Dear Editor,
Over the last several decades the world has witnessed a spate of new health threats in the format of SARS, HIV, Ebola, Bird flu, Swine flu. All of these in the form of highly communicable diseases which at one time have threatened the health of the planet. Now we are experiencing another such virulent disease in COVID-19 which is currently attacking countries around the world.
In addition to the public health implications, it also reveals the diminished response capability of our government at all levels of society and highlights the many economic policy failures that have left our country dramatically unprepared to combat this disease.
The human toll will be devastating. Likewise, the economic toll will be equally devastating. Each day in our news reports we see our leaders trying to minimize the criticality of the pandemic and conceal, spin or manipulate the truth of the issue to divert attention from their lack of leadership and their effectiveness in responding to this threat. Thus, the leadership and policies arising from all levels of government have been, at best, chaotic and disjointed.
Putting political machinations and these complaints aside, America has its work cut out for it, and needs to put its house in order. At some time in the future the pandemic will be under control. When that happens, America needs to do three basic things to recover its economy and prepare itself for the post-pandemic future.
First, America needs to start living within its means. This implies a reduction in debt-financed consumption at both government and household levels. Second, it needs once again to invest in its people. A high, quality educated workforce is what built America and it will take a similarly skilled work population to get it back on its feet. Third, the U.S. needs to invest vast sums into new technologies and get serious about repairing and modernizing its infrastructure which has fallen into a sad state of disrepair. All of this requires money: but it also requires quality policymaking–fiscal, industrial, and regulatory–that together reduces uncertainty, engenders confidence and encourages investment.
The question that will remain to be answered after the dust settles from the COVID-19 pandemic will be: Is the United States at the end of its resources and unable to pay its debt to its creditors when the nations who lent us money to sustain our government at low interest rates because of their own financial stress call in their loans?
The low interests rates and the ability of Congress to “kick the fiscal can down the road” until another day and operate the government by borrowing huge sums of money have sustained us at great hidden cost but also have put us financially at great peril. At the same time, as they have placed the country into great debt, their actions to give huge tax breaks have reduced the inflow of dollars to our treasury have placed the country in a precarious financial situation. I hope that these days are over, and that the American public will compel Congress to act in a more fiscally responsible manner than it has acted in the past.
In 2007, U.S. debt to GDP ratio stood at 47 percent. In 2017, the IMF forecasted that the U.S. would have, in 2019, a debt to GDP ratio of close to 100 percent.
Due to the lack of transparency in the current administration, no current update is available to determine what our current debt to GDP ratio is. I have seen no effort to reduce our deficit and, in fact, the recent tax bill will add 1.2 Trillion dollars to that total. The 2.2 Trillion dollar relief bill will add even more.
Drastic times call for drastic measures. There is a real need for implementation of real serious policies that will reverse the damage and misallocation of resources in capital, labor and technology. This will require political courage. It will also require vision, discipline and commitment for the long haul. The question is: Does America have the political conviction, commitment and discipline to make it happen?
John OGrady
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