Some of the most delusional people (from an economic perspective) that I have spoken to lately are people who (1) work for government agencies, or (2) are retired government employees who rely on pension income to pay their bills.
As someone who spent over a decade working as a government economist and structuring public bond deals, I can tell you this is going to be a financial event for state and local governments unlike anything anyone alive has ever seen. It will be about ten times worse than the Great Financial Crisis of 2008 (and even more if you live in places like California, Washington state, Illinois, New York, New Jersey, Connecticut, or Kentucky), which prompted thousands of layoffs in the public sector. But many in the public sector don’t know that yet.
The Federal Reserve has included state and local governments in their commercial paper program, which allows them to borrow short-term to fund operations. But that’s not a grant program – it’s a lending facility. It’s not even intended to protect state and local governments. It’s intended to protect the large financial institutions that buy their short-term debt so they do not book those losses in the middle of this event and create a financial contagion.
The federal government has never had and likely never will have any desire to fully backstop the finances of 50 states, some of which represent economies larger than most countries. The financial burden would be unthinkable. We’d truly become a Venezuela or Argentina.
One of the biggest differences between the federal government and state governments is that state and local governments actually have to balance their budgets. They don’t have a blank check to fund their bureaucracies forever, and bureaucrats definitely do not have safe jobs after a financial crisis.
The federal government can borrow in the bond market to finance a deficit (within practical limits, as we are seeing now) and it can even outright print money (within practical limits, at some point your currency has to mean something).
State governments do not have that luxury. The only things they borrow money for are long-term capital projects like infrastructure and short-term borrowing to smooth cash flows only until they receive tax revenues from residents and businesses. Their constitutions require them to balance their budget every year. Local governments rely on property taxes, and I think it is safe to say the real estate bubble is over.
Some states have historically done things that are tantamount to deficit financing if you think about them philosophically. One big example that comes to mind is giving their pension beneficiaries IOUs on required contributions to the pension fund. But they are limited in their ability to do that, since many pensions now are already dramatically underfunded thanks to decades of diverting money from pension contributions to pork spending. This is on top of major losses in the financial markets that pensions will report in June. Stuff like this has already left a number of states with considerable structural budget gaps, even before coronavirus.
Some states are a month into forgoing tax revenues indirectly, by shutting down the means that businesses use to generate taxable profits and that residents contribute via taxes on their personal spending. There will be a paperwork-driven delay in when that hits the books, but it will hit at some point this year. And it will be the ugliest financial reality states have encountered since WW2.
They’ll probably see 30% or more declines in the revenues they collect within a year by my reckoning. Since public education, Medicaid, and public pension funding are the largest expenditures in state budgets, there will be mandatory cuts to all of those things. States can totally and utterly wipe out spending from categories other than those three and they still will not balance their budgets after this. This event is going to take out classroom spending and health care benefits.
State and local government workers will be laid off for this, but it will probably come after the private sector has gone back to work and states get around to tallying up the carnage.
Even a strong recovery after the shutdowns end will not mitigate the effect. This shutdown is destroying firms. You can say that “people will just go back to doing what they were doing” after a couple months, but that is not how economics works. It takes capital to start and operate a business, and the government has arbitrarily nuked that capital. Employees can’t go back to work at companies that went bust. That should be an obvious point, but it somehow isn’t to policymakers.
The other component of this is that alongside a spectacular decline in government revenues there will also be a spectacular uptick in demand for government services. Since we are talking about a large part of the workforce being put out of service and applying for unemployment and other benefits, you are looking at billions of dollars in new demand for services. That is going to conflict with core government services (like public education) for funding.
You can think of this as the analog to destroying capital in the private sector. Money spent on new demands for services is money that won’t be available to pay a school teacher or purchase textbooks.
This means that core government services are being hit from both sides. Even states in the best financial position (meaning they have robust rainy day funds) are not going to be exempt from this reality. They are going to blow through that money in no time. The states with little to no reserves are beyond fucked. The cost will go right to budgeted priorities.
This is only now starting to dawn on policymakers. It was always a stupid policy decision, but seem people need to be slapped upside the face with the consequences before they understand what they have done.
Florida is a destination state. Because the state has beautiful weather year-round and reaches down into the international crossroads of the Caribbean, you have people here from all around the world all the time.
When I mentioned to someone recently that the coronavirus is unlikely to spread as aggressively in Florida because of the heat here, a friend replied “Well, I just don’t see that based on the numbers.” Actually, it is very much reflected in the data.
Looking at aggregate numbers (as the corporate media idiotically encourages people to do) doesn’t tell you much of anything about how the illness spreads and why.
In Florida, three things contribute to the spread of the coronavirus: (1) travel, (2) direct contact with people who have traveled, and (3) a large population of elderly who live in gross long-term care facilities in places like West Palm Beach and Orlando.
In fact, I would say state and local governments’ poor regulation of long-term care facilities – which spread an incredible amount of illness during normal days, because you have economic untouchables caring for acutely medically vulnerable people – is one of the biggest contributors to the death toll that no one seemingly cares about. Rather than shutting down a $21 trillion economy, the government could have made a large dent in the health care burden by socializing long-term care facilities and ensuring that caretakers adhere to best practices. But they chose a short-term response with immense cost over a long-term solution that would create a permanent public burden. That’s what happens when you elect policymakers with incredibly short time horizons.
But back to travel. Florida currently has 11,111 coronavirus cases. It’s too early to tell, but it already looks like this number is starting to level off. It certainly is not growing exponentially, or at anywhere near the pace of the projections the bad models governments have been using. That effect cannot be due to DeSantis’ shutdown, which has only been in effect for 48 hours. More likely, it is due to the decision to close of the state to travel from coronavirus hotspots, which really came too late for reasonable people. This means the shutdown, which will likely cost Florida a million jobs, is totally unnecessary.
Think about that for a second. We currently have 191 deaths and 1,386 hospitalizations. But unemployment is going to go into double-digits over that.
Of those 11,111 cases, 10,760 were residents of Florida. While the state does not have data on around 7,000 of the cases, 1,020 cases were directly related to travel and 667 cases were related to travel and contact with a confirmed case. There are more cases related to travel than any other identified source.
Just from seeing what has happened in our community, I am sure most of this derives from a sudden influx of people (mostly Boomers, not “Spring Breakers”) who flew to Florida from up north when coronavirus lockdowns went into effect there. Much like how the Italians locking down Lombardy caused an immediate diaspora of infected people to the rest of the country.
The second complicating factor is population density. Looking at the number of infections by zip code tells you the virus is hardly spreading evenly around the state. Most of the epidemic is centered on Miami and Fort Lauderdale, which are two of the most densely populated metropolitan areas in the country, thanks to being physically sandwiched between the Everglades and the ocean. They are pretty much the only cities in Florida that are not characterized by urban sprawl.
You have many counties in Florida that still have zero cases or cases in the low single digits. The virus is unlikely to have a meaningful impact on their population at all, but DeSantis destroyed their local economies just the same. They don’t have overwhelmed hospitals – in fact, DeSantis’ health care policies risk putting their regional hospitals out of business, which might dramatically reduce residents’ access to health care in the long run – but they will have a generation of blight and massive job losses just the same.
Are they pissed with DeSantis? You bet. And they should be. He has downright ruined their lives over nothing because he can’t tell the difference between Miami and Ocala. That’s the worst abuse of power possible in this country.
DeSantis’ response is typical of the lack of attention to detail that has characterized the response to the coronavirus across the country, however. There has been a scramble to do anything rather than anything intelligent.
Even among the most densely populated areas, there are important sources of differentiation. Los Angeles, which has more single-family residential homes and more people who own a car, has not had the drastic experience of New York City and its (still densely populated and still mostly vertical) surrounding areas. New York’s dependence on high-rise living and its subway system are the reasons something like pneumonia can downright break the city. The people there like a lifestyle that is fundamentally not healthy or sustainable.
The more you encourage people to live on top of each other and share physical resources, the more you introduce fragility into the system. This isn’t just true for illness either. It’s true for terrorism. It’s true for environmental health. It’s true for any force that can knock out a bunch of people in one blow. And it’s totally unnecessary in an era of technology.
But you shouldn’t penalize people who choose not to live in urban areas for the problems of urban areas, which is what Trump’s coronavirus team and governors have done. Someone in a rural area should not arbitrarily lose their job because of Miami’s party culture and snowbirds.
This is also one of the problems of having such an intellectually dishonest media machine. As the coronavirus has overwhelmed specific zip codes where the nexus of population density and a large fraction of potentially vulnerable people occurs, the media became obsessed with the outliers and wishing harm on people who are culturally other to them. And thus they rabidly push bad policy ideas. They have bullied policymakers into objectively destructive behavior that has economic consequences that are getting increasingly difficult to wrap one’s head around.
I do not think Trump and state and local policymakers fully understand what they have done to American households financially by extending this shutdown for at least a month. I certainly do not think they appreciate the very powerful rage Americans feel about it. Maybe after unemployment claims surge beyond 20 million cumulatively (possibly by next week) they will get a clue.
To say I am disappointed in GOP strategy lately doesn’t even begin to cover it.
Seeing things play out on the ground in Florida, I suspect Trump is taking a meaningful hit to his popularity, even in wildly conservative districts (like the one I live in). This shutdown is likely going to end in Trump losing his new home state of Florida in November, which mathematically means he’ll likely lose the entire election and be a one-term president.
It may very well bring an end to DeSantis’ political career too. He only won the state by something like 34,000 votes in the first place – and he was running against a relatively young Democratic Socialist who was being investigated for bribery and who was just found in a Miami hotel with a male escort and three bags of meth. DeSantis needed to build colossal goodwill as governor, and until March, I thought he had done exactly that. Maybe he can reverse that, but who knows?
As predicted, when DeSantis issued a statewide stay-at-home order, employers rapidly started laying off employees. So many people have been laid off or furloughed in Florida that the system for filing unemployment claims has crashed and cannot be resurrected. Staffers have started accepting paper applications via snail mail because it is taking weeks to get someone on the phone.
Unemployment claims are a very big deal in Florida. Former Governor Rick Scott (now Senator Rick Scott) created an unemployment system that was quite deliberately designed to fail and punishes people who are suddenly out of work. He had no interest in establishing a website functionally capable of processing even a modest number of claims. When discouraged people gave up on filing claims, it artificially made his negative data seem small. It’s sort of like manipulating coronavirus testing to make infections seem less widespread. People only see what policymakers want them to see.
Florida also has one of the lowest levels of unemployment support in the nation, providing a maximum of $275 a week in assistance. I am a die-hard fiscal conservative, and I will still concede that is scandalous. Although DeSantis paired his order with a 45-day ban on evictions, it’s not difficult to see how the state’s most vulnerable populations are screwed, even with the enhanced assistance from the federal government. Florida is not an inexpensive place to live!
In February, Florida had 9 million people in the workforce and a 2.8% unemployment rate. Nearly 400,000 Floridians filed unemployment claims in the past two weeks – before DeSantis’ shutdown even went into effect – and there’s no way to quantify the number of people who have been attempting to file claims but failed because Scott trashed the system. Most of these claims are related to the closure of restaurants, bars, and resorts across the state. The next wave of unemployment will not be centered only on tourism.
From what I gather, that is the story of most hospitals across the country right now. They have no new procedures booked as they have all been ordered to standby and wait for some projected surge tied to the pandemic. People are posting pictures of mostly empty hospitals all over social media. If the surge in cases does not materialize at the levels projected, state and local governments have likely destabilized their health care systems financially going forward. These dire projections about coronavirus infections are definitely high-stakes policy matters.
When a workforce of 9 million decreases by 1 million jobs, which is quite plausible at this point, everyone is going to notice. And it’s probably not going to stop there. I think Trump and DeSantis are underestimating how long it is going to take to recover from the destruction of demand that entails.
“This is horrible for people. I don’t want to minimize that,” one DeSantis adviser told POLITICO. “But if we have to look past the crisis, it’s bad for the president and it’s bad for the governor.”
“Everyone we talk to in that office when we ask them what happened tells us, ‘the system was designed to fail,’” the adviser said. “That’s not a problem when unemployment is 2.8 percent, but it’s a problem now. And no system we have can handle 25,000 people a day.”
State auditors have routinely chronicled shortcomings with the CONNECT system, most recently in a report issued in March 2019, two months after DeSantis took office.
Scott spokesperson Chris Hartline did not directly address complaints about the CONNECT system. But he said Scott acted to ensure the state helped only those “who truly needed the assistance.”
“His goal was to make sure every Floridian who wanted a job could get one, and turned the program into a re-employment system so people could find employment,” Hartline said in an email. “As governor, he made investments to ensure the system worked and Florida’s unemployment insurance program is funded at record levels thanks to reforms under Governor Scott, meaning more Florida families can receive the help they need.”
Rep. Charlie Crist, a Democrat who as a Republican governor led Florida through the last downturn, said the state’s current economic catastrophe could doom Trump in the state the president needs if he wants to win reelection.
“If unemployment continues to go up, and if so many people stay unemployed, it’s a nightmare for the president in this state,” Crist said. “I should know. When I was governor and I was running for the Senate in the Great Recession — and there was nothing great about it — it was a nightmare.”
An adviser to Marco Rubio’s 2010 Senate campaign didn’t argue.
“We’ve got unemployed, pissed-off people. They can’t get benefits. And when they get them, it’s not going to be enough,” he said. “They’re there for the taking by the Democrats. We killed Charlie with the bad economy in 2010. Democrats are gonna repay the favor.”
Unemployment claims in Florida continued surging Thursday — as did frustrations among the newly jobless who have struggled for weeks to file for financial relief amidst the coronavirus outbreak that has crippled the state’s economy and sidelined much of its workforce….
Among many of Florida’s unemployed, staying home is a given. Jay Mendez got laid off from his accounting firm three weeks ago and also lost his part-time restaurant gig. He wakes to an alarm every morning reminding him to call the unemployment office as he hopes this time to successfully file his claim — some days he’s had 100 unsuccessful attempts.
“There’s no getting through, and to this day I still haven’t gotten through,” he said. Now without work, he said, “I have nothing else to do.”
He could cover this month’s $1,450 rent for his one-bedroom apartment, but he said not much else.
“No one wants to use their savings for these things,” said Mendez 32….
Lisa Wright, a 56-year-old newly unemployed software development consultant from Fort Lauderdale, deferred car and mortgage payments and charged her health care premium on her credit card.
“I’m trying to conserve my cash, because I don’t know how long this is going to be,” she said.
She has been unable to file her unemployment claim, she said, because she’s been locked out of the state’s website and can’t get help.
“This should be so simple,” she said. Phone lines have mostly been busy. When she does get through, the call eventually disconnects before she gets help.
“No one can get the benefits if we can’t get through,” she said.
Based on all the reports of corporate layoffs I have personally heard about today, I would not be surprised if jobless claims next week hit 10 million. It seems like everyone is giving up en masse and pushing their employees onto the government.
The country’s top banks are cranking out ever more pessimistic forecasts too. They are seemingly divided on what the trajectory for any possible recovery looks like. As these shutdowns get pushed further out, it’s becoming impossible even to guess. I’d say a lot of that depends on whether the Treasury and Fed can stave off a financial crisis while the economy is shut down.
The United States economy will shrink 5.5% in 2020, the steepest drop since 1946, with a huge 38% contraction predicted for the second quarter, Morgan Stanley said on Friday in a new batch of forecasts on the economic damage from the coronavirus outbreak.
The U.S. bank said it had cut its first-quarter forecast to an annualised 3.4% contraction from a previous 2.4%, while in the second quarter the economy is predicted to shrink 38%, up from an earlier forecast of a 30% contraction.
U.S. unemployment will also peak at a record 15.7% in the second quarter – that is up from a previous 12.8% forecast by the bank’s economists – with cumulative job losses of 21 million in the second quarter, Morgan Stanley said.
Projections released by the U.S. Congressional Budget Office showed U.S. gross domestic product will decline by more than 7% in the second quarter as the health crisis intensifies.
That last bit is what amazes me. Government agencies, from the CBO to state forecasters, seem to be in denial of what this is going to do to revenues. It’s going to be interesting when that reality check gets cashed.
The NYC media hot-take: “Look at all those idiots in flyover country continuing to spread disease! Sure they only have a couple coronavirus cases now, but Armageddon is coming for their science-denying MAGA asses!”
The economic reality: This is where do all those trucks that bring you food and other necessities after the hoarders buy it out every single day come from. This is where your essential goods are manufactured and where most of the shipping hubs in our country are located. Enjoy your bread and freshly-squeezed Florida orange juice.
We are so lucky the New York Times doesn’t run this country.
The following things can be, and likely are, simultaneously true:
(1) Communist China is a generally unreliable narrator, especially in any situation that directly involves its primary economic and cultural rival, the United States. China has a well-established track record of falsifying important statistics, ranging from the performance of their economy to the success of their efforts at managing disease. Communist China deliberately attempted to conceal the extent to which the coronavirus spread through the country using propaganda and physical violence.
(2) The narrative that the illness originated in China and is only now reaching the western hemisphere is not supported by credible data of any sort, which would require antibody testing not testing for current infections. It is not “Chinese propaganda” to challenge this specific claim, especially given the social cost and economic destruction involved.
This problematic assumption is the product of another generally unreliable narrator, the World Health Organization. The WHO is a corrupt and downright incompetent agency with a long history of screwing up global, coordinated responses to epidemics. They only continue to exist because rent-seeking globalists love corrupt and downright incompetent agencies.
(3) Some academics in the US and Europe have created objectively bad models that lack predictive ability. This is partially because they use bad inputs, meaning deliberately falsified data from places like Communist China and the WHO. This is also partially because these academics are not good at modeling the spread of disease. They use mathematically simplistic models in a technological age where they should be able to employ machine learning to do much better (yay, tenure – keeping old people and old ideas at the top of the food chain at the expense of progress). They make bad assumptions about the nature of populations and when diseases were first observed in a geographic region. They assume that the disease made it to a region only when there is an uptick in testing, hospitalizations, and deaths. With this particular illness, it is possible to be asymptomatic for weeks and still carry it – another detail the corrupt WHO loudly misrepresented for months – which increases the likelihood that it was spreading around the globe earlier than academics and policymakers currently assume. So does the fact that testing was mostly limited to acute cases. So does the fact that most people ultimately only experience mild symptoms.
These models should not be used in crafting public policy. But they are being used in public policy because we have a profoundly bad generation of policymakers who are more concerned with maintaining power than asking the right questions for the good of all humanity. This issue is further obscured by the hyenas in the media who play up every new case, as if every one has the potential to overwhelm ICUs. Any increase is one incremental step toward Armageddon.
(4) Extreme political dysfunction in the United States has contributed to the government making catastrophically bad decisions in response to the coronavirus and doubling and tripling down on them. This dysfunction works across the entire political spectrum.
Trump has been dealing for years with a scorned rival party and select groups of bureaucrats who dub themselves “The Resistance.” Their goal is to frustrate all activity within the Trump Administration – regardless of whether said activity is critical to national security, economic stability, and now even public health – and they have successfully hindered Trump from taking an aggressive stand in managing the coronavirus. He wastes a ridiculous amount of time and energy shooing The Resistance away – all day, every day – when he could be focused on serving the American people.
As the virus was raging around the world, they were playing up a sham impeachment, blowing up taxpayer dollars and sucking all of the oxygen out of a political system with bigger things to worry about, over an entirely predictable outcome where they lost for the billionth time because for the billionth time their arguments were painfully childish and unpersuasive to most Americans.
When Trump made prudent decisions about closing the borders, they blasted him as racist 24/7.
The Resistance actively tries to drive highly qualified outsiders out of Washington DC by viciously smearing anyone who dares to be associated with Trump. You can be a literal choir boy and The Resistance will accuse you of operating a rape train in college, whatever the hell that is.
Their obsession with sabotaging the daily activity of the executive branch of government has become sociopathic. They truly don’t care if the country is destroyed so long as they get their gotcha Twitter Moment. They are also completely blind to the fact that most of the country regards them with the level of contempt they deserve, because they are beyond mentally ill at this point.
And now Pelosi thinks what the world needs is another round of highly partisan investigations carried out by the mouthbreathers she has put in charge of otherwise important congressional functions. This means that any future stimulus legislation is either unlikely to get done or likely to be structured in ways that do not help ordinary Americans but continue to enrich special interests when funding is scarce. So all the economic damage that comes with the ongoing economic shutdown going forward is unlikely to be intelligently mitigated. Just to nurse their decades-long dick-measuring contests during a crisis, because this is all Boomer politicians do – “investigate” each other ad nauseam.
And frankly, even the last coronavirus stimulus package, while necessary, was so highly partisan that it managed to include a litany of provisions that continue to nuke economic value even as they promise to provide assistance. Like the airlines have to fly empty planes around the country to “maintain capacity,” further draining their financial resources before they receive an injection of money to prevent them from going bankrupt. What were they even thinking? We don’t want you to file for bankruptcy, so we are forcing you to continue blowing money on superfluous expenses. Can these swamp rats just go away already?
Trump, per usual, has himself made some incredibly poor personnel decisions and is trusting people he should not be trusting. Having Dr. Fauci manage the coronavirus response was and continues to be a major problem. Despite all the phony hero worship, Dr. Fauci is very much embedded in the Washington DC political establishment. That’s pretty much his main qualification for the job, in fact. He has been pushing Trump to make decisions that have led to the complete collapse of the US economy – without important data like antibody testing, which could eliminate concerns that most of the US population has already been exposed to the coronavirus, not knowing it, and that telling people to stay home is pointless.
Dr. Fauci has zero timeline for managing the spread of the coronavirus or even testing his own assumptions. He says he would like for the shutdown to continue “until there isn’t a single case of coronavirus left.” He would be perfectly content to keep the economy shut down all year, and has little demonstrable concern about the profound human suffering that involves. If the Fed needs to print enough money to replace the entire GDP, then so be it in his book. Zimbabwe and Venezuela have amazing health care systems, you know.
This only reinforces conspiracy theories that he is a member of The Resistance, because the best nutrition for conspiracy theories is a fundamentally irrational reality. Dr. Fauci has surely accomplished that by advocating for a situation where job losses outnumber coronavirus cases 47 to 1 and are only getting started.
Dr. Fauci himself only weeks ago was making the rounds on political talk shows claiming there was no reason to worry about the coronavirus. Dr. Fauci and Dr. Birx now blame their blasé attitude on their decision to trust Chinese propaganda, which should be immediately disqualifying. This crowd also outright lied to the American people about the efficacy of covering their faces when going out in public, presumably as a tactic to stop the hoarding of medical gear when they could have just allowed health facilities to turn to the private market for supplies. Not only are they trusting Chinese propaganda, they are behaving like Red China themselves.
Trump apparently has his children interfering in the coronavirus response, because – per usual after Trump makes terrible personnel choices – his children are the only people left in DC that he trusts. Trump has a well-established pattern of selecting a bad czar and then not being able to move on to someone more reasonable and less egotistical because that person has seized the moment to make his or herself a household name. And part of that is Trump’s own doing – he tries to turn everyone around him into a brand, and he creates monsters in the process. The only person who has survived this treatment – thank God – is Treasury Secretary Steve Mnuchin, and that’s just because he’s a cold-hearted and calculating Goldman Sachs alumnus with the weapons-grade DGAF that comes with being on the spectrum. Without him, our economy would really be toast right now.
(5) There are solid clues that America and Europe are burning down their respective houses over a virus that has been circulating the world for months unnoticed. Here is one example:
No rational person would assume that the virus was floating around Brazil in early January (when this woman caught it) and not also floating around Florida. Socially, Florida is closer to Brazil than it is to the rest of the United States. No rational person would assume that the virus was floating around Florida and not New York. The social networks of these three places are thoroughly intertwined. Again, this is why we should be using machine learning to predict the path of viruses across networks of interaction, not “exponential growth – somewhere, anywhere, everywhere – we’re all gonna die” models. It’s possible that 50 million Americans have already been infected over the past few months, and no one noticed it because they did not overwhelm ICUs and the media was too busy crowing about Gordon Sondland rather than drumming up panic over pneumonia.
The primary reason we cannot answer this question is the behemoth health care bureaucracy in the United States exacerbates problems in emergencies rather than alleviating them.
At least 10 million Americans are unemployed thanks to Fauci and Birx and the hysterical models they have chosen to rely on without seriously considering counterexamples. (If you came to this blog looking for hero/credential worship, you are definitely in the wrong place. The only things I care about are outcomes.) And only now has the FDA gotten around to approving antibody testing in the United States that would give policymakers the first real clue as to how widespread the illness has been.
It may be that this thesis is wrong, but it 100% should have been tested before deciding to burn a $21 trillion economy down.
(6) It is a real problem in government and other cultural institutions that Baby Boomers refuse to move out of positions of power even though many are no longer the most intellectually qualified people to be making decisions. I am not saying this to be unnecessarily cruel or insulting, it’s simply a fact of aging that would be recognized in any other context.
Trump’s coronavirus task force looks like the A-Team of senior citizens and they share the “save us at any cost – and we do mean any cost” mentality that has torched our economy. Dr. Fauci is almost 80 years old himself, which incidentally is the median age of coronavirus-complicated deaths in Italy. This really isn’t all that far off of having a clearly senile Robert Mueller managing the Russia investigation and having his political operative underlings walk all over him.
We’ve got a demographic minority that is deeply invested in a deeply personal panic, and they are making incredibly dangerous and destructive policies to govern the many. Whatever the reverse of triage is, that’s what we are doing to our country.
This exact sort of situation is what our entire constitution was constructed around preventing – allowing a select group of people to strip everyone else of their liberties, property, ability to earn a living and feed and educate their children, because it might be construed as in the minority’s personal interest. If past generations acted the way our government is acting now, our country would have ceased to exist a long time ago. It’s lunacy, and that’s why it requires an atmosphere of panic, threats of jail time, fines, and threats to one’s reputation and well-being to achieve compliance. It requires lies like “this virus is actually killing a lot of young people without pre-existing conditions, so you better not go outside or it might get you too” and “stop buying masks, science says they only work for us.” It requires the country of George Washington to behave more like the country of Stalin.
The worst people that could ever be making public policy decisions – in any context – are people with short time horizons and an explicit conflict of interest. If someone’s policy mindset is “burn it all down and decide later if it was the right decision,” they don’t belong in US government. They belong in places like North Korea or Iran. We don’t need pseudo-scientific ayatollahs here. This shouldn’t even be a controversial observation.
There are younger scientists with far, far better knowledge of data science and technology out there. Some are in the private sector and not at universities. They could be running the coronavirus response right now not a man who is almost 80. They have not been a part of the solution to this pandemic beyond their own decisions to publish rational, contrarian content online and in the opinion pages (of mostly financial media) with the hope that actual science might stick somewhere that matters. Instead we are stuck with the Boomer political response, which involves a blind faith in swamptastic institutions to the point of believing propaganda is credible information and an absolute disdain for the immense cost of the response to three younger generations.
There is a reason why propaganda works on our current crop of leaders, and it’s not all that different from why senior citizens make the easiest fraud victims. They are the ones who are most sincerely convinced that their credentials and experience make them the best candidates for decision-making positions, but they are also the most removed from current culture and new technology, so they are the least likely to realize when they have been duped. You don’t have to be a wizard to punk someone with zero intellectual humility – it’s something Russian and Chinese trolls do all the time.
Given all that has happened, it is terrifying that America is going to vote on whether to be led by Trump – whose entire coronavirus response changes catastrophically on a whim, gets outsourced to charlatans with innumerate models, and can melt down in the span of a couple days – and a dude who is legitimately senile and would be in his EIGHTIES in the White House.
We’ve had two of the worst financial crises in US history in the course of 12 years and five foreign conflicts that have become mostly irrelevant to the American people, but sure, what’s another manufactured crisis before this generation of leadership goes away already? What do the trillions even mean at this point?
Unless further technical guidance is issued soon, it might be tough for many lenders to launch on Friday, according to Chris Hurn, CEO of Fountainhead, a non-bank direct Small Business Administration lender. Otherwise, he thinks lenders should be ready to go by next week.
Many have already done what they can to prepare for an expected surge in demand. Hurn estimates his company alone is likely to process loan applications for more than $1 billion right off the bat.
Who is eligible to apply?
Generally, any small business with 500 or fewer employees is eligible.That includes sole proprietorships and independent contractors. It also includes nonprofits, veterans organizations and tribal businesses.In certain circumstances, businesses with more than 500 employees also may qualify.Applications will be accepted up to June 30. But the program is on a first come, first serve basis.
What is the money for?
The goal of the loan program is to help small businesses continue to pay their employees and their overhead costs in orderto stay afloat for the next couple of months.So long as you use the borrowed funds to make payroll and to pay expenses, such as utilities and your rent or mortgage, you won’t have to repay the loan and you will not owe income tax on the forgiven amount.In order for your loan to be fully forgiven you must maintain your headcount and not reduce employees’ pay.
But I had to let my employees go already. Does that mean I can’t get a loan?
You still can, so long as you can show you had employees as of Feb. 15, 2020. Once approved for a loan, you can use the money to rehire your staff.The loan forgiveness provisions will apply so long as employees are rehired by June 30, according to senior Treasury and Small Business Administration officials.
What do I need when I apply?
Lenders will ask you to fill out a two-page application, which can be found here.You must show lenders proof that your company was in operation on Feb. 15, 2020 and that you had employees for whom you paid salaries and payroll taxes.In addition, you’ll need to show proof of your average monthly payroll costs in 2019 (or for the first two months this year if your business is new).Independent contractors and the self-employed, who must wait until April 10 to apply, need to show proof of “payroll and other certain expenses” according to Treasury.You will not have to provide a personal guarantee or collateral to secure a loan, as you normally would for an SBA loan. But if you use the money for fraudulent purposes you will be subject to criminal charges.You will not be charged loan fees.
How much money can I get?
Loans will be made in an amount equal to 2.5 months of your average monthly payroll costs in 2019 (or the average of the first two months of this year if your business is new).
Does the money need to be paid back?
You will not have to pay back the loan so long as you use at least 75% of the money you get on payroll costs (including wages, benefits, payroll taxes plus state and local wage taxes). and the rest of the funds are spent on your business’ rent or mortgage, utilities and other overhead expenses. The money must be spent in the first eight weeks after you receive the loan.In other words, if you spend the borrowed money for authorized purposes over the first two months of the loan, that obligation will be forgiven. And the amount forgiven will not be treated as taxable income to you.At the end of eight weeks, you’ll have to show your lender proof of your expenses during that period.Payroll costs eligible for forgiveness may not exceed $100,000 per employee.
When would I have to pay the loan back if it’s not forgiven?
If any part of the borrowed money is used for unauthorized purposes, that amount will not be forgiven. And you will have to repay it over two years at a 0.5% interest rate.There’s an automatic six-month deferral on payments for all borrowers. So you would need to start paying it back, with interest, after six months.
Where can I get the loan?
All SBA-approved lenders as well as federally insured depository institutions, federally insured credit unions and Farm Credit System institutions will be able to make these loans if they choose. Senior Treasury officials said they are also looking into allowing some fintech companies to make loans as well.The SBA will be posting a tool for you to key in your zip code to find lenders near you participating in the program.If you’ve never taken out an SBA loan before, you might go to your primary bank first because lenders will be operating under so-called Know Your Customer regulations and that process will be streamlinedif you’ve previously workedwith the lender.
Do I have to go to a bank to apply?
No. The expectation is that you should be able to apply online.
Is it true that I can get the money the same day I apply?
Possibly, at some lenders. But it’s more reasonable to assume it could take two to three days after you submit an application, Hurn said. It’s up to every bank to decide when it disburses the money after an application is approved.
This loan will only support two months of my costs. Then what?
Good question. If the coronavirus crisis goes on for a long time, the Treasury and Congress will need to come up with more ways to provide capital to keep small businesses afloat.
Where can I go for more information?
For more detailed information on the loans, guidance put out so far by the Treasury and the SBA can be found here and here.