Weekly Opinion Editorial
GOD HAS NO DEFICIT!
by Steve Fair
The Oklahoma
legislature faces an estimated $1.3 billion dollar revenue shortfall due to
falling oil prices, reduced sales tax and fuel tax collections, and
COVID-19. The state will receive an
estimated $800 million from the federal government through the COVID-19 stimulus
bill, which could help plug some holes, but even with that money it appears
budget cuts are looming. House Majority
Floor Leader Rep. Jon Echols, (R-OKC), said the state has lost more than 18% of
its total revenue and cuts to state agencies could range from 3-10%. The Oklahoma Constitution requires the legislature
to pass a balanced budget, so it will be challenging times at 23rd
and Lincoln this month.
The federal
government is not constrained by a balanced budget amendment, so deficit spending
is the norm. With the passage of the stimulus
bill, the federal budget deficit this year will be $2 trillion dollars and the
national debt will top $25 trillion. With
record unemployment and the economy in the tank, deficit spending makes sense
in the short term, but spending money you don’t have will have long term impact
on future generations.
In 1929, the U.S.
stock market collapsed, banks and businesses failed and unemployment was
25%. Demand for goods and services
declined and supply was reduced. The
Federal Reserve, which has been created in 1912 for the purpose of providing
the nation a more stable monetary system, raised interest rates to limit
speculation in securities markets. That
backfired and caused panic and reduced demand further. President Herbert Hoover tried to keep the
federal budget balanced until 1932. He
believed in the economic system called Liquidationism, and that no government
action should be taken during an economic downturn. Liquidationism holds the ‘temporary pain’ of
companies being liquidated is a solution in itself and government should stay
out of the way. Eventually Hoover did acquiesce to pressure to provide relief
to citizens and agreed to a deficit budget, but he remained firm in not baling
out private companies.
In 2020, the
Federal Reserve is firmly in control of our economy (good and bad). The
interest rate is set by the Fed. Monetary supply (money to be loaned) is
controlled by the Fed. Congress and
President Trump have already shown they are willing to deficit spend to get
through this crisis. There is not the political will or public support to allow
the economy to suffer ‘temporary pain.’ This crisis will have an impact on how people
live in the future. Here are three
predictions of change:
First, the world’s
eating habits will change. More food
will be consumed at home- less at restaurants.
That has been the recent trend. In
2018, Americans ate out 185 times a year, down from a high of 216 in 2000. That’s good news for grocers, not so much for
restaurants.
Second, retirement plans will change. With the stock market losing up to 30% of its
value during this crisis, some will have to delay retirement or forego it all
together. Those who are retired and
relying on investment income will have to make adjustments to their lifestyle
or go back to work.
Third, the next
generation will change. The COVID-19
crisis is a part of their experience.
How they will work, play, invest, worship, interact, and vote will be
filtered through the experience. That
can be good and bad. The good is they
will understand that life is fragile and they should cherish it. The bad is they may believe life is so fragile;
they live it like a dare-devil.
Deficits
and shortfalls are all around us, but God is still in control and has no
deficit or shortfall. He owns the cattle on a thousand hills and the wealth in every mine. Stay safe!
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