The nation is sick. Things will get worse before they get better — but they will get better. There will be tough choices ahead and sacrifices made by all before the coronavirus outbreak abates. And if we want the best possible outcomes, we will have to take our medicine, literally and figuratively, right now.
The first dose: President Trump has outlined a $1 trillion aid package that includes $500 billion in direct payments to individual citizens and $300 billion to small businesses.
As a free-market conservative, I understand the trepidation when we talk about stimulus packages amounting to trillions with a “t.” I cringe at terms like “bailout,” but that term doesn’t apply here because this is direct assistance to taxpayers and targeted relief to affected industries in a time of national emergency.
And let’s remember, this isn’t the 2008 financial crisis — it’s an act of God. No one is to blame; this is not the result of excessive risk-taking, subprime mortgages or credit default swaps. The banks are in great shape; it’s the on-the-ground industries harmed solely because economic activity has stalled while we protect public health. If it weren’t for the COVID-19 virus pandemic, the economy would still be humming along with a stock market on the cusp of 30,000 points and record-low unemployment.
If we don’t act quickly and decisively, if we only take half-measures, we will pay far more later. There will be a domino effect that begins with the furloughed or laid off worker in the middle class missing one or more of their monthly payments. That leads to tightening credit, fewer financial backstops, less consumption, small businesses shuttered, jobs cut and significant lost opportunity costs.
Tax revenue will also go down as a result, which means the money we must spend now will be eclipsed by the money lost later. More importantly, our state and local taxes pay for schools, roads, first responders and other services that will be undermined for years to come if we don’t act now and get ahead of this growing crisis.
Take our medicine now, and our economy should recover within months of getting the virus under control. Balk at the high price tag, and it may take several years and cost many trillions more. Just as we have to flatten the curve of infections, if we don’t get ahead of the financial consequences now, we will never catch up.
The aid package is about giving a hand up to the people who are the backbone of the economy. In the oilfield services industry, our employees get their hands dirty and work long hard hours to produce the energy that America runs on. But they can only work when our clients, the oil companies that hold the leases, drill. Unfortunately, demand is incredibly low as hundreds of millions of consumers shelter in place at the very same time that Saudi Arabia and Russia have flooded the market with extra supply.
The reality is that people in every industry, at every level of income, are being hurt; restaurants, bars, movie theaters, hotels, airlines and others are not just losing revenue; they’re near zero. The people who work in those industries are missing paychecks and tips while utility bills and other expenses continue to arrive in the mail. People are doing the right thing for their communities by staying home, and it’s not their fault that their finances suffer because of it.
The President is right: we are at war. We can’t afford to politicize something as crucial as our health or the economy. We need to be united as Americans as we haven’t been in decades to stop the spread of the covid-19 virus, not continuing to point fingers.
It’s an unfair tradeoff to have to tank our economy to take care of our families. But Americans have always stepped up in times of great peril, and Congress must lead the way.
I know many fiscal conservatives elected on the heels of the Tea Party movement are particularly reluctant to spend so freely with taxpayers’ money, especially given their objection to President Obama’s stimulus. They will undoubtedly have a bitter taste in their mouths, but they must take their medicine for the greater good. Providing direct and immediate financial support to American families and the industries that employ them isn’t a betrayal of their values; it’s an affirmation of the tradition of American sacrifice.
Dan K. Eberhart is CEO of Canary, an independent oilfield services company in the United States, and a frequent commentator on oil markets and US politics. The opinions expressed in this commentary are his own.