Weighing the cost of life to the cost of living, as some would say, we’re burning down the barn to get rid of the rats. At what point do we reconsider our approach to public safety? At what point are we willing to give up our civil liberties and our financial security in an attempt to protect those susceptible to the virus?
Rather than quarantine everyone, would it not make more sense to quarantine the susceptible? This is not necessarily my opinion but rather a possible solution to prevent running our country and the world into economic collapse.
Many public health officials have warned against relying on inaccurate health models and a lack of pandemic experience when setting public policy while warning that economic collapse would have its own health consequences.
We must remember that government is not the answer to all problems and is not the bottomless money pit.
At this time, every state is dipping into its rainy day fund to help cover the cost of the coronavirus pandemic. This is on top of the ridiculous sums of money appropriated by the U.S. Legislature. Robbing from their rainy day funds, Washington State is down $200 million, Georgia is down $100 million and Maryland is down $50 million.
Prior to the pandemic crisis, most states had only enough money in reserve to operate state government for eight days, some more and some less. Illinois has only enough reserve to actually operate their state government for a few minutes.
Many states gather a disproportionate share of their tax revenue from upper income people who on the average earn more than 25% of their income from capital gains. Due to the effect on the stock market by new pandemic government regulations and investor uneasiness, most, if not all, of the higher income tax payers will now be reporting losses and paying lower taxes as their capital gains have suddenly vanished.
Some states like California receive 70% of their income from taxes with half of the income tax paid by 1% of the population. A very large percentage of those people’s income comes from capital gains.
States most affected by changes in income from capital gains are California, New York, Connecticut, Massachusetts and Oregon. New York estimates a reduction in tax revenue greater than $7 billion.
Texas, unlike many states, has no state income tax and gets a good portion of its income from the oil industry and consumption tax. On top of the financial issues brought about by the corona pandemic, the Texas Taxpayer Research Institute estimates that Texas will lose $85 million in state revenue for every $1 drop in the price per barrel of oil.
Currently, oil has dropped more than $25 dollars per barrel, thanks mostly to the Russians and Saudis flooding the world market with low price oil. Couple this with the loss of sales tax from businesses that have been placed in moth balls by government regulation and it is easy to see that the huge — by most standards — rainy day fund is rapidly declining.
President Trump and Governor Greg Abbott have both indicated that we must find a way to start getting people back to work, hoping that by May 1 we may see some movement in that direction.
Hopefully by this time next month, we are making headway in finding a workable solution to the pandemic and the economy. Clearly burning down the barn to get rid of the rats is not the best solution and not in our best economic interest.