March 19, 2020

By Steve Brawner
© 2020 by Steve Brawner Communications, Inc.

You know how personal financial planners are always telling us to save six months of living expenses in case we face hard times?

Turns out that’s good advice for a nation as well.

No one knows what the future will hold, but a Department of Health and Human Services plan, as reported by the New York Times, anticipates an 18-month coronavirus pandemic that “could include multiple waves of illness” with “significant shortages for government, private sector, and individual U.S. consumers.” Meanwhile, Treasury Secretary Steven Mnuchin told Republican senators the unemployment rate could reach 20%.

To cushion the blow, Congress and the Trump administration are hatching plans that would exceed the bailouts of a decade ago. The number $2 trillion is being reported. Both of Arkansas’ senators, Sens. John Boozman and Tom Cotton, are willing to go big. Cotton on Jan. 30 called for a “Manhattan Project-level effort” to develop a vaccine – the Manhattan Project being the World War II effort to develop the atomic bomb. He gave a chilling speech Monday urging “extraordinary measures,” saying, “(O)ur hour of great national testing has arrived.” He’s introduced four bills that would provide money to individuals and businesses, including $1,000 checks to individuals making less than $100,000 annually plus $500 for dependents.

That would pay the mortgage. Meanwhile, utilities in Arkansas are saying they won’t shut off power and water for those who can’t pay their bills.

Only weeks ago, the United States was in the midst of its longest sustained period of economic growth in modern history – almost 11 years. But despite those good economic times, the federal government had continued to increase the national debt. From June 2009, when the recovery began, to today, the debt has increased from $11.4 trillion to $23.5 trillion. This year’s budget deficit was projected to exceed $1 trillion even before the coronavirus epidemic happened. It will be far bigger now.

That $12.1 trillion over 11 years is the equivalent of $37,000 per American, all borrowed, and all when the economy was growing. A wise nation would have been saving money for such a time as this. But hindsight, I guess some might say, is 20/20, even when foresight was also 20/20. For now, we must prevent a depression.

This has been a frustrating 11 years for those few of us who call ourselves “deficit hawks,” meaning reducing the national debt is a top priority. But as Jesus taught, we must remove the beam in our own eye before we can cast out the mote in another’s. Throughout this time, I’ve seen the exhortations by financial planners to build up a rainy day fund, and I’ve intended to do so, as soon as I made more money and figured out how to cut expenses. Those days never seemed to come.

Living on the edge is baked into our national fabric. Several decades ago, manufacturers adopted “just in time” logistical strategies that waited to transport goods until the point when they were needed. It saved on warehousing costs, but it clogged our highways and created a supply chain that more easily could be disrupted by a crisis.

We are, in fact, a just-in-time nation. Most of us have built our lives around getting paid just in time so we can pay our bills just in time. Now, time is no longer on our side, and it took less than a week for the economy to come crashing down. Heck, the United States knew this pandemic was coming for two months and did little to prepare. What were we thinking?

When this is over, the United States must reassess its priorities. It should better anticipate crises like pandemics, which we know will happen again, and spend billions to prevent them so it doesn’t have to spend trillions responding to them. It should invest and save more, and it should borrow less.

Individuals also should save more and borrow less – starting now, if we can. Let’s stop just-in-time living.

In other words, beans and rice are fine, if that’s what it takes to build up some savings. In fact, we all should have a supply stored up, right next to the supply of toilet paper.

Steve Brawner is a syndicated columnist in Arkansas. Email him at brawnersteve@mac.com. Follow him on Twitter at @stevebrawner.