Hello everybody out there in farm country. This radio commentary is brought to you by the National Corn Growers Association, CropLife America, and Renewable Fuels Association. They are all friends, supporters, and allies of a healthy farm economy and prosperous rural America. Thank you.
And now for today’s commentary –
The cost of unemployment and economic hardship from the global coronavirus pandemic is no small change. We have not had to face anything like this since World War II. The projected debt at the end of this year was supposed to hit 79% of our gross domestic product (GDP). But now with all of the new spending bills it will likely explode to 101% of GDP. Look back at the end of World War II, our debt level had grown to 106% of GDP. With economic growth and sound money management we brought that debt level down to 23% by 1974. In almost every year since then (almost 50 years) our debt has kept climbing. Many economists consider the level that we are looking at now as dangerously high. That makes me question how much more do we need to spend. I think the money approved for farmers, ranchers and food assistance programs will be a big help in saving a lot of farms and ranchers from bankruptcy.
However, it will not begin to cover the losses from trade disputes and low prices. We will get $16 billion in direct payments. Row crops (corn, soybeans, cotton) will get almost $4 billion. Cattle farms – $5 billion. Dairy – $3 billion. Hog farms – $1.6 billion. Specialty crops – $2 billion. There will be $3 billion to purchase food for food assistance programs. I guess it should not be any surprise there is growing pressure to spend even more money. We will spend at least $3.5 trillion because of the virus. If we spend more, it should be directed to keep workers on the payroll and keep small businesses alive.
Nancy Pelosi and other big spenders want the federal government to bail out states and local governments. That’s the last thing that we should do. A lot of states have been making bad spending decisions for 10 or 20 years and that includes my farm state, Illinois. New York would also qualify and probably California. We should not do anything to bail them out. It is not free money. Our children and grandchildren will be expected to pay it back. We can expect to borrow more than $4 trillion dollars this fiscal year. Let’s step back and see if our economy begins to recover.
Until next week, this John Block reporting from Washington, D.C. If you would like to review my radio shows going back more than 20 years, just go on-line to www.johnblockreports.com.