I tried to imagine a Congressional Mosh Pit on the floors of the US Senate playing Guns N’ Roses yesterday. I have not the slightest clue about musical predilections of elected representatives, would not be surprised if a good number actually loved the band. Given current realities, a mosh pit anywhere is verboten, but the passing of the USD 2 Trillion Virus Relief Bill with zero dissent raises the possibility there is still a common cord amongst 541 US Congressmen.
With zero humility and more than a dollop of plagiarism, I have even taken it upon myself to draft a riff to be belted out only on acid-laced raging lips.
“But if this ever changin’ world
In which we live in
Makes you give in and cry
Say’n live and don’t let die
Sing’n live and don’t let die”
Seriously, it is refreshing, and heartening, to see US Congress taking right steps. Ditto for Government of India.
Wait a minute!! Is it not the bleak scare of death in times of the pandemic you are talking about? Do you not know number of infected cases already tops the dreaded list, on top of 1200 already departed? Do you not hear the horror in the voice of people in India as they are suspended between a bug and a bedlam? I do and forevermore I berate the powers-that-be for their comical incompetence, boneheaded vanities of their muddled minions, or worse, simply, derelictions of duty bordering on criminal negligence.
Yesterday was a welcome change. Last night I saw US Senate passing a USD 2 Trillion, with a T, Coronavirus Relief Bill unanimously (96-0, with 4 away quarantined) – the largest-ever economic stimulus package seeking to provide succor to those felled, economically, by the pandemic. When passed by the House, expected Friday, this will provide loans and disbursements to a wide swath of the economy, including direct payments to individuals and loans to US companies, big and small.
What struck me is the thought and care that went into crafting it. It calls for a one-time payment to families, a typical family of 4 with median income will see almost USD 3500 coming in, benefits are available equally to those with no income or who depend on assistance programs. It provides for a broad expansion of unemployment benefits – by including gig workers, increasing current support level by USD 600 / week for four months. USD 350 Billion will go to small businesses as mostly forgivable loans. Another USD 500 Billion will go to large corporates, a large part of which as a backstop to Fed Reserve loans but includes specific grants to companies deemed critical to national security (e.g., GE and Boeing), USD 32 Billion combined for companies in the air-transport industry for which Fed will negotiate ownership in these companies. No surprise the this follows the widely successful TARP model that brought the US auto and banking/insurance back from near death in the Great Recession.
As a nod to the calamity that brought us here, USD 100 Billion in grants to health care industry, with an additional USD 16 Billion to stockpile medical equipment (e.g., PPE). It increases matching Federal funds for Medicaid by 6.2%, delays scheduled reductions for Medicaid reimbursements and increases some reimbursements by 20%. On top, a USD 150 Billion will disburse to State and Local governments to defray unanticipated virus-related expenses. To allay fears of pork for families of the high and mighty, it explicitly prohibits the Executive leaders (including the Prez and the Veep) and legislative members, their spouses and children included, from receiving any of the monies.
“Pretty Pretty good” – as Larry David would say. Meltdown over three months was not caused by reckless CEO’s or an ego-driven Executive, though we have both of that for large measure; even if we went ahead with aggressive testing on Day 1, markets would have stalled and liquidity crunch would loom large, air traffic would cease, restaurants and office spaces would be empty and self-quarantine would be de-rigueur. Needless to say, this is the perfect place for the Feds to step in as lender of last resort. And they did, beautifully.
The story in India is just as promising. Yes, it took some time for the Elephant to tap, but she is on her feet and, thankfully, waiting still. Many know-it-all had to prophesize panaceas for the gullible, nothing we did not see before. The country had one short trial run of what was to come next – a 21-day mandatory shutdown, an enforced shelter-at-home across the country. Currently, on Day 3, the largest lockdown in history covering 1.4 billion people is going on smoothly with nary a hitch, in context. A vulnerable segment – migrant workers and daily wage earners in the informal sector – was attended to soon thereafter with a USD 22.7 Billion packages most likely to touch their family members back home, insuring subsistence for a three-week loss of income. These disbursements are mostly directed at individuals, especially women, but micro-enterprises can benefit, families will get more food, cooking gas and so forth. Jugaad – the proverbial self-help mindset fueled by raw innovation – is already multiplying resources available; train cars are being converted into ICUs and COVID treatment facilities, resorts into isolation centers, hotels into hospitals and so on. All that before legendary might and efficacy of the Armed Forces are called in. Nice!
We are hobbled by an enemy we can not see, hear, smell or feel the touch of, an enemy that does not discriminate, and, as The Economist correctly observed, it has transformed Western Democracies. Central banks are in mortal combat, laying out 10%-15% of respective GDP in packages already, more to come. We have been shaken, stirred and shoved to the wall defending our past indecisions as far as health care infrastructure goes. Two right-wing governments of two western economies came up with the two biggest rescue packages, purse strings still wide open; intrinsic reticence in reverting to the State is no match against a virus ten-thousandth of a millimeter in diameter.
Examples of the US and India highlight the need and use cases, of better governance. Both were done in record time, took cognizance of the need on the ground, are laden with few pork, and overwhelmingly supported across the political rainbow. Rare days like these make you wish such wisdom of the moment was not transient, that we all listened to our better selves in times of no distress.
We wish that today, and every day, were Groundhog Day!!
Imagine heavens on earth, in every country. Be careful of hallucinations in the morning.
[Partha Chakraborty, Ph.D., CFA is an entrepreneur in Water technologies, Blockchain and Wealth Management in US and India. All opinions are of the Author alone, and do not necessarily represent that of any organization he may be part of. The author alone is responsible for any error or omission]