Imagine, if you will, our distinguished entrepreneur. We'll call him Barnaby Collins, proud maker of Toilet Flow, a liquid additive guaranteed to keep your toilet running smooth.
Barnaby is fortunate enough to get a TWENTY MILLION DOLLAR loan.
What should he do with his loan?
Scenario #1
Barnaby buys him and his family members (all who "work" for the Bizness) brand-new HUMVEES! He renovates the front office with fancy walnut desks and state-of-the-art computers. Next, he takes out some of the money for a personal loan that, yeah, sure, he'll pay back to the company...someday. He wines and dines his favorite clients - ones who are already his buddies and already committed to doing business with him. Finally, he takes some of the money and invests it overseas, and places some in offshore accounts.
He does not buy equipment. He does not improve pay and conditions for the people who work for him. He does not improve his supply chain. He does not advertise his product. He does not do research to make his product and keep up with a competitive market.
When the loan payments come due, he has not improved his bottom line. Instead, he hasn't earned the additional money to cover the loan cost.
Barnaby is screwed.
Scenario #2
Barnaby does not spend on himself. Instead, he spends to make his product better, buying state of the art equipment. He assures himself of a better, more motivated workforce by increasing their pay and benefits. He does wise, targeted advertising. He improves his supply chain.
The loan payments come due. But this time, Barnaby has increased his bottom line, sufficient to cover the loan costs and have PLENTY of cash left over!
Which scenario do you think Barnaby should follow?
This is not theoretical. As a CPA, I have seen these scenarios play out. And trust me, there is a difference between INVESTMENT and WILD SPENDING.
The physical infrastructure bill, the one even many Republicans like, and the human infrastructure bill, Build Back Better, are vital investments that will pay back in the future growth and stability of this country. We should not be afraid of these bills because the return on investment will be immense. It will return its investment, as businesses have the physical and human infrastructure improvements to make their jobs easier and more lucrative.
Imagine being able to move your goods on state-of-the-art transportation systems!
Imagine a happier, more secure worker with money to buy the products you make!
Imagine not having to deal with the increasing costs of coping with climate change!
No, these bills are not sufficiently funded to solve all our problems (thank you, Manchin and Sinema). But they will help. They will put us in the right direction.
And if you're worried about the cost, you're worried about the wrong thing. This is not Scenario #1. This is not Barnaby out scooping up Humvees.
Oh, you deficit hawks!
Where were you when we cut taxes for the wealthy and large corporations, to the point that a secretary or factory worker paid a more significant percentage of their money in taxes than they did? And what did they do? They bought back their own stock, they leveraged, they hoarded, they took it overseas. They did everything except make this country better.
Where were you when they kept increasing the military budget? So much of the money went to private contractors, building things that really don't enhance our security, even projects that the Pentagon didn't ask for or recommend. For the most part, it goes to THINGS, and not soldiers.
Where you were when they kept extending corporate welfare? Breaks upon breaks where wealthy corporations not only pay no tax, they get huge REFUNDS! Corporate welfare dwarfs human welfare. And yet, no one talks about it.
Where were you when the Fed pours trillions into the coffers of well-off corporations and banks, and none of the money counts as debt?
But when we try to improve the conditions for workers in this country, these very same people who put up with what I would call Scenario #1 spending, all of a sudden get their knickers in a wad and scream, "We can't spend money to help people? We don't have that money! Why, we're in DEBT! Didn't you know that?"
Yeah, I know that. But, unfortunately, we're in debt because of Scenario #1 spending, which offers little or no return on investment.
In the end, I hope our INVESTMENT HAWKS win out over our SCENARIO #1 PRETEND DEFICIT HAWKS.
Which one are you?
Great blog! Thanks...I'm with you. Have a great day.
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