Thursday, March 26, 2020

The Jones Act and Bailouts

I hate to delve into politics on this page but sometimes the situation warrants it.  Unfortunately, it is looking like one of those situations.  As you may know, the Senate passed a two trillion dollar bailout yesterday by a 96-0 vote.  I think one of the reasons that it wasn't 100-0 was because 4 of the Senators were either sick or quarantined.  I think I read somewhere that if you put the Manhattan Project, Apollo Project, the Hoover Dam and the B-29 costs in 2020 dollars, this would dwarf that.  I mentioned those because they are often used as example of big engineering projects.  I suspect that if you put the costs of the New Deal in 2020 dollars, this would probably dwarf that as well (and as suspected it does).
So how did we get here?  Back in December, there was news of an epidemic in the Wuhan province of China.  It was caused by a coronavirus now called COVID-19.  A coronavirus is a type of virus that has little spikes on it and that makes it look kind of a crown, hence the name.   The cold is a type of coronavirus.  At any rate, this particular virus is highly contagious and fairly deadly compared to other types of viruses.  Another thing that makes this virus dangerous is that it is transmissable even if people are not exhibiting symptoms.   The virus attacks the respiratory system.
When it was determined that this thing had a chance to be deadly, travel from China was banned but that did not apply to American citizens.  Judging by what I said above, that was probably too late.  It didn't help that the Chinese weren't forthcoming with information about this but it also didn't help that one of the groups that was supposed to deal with this proactively was shut down.  The first case appeared in the United States towards the end of February.  By the beginning of March, it looked like the virus was spreading to other parts of the United States.  As of the writing of this post, there are 80,000 cases in the United States and looking at information from other countries, that number is going to go up.
Around the middle of March, many of the infected areas started to implement stay at home orders and because of that, the US economy tanked.  Which led to this stimulus bill.
As you guess, this has hit the cruise ship industry pretty hard.  It sounds like it is the President's opinion that they should be helped.   In normal circumstances, I would say yeah that's probably a good idea but there is a snag.  Most of the cruise ships are not flagged in the United States.  One reason for this is so that they can pay lower taxes.  Another reason for this is so that they can hire non-American workers.  I think another reason is so that they don't have to make them in the United States.
So Cruise Ship companies don't pay US taxes.  They don't use US workers (for the most part).  They don't use US ships.  So why should the get US taxpayer money.  Save that money for American companies that are in trouble.

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