Listening to recent news conferences by the White House, certain governors and other state officials — like those in Texas, Iowa, Georgia and Tennessee — makes it seem like the coronavirus crisis is already passing, America is on the verge of reopening and our economy will be begin bouncing back any day now.
“All the key metrics are going in the right direction,” Texas Gov. Greg Abbott, a Republican, told the Texas Tribune at the end of April. Even those governors who acted most aggressively and whose states have borne the worst of the pandemic so far, such as New York’s Andrew Cuomo, a Democrat, have begun to sound notes of hope and optimism that we’ve cleared the worst of the first wave. The office of Maryland Gov. Larry Hogan, a Republican, said on April 30, “We hope to be in a position to begin the recovery in early May.”
But the idea that life will soon return to normal is a fantasy, especially given new government estimates that show we might be facing 3,000 daily deaths by the end of the month — the equivalent of a 9/11-scale tragedy every single day. Yet even leaving the human and health care toll aside, the scale of the economic problem ahead is larger and worse than our leaders and politics appear capable of handling — or even recognizing.
Just a taste of the hurdles to come: Friday’s jobs report showed that 3.3 million more people filed for unemployment (before this crisis, the weekly record was 695,000, in 1982); 33 million Americans have lost jobs, wiping out an entire decade of job gains. That’s larger than the combined workforce of 25 states. How can the government help get these people back to work? The president’s answer underscores how out of touch the federal response has been: He repeats the notion that it’s up to governors to organize coronavirus testing.
Our leaders are guilty of a colossal failure of imagination. The ability to understand what’s truly happening is a prerequisite for devising solutions. Until they begin looking squarely at the daunting reality, the United States has no chance of surmounting this crisis.
Four relatively narrow policy questions hint at the difficulties ahead. First, the bailout: After the initial $349 billion allotment vanished in days, Congress threw an additional $320 billion into the Paycheck Protection Program, the effort to keep smallish businesses from firing employees for roughly eight weeks. That just means companies, including many I’ve spoken to, are planning June layoffs. Will Washington put another $670 billion into the PPP just to keep those small businesses afloat through July?
Second, American education: Universities are forfeiting room and board fees, lucrative spring sports seasons and the elective surgeries at teaching hospitals that balance their budgets. Many — if not all — colleges and universities will probably have to nix the fall semester. The University of Michigan alone thinks it will need a $1 billion bailout, but even smaller institutions anticipate being insolvent shortly; the University of Akron announced Monday it plans to close six of its 11 colleges to meet a budget shortfall, and the Vermont State Colleges System estimates it may require a $25 million bailout, nearly equivalent to its annual $30 million state appropriation. Across the country, it’s easy to imagine that the nation’s 4,000 colleges and universities might require a $200 billion bailout just to finish out the calendar year.
Third, states and cities are going broke, thanks to the costs of responding to the crisis — from unemployment claims to boosting hospital capacity and purchasing protective equipment — as well as the collapse of income, sales and meal tax payments. New York City says it will need $7.4 billion in federal aid, and the state faces a $13 billion shortfall; Alaska’s budget gap might top $1 billion; Colorado’s, $3 billion. The impact on California’s finances has been termed, simply, “beyond crazy.” That will be true for every single state, every single county, every single city, village and town in the country. Unlike the federal government, which can deficit spend with abandon, state and local governments must balance their budgets, meaning these holes must be closed, immediately, by federal aid, budget cuts or tax increases. Of course, those bring consequences, such as a falloff of social services, that will slow the eventual recovery.
Fourth, economic forecasts haven’t even begun to reckon with how the new social distancing rules will affect employment. Imagine that every restaurant and bar in America can reopen next week under rules that limit their capacity to 50%. Imagine, too, that they can make ends meet in this scenario (unlikely, given how thin restaurants’ margins generally are) and that people feel comfortable patronizing them (also unlikely, until a vaccine is widely available). In this best-case scenario with 50% of the customers, you need only 50% of the waiters, sommeliers, hostesses and cooks, meaning millions of restaurant jobs will disappear for months or years. There are, according to industry statistics, about 15 million people employed in restaurants — a workforce larger than the population of Pennsylvania. That’s just one business sector.
Each one of those is a relatively discrete and straightforward problem. You can imagine each being addressed successfully if it arose alone. Yet in combination, they are devastating and much harder to overcome — and they are probably not even among the most pressing and existential challenges ahead. They don’t include the rest of the hospitality and travel industry (hotels and airlines are operating at single-digit capacity, and many hotels have closed outright); nor the historic, world-altering collapse of oil prices and how that will hit the once-economic-bright-spot of the U.S. shale industry; nor the horrors of an agriculture industry that is dumping milk and plowing under spring crops, thanks to structural distribution problems, even as a hunger crisis mounts; nor the industries that rely on crowded spaces, such as sports, movies, concerts and other entertainment; nor the second- and third-order effects on adjacent industries, like aircraft maintenance; nor the businesses that have simply closed their doors forever after weeks of financial duress.
None of this considers how our daily lives and work rhythms will permanently change because of the coronavirus — the impacts on the commercial real estate market as businesses realize that teleworking and Zoom mean they need less office space; the furloughed positions that companies now realize they can do without. It doesn’t address the accelerating shift to e-commerce. As one analyst told the New York Times about department stores, “There are very few who are likely to survive.”
And none of this anticipates the effects of the feared second wave this fall and winter that Centers for Disease Control and Prevention head Robert Redfield warns might be worse. As he told the Washington Post recently, “There’s a possibility that the assault of the virus on our nation next winter will actually be even more difficult than the one we just went through.”
As massive as the $2 trillion rescue package initially seemed just weeks ago, it’s already clear how paltry it is. New estimates by the nonpartisan Congressional Budget Office show the U.S. economy contracting by 40% on an annualized basis. Given that pre-coronavirus gross domestic product was in the range of $21 trillion, truly stabilizing the economy might take something in the range of $5 trillion to $7 trillion to cover just the next four to five months; because a vaccine is still only theoretical and could take 18 months to arrive en masse, analysts like Harvard’s Juliette Kayyem say we might be in for “2 years of really funky living.”
At every turn, the scale of the disaster is almost unfathomable. Forget the Great Recession or the Crash of ’87. It’s easy to imagine a scenario in which, if we escape a crisis “only” on the scale of the Great Depression, we might be lucky.
And yet the imagination of our country’s leaders hardly seems up to the task. The president himself appears incapable of empathy, is skipping as many as nine out of 10 of his task force’s briefings and remains wedded to magical thinking — recommending cures ranging from the simply unproven to the outright deadly. His executive branch, after a three-year assault on institutional norms, is hobbled by vacancies, revolving doors and a plague of temporary acting officials that’s only going to get worse as the president’s term winds down. Congress, after years of ignoring warnings to prepare for remote work, finds itself deeply hobbled in even its most basic tasks — from passing bills to holding hearings and receiving briefings. Senate Majority Leader Mitch McConnell, R-Ky., in particular, seems content with fiddling as the country burns; he’s suggested that states declare bankruptcy rather than using his time to address the mounting problems.
Having failed to prepare for the epidemic as it loomed overseas, the U.S. now finds itself in the position of mounting the worst response in the developed world. Months into the crisis, we’re not even getting the basics right; other countries are running circles around us when it comes to testing and contact tracing, which all public health experts agree are key to addressing the short-term challenges. We’re still testing 700,000 people per week, not the 30 million a week that the Rockefeller Foundation says might be necessary to fully reopen the economy. We’re even, apparently, drastically undercounting the death toll.
In the absence of federal leadership, states are forming their own coalitions to procure protective equipment, and there’s no plan on the horizon for contact tracing at the level necessary to allow a safe reopening of the economy. Meanwhile, Australia in late April released a contact tracing app, akin to what has made such a difference in South Korea, that had more than 2 million downloads in its first 48 hours in a nation of just 25 million. We haven’t even begun that conversation nationally here.
Addressing the Great Depression took enormous creativity and agility by Franklin Roosevelt’s New Dealers; it required massive new social programs, employment efforts that transformed the country and targeted individual industries, right down to literally paying writers to write about the Great Depression. The federal response to that crisis also underscores how large and long the U.S. government’s present-day interventions might need to be. When FDR ran for re-election in 1936 — four years into his New Deal — unemployment still stood above 16%, and rural electrification, a cornerstone of the New Deal’s economic development efforts, would take more than a decade to unfold.
It’s clear that we as a country need to be thinking in terms of tens of trillions of dollars of federal effort over the next decade. Planning in terms of weeks and $1,200 stimulus payments certainly helps now, but it’s no Marshall Plan. Every hour and day that the federal government fails to recognize the scale of this problem, the problem gets worse — and the solutions will be harder and more expensive.
Garrett M. Graff is a former editor of Politico magazine and the author of “Raven Rock: The Story of the U.S. Government’s Secret Plan to Save Itself — While the Rest of Us Die.” He wrote this article for the Washington Post.