NDN Blog

Another Republican Recession, Landscape Still Leans Blue

As we’ve written to you before, we aren’t going to be paying too much attention to polling these next few weeks for it will no doubt be very volatile and noisy. Trump does appear to have gotten a small bump in recent days, though the fundamental structure of the race hasn’t changed - he’s minus 4.5 in 538’s job approval tracker, down 9 to Biden in new Fox News polling, and the Congressional Generic remains at -7.4 for the GOP.  The national landscape still favors the Dems. 

We are doubtful that Trump is in for any kind of sustained bump.  Regardless of Trump’s daily pressers, the cold hard truth is that the President failed to take action against COVID-19 when he should have; is playing a dangerous and sadistic game with the states; and his plan is still inadequate for what’s needed today.  The numbers that Americans will be focusing on in the coming months won’t be his daily TV ratings or job approval but COVID infection and death rates, the amount of equipment moved to the health care front lines, unemployment and uninsured rates, and GDP growth.  If these measures are good, he will have a good election.  If they aren’t, he won’t. 

That Trump is the third consecutive GOP President to see a recession and exploding deficits on their watch speaks to something we’ve been exploring in recent years - that the two parties just aren’t the same and aren’t mirrors of one another.  Since this new age of globalization began in the late 1980s, Democratic Presidents have produced growth, jobs, rising wages, and lower annual deficits.  The two Bush Presidents and Trump will have produced recessions and hard times, and W Bush and Trump will have overseen two of the worst economic moments in American history.  That Democrats keep getting the big things right in this new age, and the Republicans so disastrously wrong, simply must be a more significant area of debate and discussion in the months ahead. 

Where Are the Tests?

The early troubles that the CDC had in standing up a national COVID-19 testing regime have been well documented.  But in early March, the Administration told us that these problems had been fixed.  The Vice President promised 5 million tests in place by March 13th.  Other Administration officials promised tens of millions by late March.  Daily testing rates climbed, and on March 25th we hit 100,000 tests a day for the first time.  Even though many of these tests had ridiculously long turnarounds, 3-7 days, the much needed national testing system seemed to be in the process of being stood up.

But something has happened.  Daily testing growth stopped, and we are now stuck at around 100,000 tests a day (see data below).  Despite the promise of millions of tests, the US has only conducted 1.1m over the past ten weeks, and at current rates will not complete 5m tests until May 11th or so, a full two months after the Vice President said 5m tests were in place, ready to go.  

Given that to stand America up from the crisis the nation will need hundreds of millions of inexpensive and rapid tests, we simply have to understand what is happening here.  The answers provided by the White House are inadequate, and hundreds of thousands of American lives are in the balance here.  We simply have to get testing right or the crisis will get far worse and our recovery will be far more difficult.  There is no margin of error here. 

If the White House cannot explain what is happening with the US testing regime today, the House should conduct a virtual hearing Friday, and request that Dr. Birx testify under oath.  Something has gone wrong, again, with our national testing regime, and the American people deserve both answers and a clear plan for how to make it right."

You can find more from NDN on the need for a national plan to tame the virus here, and more on the need for better testing here

US Daily Testing Numbers - data from the COVID Tracking Project:

Mar 20 - 35k (this is one week after Pence said 5m tests would be in place)

Mar 21 - 44k

Mar 22 - 45k

Mar 23 - 66k

Mar 24 - 65k

Mar 25 - 113k

Mar 26 - 107k

Mar 27 - 108k

Mar 28 - 114k

Mar 29 - 95k

Mar 30 - 113k

Mar 31 - 98k

April 1 - 101k (1.2m total over 10 weeks!)

May 11 - 5m (at current rates of testing)

Invite: Fridays At 2 PM - Simon Rosenberg & Rob Shapiro Discuss COVID

NDN is pleased to invite you to a new weekly series every Friday at 2pm that will feature Simon Rosenberg and Rob Shapiro discussing the latest updates and analysis on COVID-19. 

The weekly briefings will take place on Zoom and will last for 45 minutes each. If you would like to attend this Friday, April 10th, please register at this link. Once you register, you will find a link to the briefing location on Zoom that will go live at 2pm on Friday.

Simon is NDN's President and is a frequent political strategist and commentator in the national media, appearing regularly in the New York Times, Washington Post, and MSNBC. In this past election cycle, he was a senior advisor to the Democratic Congressional Campaign Committee, helping craft the strategy which netted Democrats 40 seats and earned the highest vote share by either party since 1986. 

Rob is a long-time contributor to NDN and was the Undersecretary of Commerce for Economic Affairs in the Clinton Administration. He was a senior economic advisor to Hillary Clinton, Barack Obama, and John Kerry in their presidential campaigns, and is currently the Chairman of Sonecon LLC, an economic and security policy consultancy. 

As background, Simon keeps a live document with his latest thinking on COVID that you can find here. As well, Rob published a new piece in The Washington Monthly last month that examines what a long-term economic recovery plan would look like in the face of several different scenarios of the coronavirus's severity. 

With Stimulus Done, Congress Must Now Focus on Defeating COVID

America will not be able to stand its economy and society back up until the COVID virus is contained.  With exploding infection rates now across the country, it is clear that the President and his team have failed in their fight to tame the virus.  With the hard work of providing for the US economy behind it, Congress must now focus on crafting a successful national approach that will allow us to fight the virus in the coming days but also in the many months that remain in this difficult struggle.

There is broad agreement about what needs to be done, right now:  

1) Surge equipment/beds/workers to the frontlines

2) Implement a national 21 day stay at home order

3) Crash a universal rapid testing/isolation regime like in South Korea

To put pressure on the Administration to finally craft a comprehensive response to the virus, Speaker Pelosi should form a political alliance with the governors in the most afflicted states.  By working together, they can create both a more effective national strategy to defeat COVID, but also begin to show a sense of common purpose which we will need to develop if we are to prevail against this dangerous threat.

There have been many Trumpian missteps over the past ten weeks which have allowed the virus to get out of control, but the greatest of all may be his pitting state against state and community against community; to prevail against a pandemic all of us must do our part and work together.  There is no us and them – only us.  The Speaker can exhibit the kind of leadership required to prevail against COVID by forging a new “war time” alliance of the House and top governors, and force the Administration to finally use the awesome power of the United States government to do what should have been done months ago.  We know what needs to be done – let’s get it done in the days ahead.

With New Data, The Costs of the President's Failed COVID19 Response Becoming Clearer

As more economic and public health data becomes available, the more the nation is becoming aware of the extraordinary costs of the President’s ongoing failure to craft a successful national response to the COVID19 virus.

While Congress is the midst of addressing our daunting short term economic challenges, far more must be done in the coming days to stop the spread of the virus. 

Nine weeks into this crisis and the nation still has no plan to stop COVID.  Our elected leaders from across the country should come together around a plan as ambitious as the economic plan close to passing today.  While there are many good ideas on the table, NDN believes there are four key things we must do right now to prevent COVID from doing unimaginable harm to the nation in the days ahead:  

1) Surge supplies/beds/staff to the medical front lines

2) Implement a national 3 week stay at home program

3) Crash/stand up a national testing/isolation regime like South Korea’s

4) Fund a “Manhattan Project” for a vaccine/therapeutics/testing/equipment both for COVID and to prepare for future pandemics

Our nation’s leaders shouldn’t accept the President’s ongoing failure to respond to the COVID threat; all of us should demand he step up here and do what the American people and all of the experts expect him to do – tame COVID, and then stand our society and economy back up later this spring and summer.

Can the governors of the big, afflicted states band togethter to create a pressure campaign against our flailing President? Work with Senate and House leaders, leaders of other nations? If the President won't lead America now, others must. 

A New Role for Elected Officials — Community Truth Teller, COVID Navigator

This essay first appeared on Medium on Wed, 3/25. 

How a nation manages its information landscape in a pandemic is of vital importance. As we are learning, the ill-informed acts of a few can have a dramatic impact on the rest of us. We are now, and will be for perhaps the next eighteen months to two years, truly all in this together in ways which are not always so in a big, diverse nation like our own.

Thus, I think it is important for Democrats and responsible Republicans at all levels of government to dramatically step up their engagement with their constituents in the coming months. With travel and traditional legislating being significantly cut back, our elected leaders have more time to be using modern communications tools to become very present in the lives of their communities, at a time when accurate information can be the difference between life and death. Using tools like Zoom that allow large face to face conversations will not just be effective at communicating vital information, but will also keep the human connection that so many of us are struggling to maintain.

It’s my hope that in the coming days, our elected leaders across the country take responsibility for their community’s information environment, and dramatically raise their levels of engagement. We’ve seen examples of this from Governors like Andrew Cuomo, JB Pritzker, Jay Insee, Gavin Newsom, and Gina Raimondo. Joe Biden has built a TV studio in his house, and is now running his campaign from here. A new Politico story out this morning by Sarah Ferris details the efforts of recently elected House Members to lead important conversations back home. She reports:

“[Rep. Dean] Philips, a Minnesota Democrat, said the forced isolation was “strangely accommodating” for his job at this moment, which consists of a lot of phone calls but zero hours of fundraising or lengthy flights to Washington.“ There’s a silver lining in this,” he said. “It’s fair to say I’m communicating with more constituents, more broadly and more deeply, right now, than I’ve been able to in a year and a half in Congress.

The leaders of every level of government, from the US Senate to city councils, should establish a process to help their colleagues transition to and succeed in this new model of communications and leadership. State parties can do this too, as can organizations like the Democratic Governors Organization and the Democratic Legislative Campaign Committee. We should have a sense of urgency about this project, seeing it as just as important as surging equipment to frontline hospitals or standing up our national testing regime.

This national project is particularly important given the torrent of misinformation, lies, and magical thinking coming from the President’s Twitter feed and press briefing each day. There is no question that the President’s failure to have an honest conversation with the American people over these past few months has left us all more unprepared than we should have been; and allowed people to unknowingly take actions which endangered themselves and others. The President’s failure to be honest with all of us, to prepare us for what was to come, and to encourage us take prudent steps to protect ourselves, our families, and our communities has been among the biggest failures of his response to COVID — and it is one we must learn from.

I also think that we Democrats have historically undervalued the importance of “official communications” in our understanding of how we talk to constituents and voters. Some of this has to do with consultants not making money off of videos produced in legislative offices or tele-town halls, thus creating a financial incentive for prioritizing campaign communications. I’m not saying ads don’t matter; but we can do both, and we should have a realistic understanding of the positives and negatives of each approach.

In the coming months, our leaders need to be patriots, not partisans, and really lean into this new COVID-era leadership and communications model. It is what people need now, it will save lives, and it will help us learn how to live in a new way. We should not underestimate the collective power of thousands of elected officials at all levels of government leaning in and talking to their communities honestly and forthrightly to provide the kind of information corrective to Trump that the nation needs if we are to defeat the virus in the days ahead. Beating this thing will be the work of all of us, not just our leaders in DC — this one truly requires everyone to do their part.

The President’s plan to combat COVID19 has failed. Congress must step in — now

The US had two choices on how to combat COVID-19 - a national shut down or an universal testing/isolation regime like in South Korea. Nine weeks into the crisis, the US has done neither, and so now we have some of the fastest growing infection rates that any country has experienced since the pandemic began.

Time is running out to prevent the virus from becoming something which fundamentally alters the American way of life. The President has made it clear that he cannot lead us through the crisis, and thus is it time for Congress to take responsibility for developing and implementing a true national plan. We only have a few days to get this done.

In recent days, expert opinion has converged about what we must do:

1) Surge supplies/beds/staff to the medical front lines

2) Implement a national 3 week stay at home program

3) Crash/stand up a national testing/isolation regime like in South Korea

4) Fund a “Manhattan Project” for a vaccine/therapeutics/testing/equipment both for COVID and to prepare for future pandemics

The economy and our society cannot stand back up until the virus is tamed. Washington’s focus on stimulus and worker support, while important, should have come after a national plan to combat the virus was in place. We have no choice now except to work on both in the days ahead.

It is critical that Congress also find time to pass the Klobuchar/Wyden bill that would help institute a national vote by mail program for the 2020 election. While so much else is up in the air, Americans should have the certainty of knowing that our democracy marches on, undaunted.

Finally, we need to focus far more attention on our young people. Both to help them better protect themselves from getting the virus and to help them and their families cope with what could be difficult months at home, away from school.

The President’s plan has failed, and Congress must step in now to develop a clear national strategy to tame the virus. There is no higher priority in the days ahead.

COVID Daily - Keep The Focus on Testing, Surge Health Supplies, Natl Stay at Home - Mon Edition

This is a live document which was last updated Mon April 6 at 830am. 

Top Lines

Monday morning's numbers from the COVID Tracking Project:

333,747 cases - up from 307,913 Sun, 274,316 Sat, 239,009 Fri, 212,695 Thur

9,558 deaths - up from 8381 Sun, 7,040 Sat, 5,784 Fri, 4,774 Thur, 3,832 Wed, 2,981 Tue

1,778,487 tests - up from 1,644,200 Sun, 1,438,455 Sat, 1,288,013 Fri, 1,230,519 Thur, 1,118,873 Wed

States over 100,000 cases - NY

Over 25,000 cases - NJ

Over 15,000 cases - MI

Over 10,000 cases (7) - CA, CT, FL, IL, LA, MA, PA

Over 5,000 cases (4) - GA, IL, TX, WA

Over 2,500 cases (7) - CO, IN, MD, NC, OH, TN, VA

Over 1,000 cases (10) - AL, AZ, ID, MD, MO, NV, MS, SC, UT, WI

As this FT analysis and chart shows the US is currently experiencing what is probably the most serious sustained outbreak of any country since the pandemic began. Should be noted that of all the states with large outbreaks WA may have done the most so far to "flatten the curve" - we should be learning from their experience.  We also find this global tracker useful.

We've had 3 days of encouraging testing numbers - good news - but still a long long way to go.  Encouragingly, these last 3 days the US has hit 150k, 200k and 134k - very good days come after a disapointing week where we saw our daily rate drop from the low 100,000s all the way down to 78,000 on Thursday.  Hopefullly this signals that the clear problems in the pipeline are being overcome and we are hitting a new and better normal. 

As a reminder, on a per capita basis, Germany has been close to 300,000 a day, Italy is between 135,000 and 220,000 and South Korea 130,000-140,000.  What matters now is to get these numbers way up, keep them there and bring some of the rapid tests we've read about on line in the hospitals.  It should be noted that yesterday was also the biggest day so far for two other less than happy measures - new infections and deaths.  The virus continuues to rage. 

This Newsweek article reminds us that Mike Pence promised 5m tests by March 13th, and others in the Administration said there would be tens of millions of tests available in late March.  Even with the strong numbers these last few days the US is nowhere near that 5m number from a month ago, and we still need answers on what's happened to the promised tests. NDN released a new analysis of the Admininstration's ongoing testing failure last Wednesday. 

It should be noted that we are using private data, as the government's efforts to track what is happening with the COVID19 pandemic - from test results to masks - has been truly awful. The truth is that our testing regime starting so late and still in its early days we really have no idea whats going on with the virus here in the US. 

America Needs A Plan to Defeat COVID19, Not More Magical Thinking

Almost eleven weeks into the COVID-19 crisis, it is hard to put into words has little the US government has done to tackle the public health side of this crisis.  The President’s main initiative, his travel bans, clearly didn’t work; the testing regime still isn’t fully up and running; the President's unwillingness to provide equipment to hospitals remains reckless, inexplicable and sadistic; social distancing and school/business closures have all been done at the state and local level despite the disease being everywhere (that the President allowed Florida's Spring Break partying to continue lwas a sign of the lack of seriousness of his efforts). 

Recently the President said that he doesn't believe that fighting COVID19 is a federal responsibility despite his "wartime" language. He ignored repeated warnings from his own intelligence community that COVID could be the big one.  His refusal to craft a single national strategy to mitigate the spread of the virus will end up costing us many many lives and untold damage to our economy and society more broadly; that the President is relentlessly lying and misninforming all of us about what is happening makes it all that much more worse. 

We agree with with the assessment of Jeremy Konyndyk in this new thorough Guardian look at what went wrong here in the US: "We are witnessing in the United States one of the greatest failures of basic governance and basic leadership in modern times.”  The Washington Post and the New York Times have also both published sweeping examinations of all Trump's early mistakes and those the days squandered. 

The exploding infection rate here in the US proves the President's approach hasn't worked.  In recent weeks expert opinion has settled around a plan similar to the one we've been advocating:

1. Surge medical equipment/beds/staff to the front lines

2. Stand up a testing/isolation regime like South Korea's

3. Implement a mandatory national 21 day stay at home program (not just recommendations)

(NDN's #4 is a Manhattan Project for a vaccine/testing/etc). 

The economy cannot stand back up until the virus is tamed, and it's time for the President's magical thinking to end.  Now that Congress has taken dramatic steps to aid the US economy, it must step in now and make sure America finally has a plan to defeat the virus.  Our hope is that Speaker Pelosi form some kind of alliance with the nation's governors to not just get this plan in place but oversee its implementation in the coming months.  Getting America stood back up depends on it.  Such an alliance will also make it far harder for the President to keep pitting state against state, region against region. 

New from NBC News  - "The Trump administration's decision to let states chart their own responses to the coronavirus crisis rather than impose a national strategy will cost thousands of lives and is likely to result in an open-ended outbreak rolling across the country, a dozen public health experts told NBC News.

The only way to win what President Donald Trump has called a war against an "invisible enemy" is to establish a unified federal command, the experts insist — something Trump has yet to do. So far, the federal government hasn't leveraged all its authority and influence to dramatically expand testing and tracing measures, ensure a sufficient supply of crucial medical equipment or require residents of all 50 states to stay at home."

In a recent Today show interview Dr. Brix acknowledged the national social distancing effort has been inadequate, the national testing regime is still not yet stood up and if everything goes right the death toll in the US will be 100-200k. Senator Chris Murphy echoed this dispair at the lack of an effective national response in a new interview with Greg Sargent, and as did Rep. Adam Schiff in this interview

For more on what we need to do right now see these excellent essays:

Laurie Garrett "Sorry, America, the Full Lockdown Is Coming." Foreign Policy

Dr. Ezekiel Emanuel "Fourteen Days. That’s the Most Time We Have to Defeat Coronavirus." NYTimes

Drs. Carroll and Jha "Don’t Halt Social Distancing. Instead, Do It Right." The Atlantic

Professors Romer and Garber "Will Our Economy Die From Coronavirus?" NYTimes

Ed Yong "How the Pandemic Will End."  The Atlantic

NDN's been asking  our readers and members to call Congress every day until the President puts a plan in place and is clearly producing real results.  As we say above, the plan should include 3 core elements:

Surge Equipment/Beds/Staff To the Frontlines – The President and Congress have to take responsibility for a national plan to handle the extraordinary health care crisis that the nation will face in just a few days’ time.  We need wartime-level production of protective gear, ventilators, ICU beds, and isolation/quarantine wards.  We will need a way to employ more health care workers too – perhaps with temporary unemployment rising there can be a way to take qualified people and crash train them as hospital/health care staff. 

The President’s refusal to take responsibility for this part of our national response remains hard to understand and explain.  Congress must step in here and force both a funded national strategy and compliance with it in the coming days.  If the President really wants to show his support for a robust US healthcare system, the President should withdraw his support for a lawsuit which could cripple the ACA in the midst of this pandemic and encourage every state to expand Medicaid so more of our citizens get the care they need.  The President should also reverse hiis cruel new decision to prevent states from opening the ACA enrollment period to help ensure Americans who want to find health insurance right now can find it. 

Congress should open up an immediate investigation into news reports that Trump has sent life saving equipment to favored states and held it from ones he didn't like. The Governors of CO, CT, KY, MA, MI and MT have all complained that supply orders they'd made were taken by the federal government - why is this still happening and where are all the seized supplies going?

See these compelling clips of MD Gov Larry Hogan and NY Gov Andrew Cuomo discussing the dire supply chain issues facing the country.  Reports that US companies were still selling this critical equipment to overseas buyers are disturbing, as are the wildly ignorant statements by Jared Kushner from the White House podium Thursday night about how the national supply chain was supposed to work. 

Would the states be on their own if a foreign nation attacked the US? In a terrorist attack? A natural disaster, extreme weather event? A serial killer who crosses state lines? If immigrants surged to our border, or if cartels were flooding the states with drugs? Or a recession, like now - didn't we see a strong coordinated federal response? Why would a pandemic, which has planned for over many years, and which the US was prepared for - be any different? The idea that the states are on their own to battle something which is affecting everyone American no matter where they live is among the most outrageously stupid moments in this terrible affair. 

In a related matter, it looks like the Senate GOP's war profiteering scandal - an extraordinary betrayal of the public trust - just got a whole lot worse.

On the "way overdue but good news" front it appears the Army Corp of Engineers is beginning to be deployed to help build more medical facilities in US hot spots.  There are many reports now of this process being well underway and successful. 

More, Better, Faster Tests – While things have gotten better on the testing front, we still have a very long way to go before our tests are ubiquitous and rapid – everywhere and done in minutes/hours, not days.  If we are ever to return to normal, efforts to aggressively screen and isolate those with infection (in public buildings, ports of entry, schools, and sports arenas) will have to become routine – like texting a friend.  This Guardian story looks at how mass testing helped slow the virus's spread in one Italian town, and this new article in Science magazine explains how mass testing was key to South Korea's flattening of the curve without major lock downs.  This new Atlantic article by Alexis Madrigal and Robinson Meyer is an excellent deep dive on the importance of testing, and our massive failure to get it right so far. 

Developing ways of proving that you’ve had the virus and are now immune will also be really important, and would require, obviously, that every single American be tested at some point.  We found this thread by Yale Professor Nicholas Christakis to be helpful in understanding the issues around immunity and the need for rapid, ubiqitous "serology" tests which are of a different kind than the "PCR" tests which are being deployed right now.  The Washington Post just published this smart look at the importance of sreology tests for standing the country back up. 

So, yes, we are talking about billions, not tens of thousands, of tests. The government should be making this kind of ubiquitous rapid testing regime part of the mandate of a new “Manhattan Project” which works to not just defeat COVID but give America far better tools to fight future pandemics.  For more on the need for crashing a broad regime for advance a vaccine, therapeutics, hospital equipment and diagnostics see this thread from Dr. Scott Gottlieb and this Boston Globe op-ed from Senator Markey and Peter Slavin.   

We've started receiving good news on the testing front - the FDA recently announced the approval of a rapid point of care PCR COVID19 test by the California company, Cepheid.  This test will be particularly important in hospitals and other triage facilities, and in keeping our front line health care professionals from getting sick themselves.  Abbot's announced FDA approval for a 5-13 minute desktop PRC test - a huge advance if it can realized in the coming weeks.

Implement National Stay at Home/Develop A National Strategy For Students and Kids – As part of eventually developing a true national "stay at home" social/physical distancing strategy the US govt will have to help communities and families come to terms with what it means that kids may be home until the fall semester (no schools, summer activities).  This is a large and important area which needs far more attention and creativity, but two initial thoughts:

1) Their Health – the early messages about young people being less vulnerable to COVID-19 and thus somehow less responsible has to be corrected aggressively in the days ahead.  We know from data that young people in other countries have become infected at very high rates, and seem to be critical to the rapid transmission of COVID.  But it is also for themselves – early data here in the US show that young people are turning up in ICU units at much higher rates than in China, and COVID can permanently damage the lungs of anyone infected. 

Gov Cuomo weighed in last Saturday on the need to change our collective mindset about young people, Tweeting "Younger people listen up: 55% of NYS #Coronavirus cases are ages 18-49. Young people aren’t invincible. You can get this and you can give it to someone older you love. You shouldn’t endanger your own health & you certainly shouldn't endanger other people's health. #StayAtHome." More leadership like this please.

2) Their Sanity - What do we do with our kids for the next six months if schools and summer camps are cancelled? This is not just a sanity thing for these students and families - having kids at home will make it far harder to stand the economy back up when the virus ebbs. 

It is our recommendation that all schools and colleges involved in distance learning now develop a “pandemic module” to help young people better understand how to stay safe, reduce infection, and navigate the rigors of life at home, away from their friends and the lives they’ve built for themselves.  These kinds of courses may be the most valuable things that schools can do in the months ahead.

Do note that after weeks of embracing a strategy similar to what the President is apparently now fliting with, the UK has now gone into a full national "stay at home" approach for three weeks.  India has also announced a three week stay at home period.  It is time the US does the same.  A new Morning Consult poll shows supprt for a national stay at home period to be 77/19 - dramatic level of support for immediate, comprehensive action.

So, the President has backed off both the absurd Easter date and the "tiered system" he announced last week.  Florida, Georgia have announced stay at home programs - months/weeks late, but good. The President still needs to implement a 21 mandatory national stay at home order.  His refusal to do so is cowardice, not strong steady leadership - he's letting others do the hard work of managing this crisis each day.

 
 

Demand A Plan, More Focus on Young People, Vote By Mail

This document has moved to a new url, which you can find here.

How Congress Should Build A Stimulus Package To Counter The Coronavirus Crisis

The economic impact of the coronavirus pandemic will be the most severe shock to hit the US since the depths of the 2008-09 financial crash, and could rival that crisis in intensity. JP Morgan projects that growth in Q2 will fall by an annualized 14%, while Bank of America estimates a 12% hit. Both of those numbers would be the steepest quarterly decline in growth since 1947, and far worse than the 8.4% decline in Q2 of 2008. As a result, it is critical that economic policymakers in Congress and the Administration take immediate action to prevent likely 2-3 quarters of negative growth from turning into a deep, years-long malaise as we saw in 2007-2010.

Importantly, while the Trump administration has blown up the deficit in recent years largely through reckless tax cut policies, now is not the time to worry about debt-related issues. Long-term interest rates are at all-time lows, so the government has much greater ability to sustainably borrow without risk of hefty interest payments. Furthermore, a deep recession would actually likely increase deficits to a greater extent than a large fiscal stimulus now, given that long periods of weak growth tend to boost deficits because they harm revenues and increase automatic stabilizer spending, as we saw in the weak recovery after the financial crisis.

Therefore, Congress should aim for a massive fiscal stimulus right now, and should aim to achieve three broad goals with their proposal: shore up the healthcare system and pandemic-response, provide aid to workers and businesses directly harmed by the pandemic, and conduct a massive cash transfer program to boost the overall economy.

The first part of the fiscal stimulus proposal must deal with critical shortfalls in both the national coronavirus testing regime currently in place and in critical hospital equipment that will likely occur over the next week. First, on testing. The federal government must immediately ramp up testing by a factor of dozens (through an all-of-the-above approach that incorporates tests produced by the CDC, private labs, and WHO-approved firms), implement drive-through testing in all states, and begin a system of temperature checks in most high-traffic public areas (including all international airports). Each of these steps has been implemented by South Korea weeks ago and most of Western Europe now, and there is no reason why the US can’t do the same with adequate funding.

Second, it is likely that many US hospitals will run out of both ICU beds and ventilators in the next week, something that could cause a large spike in mortality as we’ve seen in both Lombardy and Hubei when medical equipment ran out. This is a problem that can be solved immediately with proper funding. New reports indicate that ventilator production can be increased by 500% if the federal government puts in the order, and the National Guard can quickly set up triage units and greatly expand the number of hospital beds with adequate resources. Third, access to testing and treatment must be widespread regardless of income, so all coronavirus testing and treatment care should be free of charge to patients (through government-provider burden sharing so that healthcare providers remain fiscally above water themselves). The quicker that the spread of new coronavirus cases diminishes, the smaller the economic impact of the crisis will be – if these steps are taken immediately, both the number of deaths and hit to the economy from this crisis will fall greatly.

The second piece of the stimulus must address workers and businesses that have been impacted by the pandemic. With the shutdown of a huge number of retail, entertainment, and restaurant businesses in the past few days, and likely much more to come across the country, businesses will find it extremely difficult to continue future operations without government support. This will severely jeopardize the economic recovery after lockdowns have ended, as businesses could lay off their workers en masse if they can’t survive during the lockdowns. As a result, the federal government should offer interest free loans to all small and large businesses impacted by the pandemic to ensure that they can continue paying their fixed costs during the crisis.

Workers have also been greatly impacted, and it is likely that mass layoffs and working hour cuts will start in the next few days as businesses see their revenue dry up. Indeed, jobless claims surged over 33% last week, and that was before the large wave of layoffs beginning on Monday took effect. To support workers and encourage them to take sick leave to avoid spreading the pandemic, the stimulus should include 1) Paid sick and family leave set at 75% of median income using a government funding mechanism (versus coming from already hard-hit businesses), 2) Enhanced unemployment insurance benefits set at 75% of median income and lasting indefinitely (until the crisis is over), and 3) Increased provision of more generous food stamps, housing support, Medicaid, and SSI payments. By supporting businesses and workers who have been hard hit by the pandemic, we can ensure that there is no large-scale collapse in consumption and business-investment once the lockdowns end, and that all workers are still able to purchase necessities right now even if they lose their job.

Finally, the federal government should unveil the most ambitious cash transfer program in American history to support the overall strength of the economy, by providing $1,000-2,000/month to all Americans. The exact monetary amount of the cash transfer, and any means testing of the payments (i.e. more to households making under $100,000/year), can be determined by the severity of the crisis as economic data comes in and by the simplicity in actually running the program, but the key point is that checks should begin arriving for the vast majority of Americans as soon as possible. A key factor behind the slow recovery in 2007-2010 was that the Obama administration’s $800 billion fiscal stimulus, opposed for being too large by some Democrats and almost all Republicans in Congress, was actually far too small considering the severity of the 2008-09 economic crisis. Economists today now generally agree that a stimulus twice that size would have led to a far more robust recovery in 2009 and 2010, and today policymakers must ensure that they don’t make that same mistake of going too small and thus handicapping income and jobs growth for years to come.

Direct cash transfers to every American have benefits that other, more targeted programs like a payroll tax cut don’t have. First, it necessarily applies to all low- and middle-income Americans, including those who are out of work, disabled, or elderly. A payroll tax cut wouldn’t provide relief to any of those groups, because you have to have a job to pay payroll tax in the first place. Second, providing these lump sums of $1,000/month would put hundreds of billions of dollars in the hands of the poor and middle class, whereas the rich pay more money in payroll tax (because they have higher incomes to begin with) and many poor households don’t pay much payroll tax (because they are out of work or make low incomes), so a payroll tax cut would end up being regressive and targeted towards the wealthy. And importantly, cash transfers appear to have wide bipartisan support in Congress today. Republican Sens. Tom Cotton and Mitt Romney have come out in favor alongside Democratic Sens. Sherrod Brown, Cory Booker, and Michael Bennet, and Chairman of Obama’s Council of Economic Advisors Jason Furman. As a result, it could likely get large support right now and pass quickly, which is a critical necessity.

Now how much would all of this cost? Giving a $1,000/month payment to all Americans would cost about $320 billion (1.5% of GDP) per month. The combined cost of more spending on healthcare/testing equipment and subsidies to hard-hit businesses and workers is harder to tell, but a bill proposed by Senate Minority Leader Chuck Schumer with many of those provisions has been estimated at $750 billion (3.5% of GDP). So an initial bill would cost about $1.1 trillion (5% of GDP), with an additional $320 billion per month until the economy is sufficiently recovered. A hefty price tag yes, but necessary to ensure that Americans who are suffering right now are taken care of, and that the economy sees a robust recovery once the pandemic begins to abate. In preparing for a recession in 2020, it is critical that we remember the lessons of 2008. In that crisis, Americans who owned mortgages worth more than their homes received little support and lost their life savings as a result, while unemployment remained far too high for too long due to a lack of fiscal and monetary stimulus. Today we should ensure that those most vulnerable to the crisis receive support immediately, and that significant stimulus is available once the lockdown ends to rejuvenate the economy rapidly.

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