We haven’t even begun to grasp how much damage the pandemic will do. Raven Rock: The Story of the U.S. Government’s Secret Plan to Save Itself—While the Rest of Us Die
by Garrett Graff edited by O Society May 10, 2020
Listening to recent news conferences by the White House, certain governors and other state officials — like the ones in Texas, Iowa, Georgia and Tennessee — makes it seem as if the coronavirus crisis is already passing, as if America is on the verge of reopening and our economy will begin bouncing back any day now. “All the key metrics are going in the right direction,” Texas Gov. Greg Abbott tells the Texas Tribune at the end of April.
Even the governors who reacted most aggressively and whose states bore the worst of the pandemic so far, such as New York’s Andrew Cuomo, began to sound notes of hope and optimism, perhaps we’ve cleared the worst of the first wave. Maryland Gov. Larry Hogan’s office said on April 30, “We hope to be in a position to begin the recovery in early May.”
The idea life will soon return to normal is a fantasy, especially given new government estimates show we might face 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 — or are willing to divulge to the public.
Just a taste of the hurdles to come: Friday’s jobs report shows 3.3 million more people filed for unemployment (before this crisis, the weekly record was 695,000, in 1982); 33 million Americans lost jobs, wiping out an entire decade of job gains. It’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 is: He repeats the fanciful notion it’s up to governors to organize coronavirus testing. Why?
Because he doesn’t want his own political re-election campaign associated with this plague, so he pulls a Pontius Pilate and pretends to be able to absolve himself from all responsibility. COVID-19 is happening in America – all of it – which makes this a national emergency, which is uniquely the domain of the POTUS under the Federal Emergency Management Act (FEMA).
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 our elected leaders look squarely at the daunting reality, the United States has no chance of surmounting this crisis. None.
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 small businesses from firing employees for roughly eight weeks. This means companies (which aren’t the same thing as “small businesses,” by the way), including many I’ve spoken to, are planning June layoffs. Will Washington put another $670 billion into the PPP just to keep corporate payrolls 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, while smaller institutions anticipate being insolvent shortly; the University of Akron announced Monday it plans to close 6 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 the nation’s 4,000 colleges and universities might require a $200 billion bailout just to finish out this calendar year.
Third, states and cities are going broke: Thanks to the costs of responding to the crisis without federal aid — 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.” This 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, these deficits bring consequences, such as a falloff of social services, and so will slow our eventual recovery.
Fourth, economic forecasts: We haven’t even begun to reckon with how the new social distancing rules will affect employment. Imagine every restaurant and bar in America can reopen next week under rules to limit their capacity to 50 percent. Imagine, too, they can make ends meet in this scenario (unlikely, given how thin restaurants’ margins generally are) and people feel comfortable patronizing them (also unlikely, until a vaccine is widely available). In this best-case scenario with 50 percent of the customers, you need only 50 percent of the waiters, sommeliers, hostesses, and cooks, meaning millions of restaurant jobs will disappear for months or years. According to industry statistics, about 15 million people are employed in restaurants — a workforce larger than the population of Pennsylvania. This is just one business sector.
Each one of these sectors 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.
This doesn’t include the rest of the hospitality and travel industry (hotels and airlines are operating at single-digit capacity, and many hotels closed outright); nor the historic, world-altering collapse of oil prices and how it will hit the once-economic-bright-spot of the U.S. shale industry; nor the horrors of an agriculture industry dumping milk and plowing under spring crops, thanks to structural distribution problems, even as a hunger crisis mounts; nor the industries who 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 who 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 teleworking and Zoom mean they need less office space; the furloughed positions 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 likely to survive.”
And none of this anticipates the effects of the feared second wave this fall and winter Centers for Disease Control and Prevention head Robert Redfield warns might be worse. As he told The Washington Post recently, “There’s a possibility 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 percent on an annualized basis. Given pre-coronavirus gross domestic product was in the range of $21 trillion, truly stabilizing the economy might take something in the range of $5 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 officialsthat’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, in particular, seems content with fiddling as the country burns; he suggests states declare bankruptcy rather than using his own time to address the mounting problems.
After ineptly failing to prepare for the epidemic as it loomed overseas, the United States 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 the Rockefeller Foundation says might be necessary to fully reopen the economy. We’re drastically undercounting the death toll.
In the absence of federal leadership, states form 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, in late April Australia released a contact tracing app, akin to what made such a difference in South Korea, with more than 2 million downloads in its first 48 hours in a nation of just 25 million. We haven’t even begun the 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 to transform the country and target 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 reelection in 1936 — four years into his New Deal — unemployment still stood above 16 percent, and rural electrification, a cornerstone of the New Deal’s economic development efforts, would take more than a decade to unfold.
It’s clear 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 many have yet to receive is no Marshall Plan. Every hour and day the federal government fails to recognize the scale of this problem, the problem gets worse — and the solutions get harder and more expensive.