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.