COVID-19 remains a pandemic as Trump pushes to reopen the broken economyBob Sheak, May 12, 2020
This post focuses on the dilemma facing government about how to work toward a balance between the pandemic and the unprecedented decline in the economy. The health crisis stemming from the spread of COVID-19 continues to rise, even more than the official estimates indicate, while the rise in unemployment and other job-related problems soar to levels unprecedented since the early years of the Great Depression. Trump and his administration have adopted the view, contrary to what many experts are saying, that the health crisis is ebbing and that it is now time to “reopen” the economy and sideline government stay-in-place or lockdown guidelines. The actions of Trump administration and the US Congress have addressed some of the needs of businesses and the unemployed, but the lion’s share of benefits have gone to big corporations and the rich. Much of what Trump does is geared to what he thinks will advance his reelection chances in November. According to polls, a majority of American remain skeptical of Trump’s approach. It may also be the case that the present economic system has reached its limits and that transformative changes will be necessary to avoid an ongoing economic breakdown or the perpetuation of a system that is so full of contradictions, suffering, and ecological devastation. Alternatively, those right-wing forces with political and economic power may find ways to buttress their advantages. Either way, the country is in for difficult and challenging times lasting beyond November.
On the health side of the pandemic
Debbie Koenig reviews the evidence on COVID-19 over the first 100 days from January 20, when the first case in the US was confirmed, up to May 7(https://webmd.com/lung/news/20200507/100-days-into-covid10-where-do-we-stand). On May 7, there were 1.2 million confirmed cases in the US, while more than 70,000 people had died from the coronavirus. More recent data, just a few days later from Johns Hopkins, finds that by May 11, there were 1,329,799 confirmed cases and 79,528 deaths (https://coronavirus.jhu.edu/map.html). Koenig writes: “…because testing has been limited, experts say those numbers are really much larger.” She quotes Jeffrey Shaman, PhD, a professor of environmental health sciences at Columbia University Mailman School of Public Health, “who has led work to model national projections.” Shaman says: “We’re not doing well at all.” Koenig also quotes Caitlin Rivers, PhD., who is “a researcher from the John Hopkins Center for Health Security. Rivers testified before the House Appropriation Subcommittee on Wednesday” (May 6) that “[e]ven though some states have been relaxing social distancing restrictions, not one has met federal guidelines for being able to do so.” I discussed these guidelines in my last post.
Koenig identifies some of the “bad news” trends.
- The United States has one-third of the confirmed cases worldwide, but we’re less than 5% of the world’s population. And we’re adding new cases at a faster daily rate than most other places on Earth.
- Death projections vary, depending on which assumptions researchers make about social distancing and other factors, but most show us at around 100,000 COVID-19-related fatalities by the end of May.
- The curve is flattening, but slowly. And if you take New York, the hardest-hit part of the country, out of the equation, it’s not flattening at all.
- Some areas, like New York, Seattle, and New Orleans, seem to be past the worst of the outbreak.
- Don’t expect life to get back to “normal” any time soon. Without firm federal guidance and a national testing policy, outbreaks will continue to pop up.
- The Institute for Health Metrics and Evaluation (IHME) at the University of Washington has been making and updating projections based on the latest available data as well as the effects of efforts to ease the pandemic, like social distancing. They now project we could have more than 134,000 total COVID deaths by early August.
- The statistics-focused websiteFiveThirtyEight tracks five models (including IHME’s), each of which makes different assumptions about social distancing behavior and the way the virus will behave. Those models show anywhere from 93,000 to 111,000 total deaths by May 30.
- President Donald Trump saidrecently that as many as 100,000 Americans could die, twice as many as he’d predicted previously. But a preliminary interagency report from the departments of Homeland Security and Health and Human Services offered a much bleaker assessment, saying we could have 3,000 deaths and 200,000 new confirmed cases every day by early June.
- “We’re on a very slow decline on a national scale, and it’s highly variable from state to state. Some places are still growing, some are flat, some are in decline,” says Shaman. “But you want to quash it, not flatten it — you’d like to see a sharp decline.” That gives hospitals some breathing room, in case the numbers spike back up after restrictions are lifted.
- Amesh A Adalja, MD and a senior scholar at the John Hopkins Center for Health Security, agrees. “The purpose of flattening is to keep the peak below hospital capacity,” he says. “It’s not about the number of deaths. And for that, I do think we’re in a better place than we were in March.” So even though the number of cases is still increasing in some areas, most experts aren’t worried about hospital capacity.
- This flattening doesn’t mean we’re ready to start reopening the country, both Shaman and Adalja say.
However bad the COVID-19 the actual and expected trends, the situation is even worse than they indicate. Most of the data on confirmed cases is limited to those who have had symptoms and have sought treatment, or are in work setting that have had outbreaks such as in meat packing plants, nursing homes, long-term facilities, jails and prisons. The data do not include those with the virus who have no symptoms but who can “shed” or spread the virus to others, representing perhaps another 15,000 to 20,000 cases. There are only now some efforts to track down those who have had the disease, shown no symptoms, but may have anti-bodies in their blood. But it has not yet been scientifically established whether people who have had the virus, diagnosed or not, are immune or how long they may be immune. Furthermore, there has been virtually no “contact tracing” to identify those in the population who have had recent associations with people who have been infected and who therefore could also be contagious. There are even questions about the data on documented deaths from the virus. Some unknown number of people have died in their homes of the virus without ever being diagnosed with the disease or being misdiagnosed.
In short, the current pandemic is worse than the official and expert estimates, the incidence and prevalence of the disease overall is likely to increase over the next two months. And, if the efforts to limit contact, stay-at-home, social distancing, wearing masks, and personal hygiene are not diligently followed, the experts tell us that the COVID-19 infections will spike upward again.
The unprecedented challenge before US political and economic decisionmakers is how to revive the economy without exacerbating COVID-19 – and,ideally taking into account, what kind of economy do the majority of people want.
An economy moving toward the limits of debt-generated limits, while besieged by depression-level unemployment
The income that enables a most Americans to purchase products and services from businesses comes from paid work in the private or public sectors of the economy, and lesser shares from government programs, investments, pensions (often job-related), and savings. The economy, as we know it, cannot function long with depression levels of unemployment. In the current economic crisis, the government, businesses, and a growing number of households are effected. And strikingly, a growing number of people are out of work or have only inadequate employment, have insufficient earnings, and often little or no savings.
Rising debt levels throughout the society
Meanwhile, the debt of the federal government is growing to wartime levels, while the debt burden of businesses, state and local governments, and a broad swath of Americans grow increasingly burdensome. More people find it difficult or impossible to acquire even the necessities of life. Economic historian Michael Hudson has long argued that the only solution is to cancel all debts, particularly those of the federal government. See the first volume of his book series on “The Tyranny of Debt” – “…forgive them their debts.” The debt is not something that can be sneezed at or casually dismissed. Robert J. Samuelson gives the issue some worrisome historical perspective.
“It is customary to express the federal debt as a share of the economy, or gross domestic product. By this measure, the publicly held federal debt was almost 80 percent, or $17 trillion, in 2019, according to estimates by the Congressional Budget Office. The debt was rising faster than the economy and was projected to reach 98 percent by 2030. That compares to the previous record of 106 percent of GDP after World War II.
“No more. The White House and Congress have already approved trillions of additional spending and tax cuts to cushion the effects of the pandemic. Previously, CBO projected deficits of about $1 trillion for 2020 and for 2021, or $2 trillion altogether. Now, the CBO’s total for those two years is $5.8 trillion, and the debt would reach 108 percent of GDP by the end of 2021.”
At some point, decisionmakers must find ways to address the system-wide economic problems or there will be even more suffering and chaos. There may be solutions buried in a consideration of how the debts have grown and how the federal government has addressed the pandemic. Just stop doing the same thing repeatedly.
The sources of the federal debt
Much of this debt stems from government policies that disproportionally favor the corporate-dominated private sector and the rich, from skewed tax cuts favoring the rich and corporations, corporate bail outs, and huge and rising military spending. On military spending, Juan Cole reminds us of the money we squandered on the Iraq and Afghanistan wars, writing: “George W. Bush and his administration squandered $6.4 trillion on the Iraq and Afghanistan wars (https://www//juancole.com/2020/05/11/trillion-afghanistan-coronavirus.html).
Cole refers to the Iraq War: “With regard to Iraq, that was a war of choice. Iraq had not attacked the United States. Iraq’s secular government feared and hunted down al-Qaeda. Bush just didn’t like the looks of Iraq and decided to whack it.” He adds: “You did not need to make Afghanistan into an American colony and try to change the lifeways of its 37 million people. You did not need to invade and occupy Iraq (pop. 38 million) and try to rule it as though the United States were a sort of steampunk Imperial Britain under PM David Lloyd George. You did not need to have 2.7 million American service members serve 5.4 million military deployments. We did not need to drop an average of 3,500 bombs on Afghanistan yearly since 2006. (Quite apart from the death toll, can you imagine how much those bombs and rockets and missiles cost, each, and how much it cost to deliver them? Who was making money off all that? Not you and me.) You did not need to kill 800,000 people (the angry relatives of whom also started taking potshots at you, requiring you to bomb and kill more people).”
But these are not only the misbegotten wars of choice. See John W. Dower’s book, The Violent American Century or Andrew Bacevich’s The Age of Illusion: How America Squandered Its Cold War Victory.
Miles Kampf-Lassin considers some of the skewed effects of recent government policies that have fueled unprecedented levels of debt and reflect upper class and mega-corporate biases. He points, for example, to a recent report from the Institute for Policy Studies that found “America’s billionaires saw their wealth shoot up by $282 billion in just 23 days as the country was sheltering in lockdown (https://inthesetimes.com/article/22514/covid-19-coronavirus-wealthy-corporate-welfare).”
Overall, Kampf-Lassin finds evidence that “U.S. billionaire wealth grew by nearly 10% at the same time over 20 million people filed for unemployment, and by April 10 had passed $3.2 trillion—topping last year’s level. He continues. “To take just one example, Jeff Bezos, Amazon CEO and already the richest person in the world, saw his fortune inflate by $24 billion in the first three months of the year, a surge the report’s authors say is ‘unprecedented in the history of modern markets.’ Meanwhile, his workers have staged a series of walkouts and other labor actions to protest a lack of basic workplace protections as warehouse employees have fallen ill with the virus, and some have died.” And adds: ‘As mass death overtook the country in April and the economy went into free fall, the U.S. stock market saw its best month in over three decades, a boon that has overwhelmingly benefited the richest people in the country. Private healthcare companies have seen major gains, boosting the fortunes of healthcare billionaires, just as an estimated 9 million Americans were booted off of their employer-sponsored insurance plans—a figure that could soon climb to 43 million.’”
The same upwardly biased tilt is reflected in government policies directed at COVID-19.
The direct cash payments of $1,200 and expanded unemployment insurance to small businesses had “acute flaws.” Kampf-Lassin points out: “The direct payment plan excludes millions, including undocumented immigrants, U.S. citizens married to noncitizens, many college students and other dependents. And even among those who are eligible, millions have not yet received their checks and some may have to wait up to five months. At the same time, thanks to a change to the tax code tucked into the relief package, 43,000 Americans who make more than $1 million will be saved an average of $1.7 million annually, costing U.S. taxpayers $90 billion in 2020 alone.”
The expanded unemployment insurance policy gave support to those “newly out of work, [but] also incentivized companies to lay off their workforces rather than retaining them while the government continues to provide them paychecks, as countries like the UK and Denmark are going.” Moreover: “The process of applying for the program has been deemed a “nightmare” for millions attempting to navigate an overwhelmed system.” Then, of all things, “workers at businesses newly deemed ‘essential’ such as meatpacking, are now being forced back to work, often in unsafe conditions—and those who refuse over concerns about their safety will lose this unemployment aid.”
The Small Business Paycheck Protection Program turns out “to be a bust for actual small businesses.” Continuing, he writes: “Of the original $350 billion allocated for these businesses in the CARES Act, over $243 million ended up going to large corporations. This includes the subsidizing of massive chains, luxury hotels and even Trump ‘megadonors’ like Monty Bennett, chairman of Ashford Hospitality Trust, who Forbes says ‘is believed to have received at least $59 million.’ As a result, only 5% of all small businesses were able to access those funds, and over 30 million are still struggling to receive relief.” The banks that are handling the loan applications under the PPP have “made off with $10 billion in fees – including many of the same banks that were bailed out by taxpayers during the last recession in 2008.”
But there’s more: “The true callousness of the approach can be seen most clearly in the corporate welfare at the heart of the relief effort. While often posed as a $500 billion fund for large companies, in fact, the CARES Act allocated over $4 trillion to corporate America, since the federal reserve can leverage the initial funding by a ratio of ten to one.”
The central question before the US government is whether a balance can be achieved between curtailing the pandemic and encouraging economic activity, and to do this before in a year or more there is a vaccine made available, mass produced and, if democratic values had any effect, widely distributed, affordable, and accessible. In the meantime, over the coming months into 2021, devising an economic policy that emphasizes the reopening of the economy that does not lead to the intensification of the pandemic will take extraordinary vision and expertise. These are qualities that Trump, his administration, the Republican Party, and his corporate and rich benefactors do not have. If, in the process, the reopening diverts or undermines efforts to fight the virus, then there is a high risk that the pandemic will rebound to dangerously high levels. In that eventuality, the economy is likely to suffer as well.
Trump acts as though there is no dilemma. He is betting the society’s wellbeing on a policy of reopening the economy with few guidelines, while providing some, though insufficient, resources to the states. While Trump and his administration are offering a rosy scenario of a robust economic recovery in the late fall, before the November election, and a recovery that occurs as the pandemic is, they say, vanquished. They provide no unifying leadership in the struggle against the pandemic and offer no economic plan, except to rely on the “market,” finding ways to give benefits to the mega-corporations and rich, and ensuring that the same neoliberal playbook of tax cuts, deregulation, privatization, and America-first trade policies remains the dominant ideological framework for policymaking.
The unprecedented jobs’ problem
The vast and growing jobs’ problem
New York Times’ journalists Nelson D. Schwartz, Ben Casselman and Ella Koeze analyze the official unemployment figures on data collected by the Bureau of Labor Statistics (BLS) for mid-March through mid-April, the most recent available data as of May 11 (https://nytimes.com/interactive/2020/05/08/business/economy/april-jobs-report.html). More than 20.5 million jobs were shed during this period, with an unemployment rate of 14.7 percent, which is higher than at any time since the early 1930s, when in 1933 it reached an estimated 25 percent. The 14.7 percent rate also exceeds the peak unemployment rate of 10 percent during the last recession in October 2009. And the unemployment figures would be even higher if they reflected the continuing shrinking of employment opportunities since mid-April.
The unemployment problem soared as reports of the Covit-19 pandemic led the federal government and many state governments to issue stay-at-home orders as more and more sectors of the economy shut down or drastically shrunk. By the end of April 30 million Americans had filed for unemployment benefits. The NYT journalists quote Michelle Meyer, head of U.S. economics at Bank of America: “What would typically take months or quarters to play out in a recession happened in a matter of weeks this time.”
However terrible the official unemployment numbers, they underestimate the full scope of the problem people are having in finding jobs that provide adequate pay and benefits. For persons to be counted as unemployed, they must have been actively looking for work during the four weeks prior to the employment survey. As Schwartz and his colleagues report,
“the measure ill-suited to a crisis in which the government is encouraging people to stay home. Some 6.4 million people left the labor force entirely in April, meaning they were neither working nor looking for work” and not counted as unemployed. Indeed, they note that the “share of the population with a job was at 51.3 percent, the lowest on record going back to the early1930s.”
There are other shortcomings of the official unemployment estimates. According to the BLS, “some unemployed workers were erroneously classified as employed but absent from work. Had they been recorded accurately, the unemployment rate would have been as much as five points higher, or nearly 20 percent.” The official estimates don’t reflect the number of workers who earn poverty-level wages or who have had their low- or modest wages slashed and now cannot make ends meet, or “the nearly 11 million people who reported working part time because they couldn’t find full-time work, up from about four million before the pandemic hit.”
Economist Jack Rasmus emphasizes how rapidly the unemployment problem has unfolded in recent weeks (https://popularresistance.org/the-myth-of-v-shape-economic-recovery). He writes on this point:
“For the magnitude and rapidity of the shutdown of the real economy in the US is no less unprecedented. Even during the great depression of the 1930s, the contraction of the real economy occurred over a period of several years—not months. It wasn’t until 1932-33 that unemployment had reached 25%.
“As of late April 2020, that 25% unemployment rate was already a fact. The official government data indicated 26.5m workers had filed for unemployment benefits. That’s about 16.5% of the 165 million US civilian labor force. Bank forecasts are 40 million jobless on benefits by the end of May. But respected research sources, like the Economic Policy Institute, recently estimated that as many as 13.9m more are actually out of work but have not yet been able to successfully file for unemployment benefits. So the 40 million jobless may already be here. And that’s roughly equivalent to a 25% unemployment rate. In other words, in just a couple months the US economy has collapsed to such an extent that the jobless ranks are at a level that took four years to attain during the great depression of the 1930s!”
“The Disastrous Employment Numbers – Almost Every Job Is At risk”
This the headline of Neil Irwin’s article, published in The New York Times (https://nytimes.com/2020/05/08/upshot/virus-jobless-rate-demand-collapse.html). He refers to a set of tables in the final pages of the BLS Statistics reports, which are about the number of jobs gained or lost in each industry. Astoundingly, as Irwin writes, “Across dozens and dozens of industries, only one added a meaningful number of jobs in April: general merchandise stores, including warehouse clubs and supercenters. They increased their payrolls by 93,400 positions.” And there were a few sectors that has small positive numbers, “including manufacturers of computers and peripherals (employment up 800), monetary authorities (up 100, not very many considering the trillions of dollars in assets the Federal Reserve is buying to stimulate the economy), and the U.S. Postal Service (up 500).”
But otherwise, industries lost jobs, as “Construction employment fell by 975,000. Manufacturing fell by 1.3 million, as assembly lines halted. Clothing stores’ employment dropped by 740,000. The motion picture industry cut 217,000 jobs, and truck transportation 88,000.” Additionally, “Law firm employment was down 64,000 positions, and computer systems design by 93,000. Local governments cut 801,000 jobs, just over half of them in education,” while “employment in health care fell by 1.4 million as Americans avoided visits to their doctors and dentists for all but the direst emergencies.” Irwin draws the following lesson from the data: “We’re all vulnerable, whether we work in an office or a factory or a construction site; whether our employer is public or private; whether our work can easily be migrated to a home office or not.”
Some segments of the population suffer more than others
Schwartz et al refer to the BLS report that found that the hardship of the employment situation has unsurprisingly struck some segments of the population more than others (https://nytimes.com/interactive/2020/05/08/business/economy/april-jobs-report.html). For example, “Low-wage workers, including many women and members of racial and ethnic minorities, have been hit especially hard. Many service jobs are impossible to do remotely and have been eliminated, and some workers have risked their health by staying on the job.”
Writing on “social trends” for the Pew Research Center, Kim Parker, Juliana Menasce Horowitz, and Anna Brown report on a new Pew survey dealing with the “economic toll from the coronavirus outbreak.” The survey included interviews with 4,917 U.S. adults conducted April 7-12, 2020, using the Center’s American Trends Panel (https://pewsocialtrends.org/2020/04/21/about-half-of-lower-income-americans-report-housholds-job-or-wage-loss-due-to-covid-19).
Parker and her colleagues point out that lower income Americans were “feeling significant financial pressure well before the current crisis.” Indeed, average wages have stagnated for forty years, millions of Americans have not had affordable access to necessities (e.g., health care, decent housing, adequately financed public education, even minimally adequate public assistance).
The scope of those in difficult financial circumstances has expanded. They write: “Overall, 43% of U.S. adults now say that they or someone in their household has lost a job or taken a cut in pay due to the outbreak, up from 33% in the latter half of March. Among lower-income adults, an even higher share (52%) say they or someone in their household has experienced this type of job upheaval.” But the financial problems are not limited to those with low incomes. Summarizing other parts of the survey, Parker and her colleagues make the following points.
- In addition to being among the hardest hit by the economic fallout from COVID-19, lower-income adults are less prepared to withstand a financial shock than those with higher incomes. Only about one-in-four (23%) say they have rainy day funds set aside that would cover their expenses for three months in case of an emergency such as job loss, sickness or an economic downturn, compared with 48% of middle-income and 75% of upper-income adults.1And while 53% of lower-income adults say they will have trouble paying some of their bills this month, about a quarter of middle-income adults and 11% of those in the upper income tier say the same.
- Only 23% of adults now rate national economic conditions as excellent or good, down dramatically from 57% at the beginning of 2020.
- Job losses continue to be felt more acutelyby some groups than others. Roughly six-in-ten Hispanic adults (61%) say they or someone in their household has lost a job or taken a cut in pay due to the coronavirus outbreak. This compares with roughly half or fewer of black and white adults. And adults without a bachelor’s degree remain more likely to report job or wage loss in their household compared with college graduates.
- The extent to which U.S. adults are prepared for a financial emergency also varies significantly across demographic groups. Overall, 47% of Americans say they have rainy day funds on hand that would cover their expenses for up to three months. While this is the case for a majority of white adults, those ages 65 and older and college graduates, it’s not the norm for most other groups. For example, only about a third or fewer of black and Hispanic adults, those younger than 30 and those with no college experience say they have this type of rainy day fund.
- Among those who don’t have emergency funds, relatively few say they could tap into other resources in order to make ends meet. Only 28% say they would be able to cover their basic expenses by borrowing money, using their savings or selling assets.
- Even without a financial emergency, many Americans say they have trouble paying their monthly bills. About one-in-four adults (24%) say they cannot pay some of their bills or can only make partial payment on them in a typical month. A larger share (32%) say they won’t be able to pay their bills this month. The gap in the share saying they won’t be able to pay their bills this month compared with an average month is particularly wide among Hispanic adults: 44% say they won’t be able to pay all of their bills this month, while 28% say this is typically the case.
- Given these financial constraints, more than half of adults who expect to receive a direct paymentfrom the federal government as part of its coronavirus aid package say they will use a majority of the money to pay bills or for something essential for themselves or their family. About one-in-five (21%) say they will save a majority of the money, and 14% say they will use it to pay off debt. The remaining 10% say they’ll use it for something else.2 Again, there are differences by key demographic groups, with black and Hispanic adults, those without a college degree and those in the lower-income tier more likely to say they will use the money to pay bills or cover essential needs.
The states do not have the resources to battle the pandemic without substantial federal support
The Washington Post’s editorial board puts together a case against Trump’s proposal to have the states take responsibility for reopening the economy despite the rising deaths that are expected from Covid-19 (https://washingtonpost.com/opinion/trump-is-pushing-to-reopen-too-soon-the-consequencies-could-be-tragic/2020/05/06/). They write: “…Yet Mr. Trump, who decided not to conduct a broad federal effort to battle the novel coronavirus and instead passed responsibility to the governors, is now urging them to reopen too soon, risking more infections, more death and still more economic loss. “Will some people be affected? Yes,” Mr. Trump said Tuesday [May 5]. “Will some people be affected badly? Yes. But we have to get our country open and we have to get it open soon.”
The editors make the following points. One, “the president is ignoring the strategy he embraced just weeks ago,” when “the White House announced a series of guidelines for governors to phase in reopening, with criteria such as achieving a ‘downward trajectory of documented cases within a 14-day period and putting robust testing in place.” Two, there is nationwide, in state after state, an inadequate capacity for “diagnostic testing and contact tracing so that offices and factories can cautiously begin to resume work without triggering more sickness.” Three, the federal government has failed to provide leadership and has been a major cause of the shortfalls of protective masks and other personal protective equipment. They refer to “the whistleblower complaint filed by a senior Health and Human Services official, Rick Bright, that when he warned a group of senior officials known as the Disaster Leadership Group on Feb. 7 about a shortfall of protective masks, other officials responded ‘there was no indication of a supply chain shortage or of issues with masks, and therefore there was no need to take immediate action.’ Such missteps have been endemic.”
One of Democracy Now’s headlines on May 7 highlights the concern about the inability of states to deal with the growing challenge of the COVID-19 pandemic (https://www.democracynow.org/2020/05/07/headlinels). The headline reads:
“The Associated Press reports a 17-page report by the Centers for Disease Control and Prevention offering step-by-step advice to local leaders on when and how to reopen public places has been shelved, with one CDC official saying the document ‘would never see the light of day.’ On Capitol Hill, the House Appropriations Committee heard testimony Wednesday from two medical experts who said not a single state or territory in the United States has met all of the White House’s own criteria for safely reopening. Dr. Caitlin Rivers, a professor at the Johns Hopkins School of Public Health, said states lack adequate diagnostic testing and the capacity to carry out contact tracing. And she warned that many of the states that are reopening have rising rates of coronavirus infections.”
Trump’s approach fails to offer a solution to the dilemma or generate public support
Trump and his corporate backers want a quick recovery, but it’s unlikely
Economist Jack Rasmus takes this position (https://popularresistance.org/the-myth-of-v-shape-economic-recovery). But, contrariwise, Trump’s supporters from the mega-corporate sectors of the economy are advancing the idea that reopening the economy will lead to a quick economic rebound. Rasmus puts it this way: “Business interests are pushing Trump and Republicans to reopen quickly, regardless of the likely consequences for a second wave of the virus devastating national health and death rates. There is a growing segment of US business interests desperate to see a return to sales and revenue, without which they face imminent defaults and bankruptcies after a decade of binging on corporate debt. A growing wave of defaults and bankruptcies could very well provoke an eventual financial crisis, which would exacerbate the collapse of the real economy even further.” The evidence indicates, furthermore, that the massive government financial assistance directed at American business is not enough to revive the economy. On this point, Rasmus reminds us:
“So far the Federal Reserve central bank has committed to $9 trillion in loans and financial backstopping to the banks and non-banks, in an unprecedented historic experiment by the Fed. Not just the magnitude of the Fed bailout in dollar terms, already twice that the central bank employed in 2008-09 to bail out the banks in that prior crash, but the Fed this time is not waiting for the banks to fail. It’s pre-emptively bailing them out! Also new is the Fed is bailing out non-banks as well, trying to delay the defaults and bankruptcies at their origin, before the effects began hitting the banking system. Bailing out non-banks is new for the Fed as well, no less than the pre-emptive bank rescue and the $9 trillion—and rising—total free money being thrown at the system. But it should not be assumed the Fed will succeed, despite its blank check to banks and businesses. Its historic, unprecedented experiment is not foreordained to succeed….”
However, rather than the quick economic recovery lauded by the Trump administration, the realty is quite different, as Rasmus sums it up: “Many small businesses never re-open and when they do with fewer employees and often at lower wages. Larger companies hoard their cash. Banks typically are very slow to lend with their own money. Other businesses are reluctant to invest and expand, and thus rehire, given the cautious consumer spending, business hoarding, and banks’ conservative lending behavior. The Fed, the central bank, can make a mass of free money and cheap loans available, but businesses and households may be reluctant to borrow, preferring to hoard their cash—and the loans as well.”
Trump’s personal perspective on reopening the economy quickly and safely is illusory
Greg Sargent argues that Trump has been promoting “the illusion that the country is returning to normalcy over taking concrete steps that might make that actually happen safely” and in the process making a successful economic recovery less likely (https://washingtonpost.com/opinions/2020/05/07/big-ugly-paradox-hovering-over-trumps-latest-deceptions). The president is obsessed with doing whatever it takes to bring the economy back from its decline and thus, from his perspective, to increase the chances of his reelection. And he believes that his personal charisma will shape the economy to new heights. It doesn’t matter that his views regularly conflict with what is actually happening in the economy.
Sargent articulates his view of Trump as follows:
“Trump prizes his magical reality-bending powers so highly that he’d rather rely on them to deliver him reelection, because he fears taking the governing steps necessary to get us back to normalcy will render his reelection less likely as well — the real world consequences be damned.” Real efforts would take too long to implement and, implicitly, would bring into question the neoliberal economic assumptions that have been part and parcel of Republican and right-wing views of the economy since the Reagan administration.
Sargent offers the following points on how Trump’s illusionary and misconceived perspective on the economy is linked to his reelection aspirations – and also, one may add, to the underlying neo-liberal ideology which has done so much to shape the economy, with its slow growth, unprecedented inequality, and hollowing out of government regulatory authority.
One, Sargent refers to “a remarkable new Associated Press scoop, which reports that Trump is deliberately refraining from wearing a protective mask in public because he thinks it will damage him politically, for multiple reasons.” Here Sargent quotes the AP scoop: “Trump has told advisers that he believes wearing one would ‘send the wrong message,’ according to one administration and two campaign officials not authorized to publicly discuss private conversations. The president said doing so would make it seem like he is preoccupied with health instead of focused on reopening the nation’s economy — which his aides believe is the key to his reelection chances in November.” In addition, Sargent writes, “Trump, who is known to be especially cognizant of his appearance on television, has also told confidants that he fears he would look ridiculous in a mask and the image would appear in negative ads, according to one of the officials.”
Two, Trump emphasizes how the economy will recover soon and reach new levels of prosperity, because he fears that a preoccupation with the virus and the massive health consequences that the society is experiencing would undermine his reelection campaign.
Three, the president overrates the level of testing for Covid-19 that has been done and the need for more federal involvement in testing, arguing that the “private sector will generate enough testing supplies on its own. But Sargent points to another reason by quoting Trump: “In a way, by doing all this testing, we make ourselves look bad.”
The political impact of the dual crises on Trump is uncertain
Thomas B. Edsall, who writes a weekly opinion piece for The New York Times, asks why Trump’s poll ratings have been so low, given how one might expect him to benefit “through heightened xenophobia, increased acceptance of authoritarian leadership, racial and ethnic schism (https://nytimes.com/2020/05/06/opinion/coronavirus-trump-authoritarianism.html).
Nonetheless, recent polls indicate the opposite. According to a “P.R.R.I. survey released on April 30 shows Trump’s brief surge of two months ago [is]slipping.” The poll finds that “Trump’s favorability rating has dropped seven points over the last four weeks. Today, just over four in ten (43 percent) Americans hold mostly or very favorable views of Trump, compared to a 54 percent majority who hold mostly or very unfavorable views of him.” Edsall draws this implication: “public concern over Trump’s competence in handling the spread of the coronavirus has for the moment outstripped the socially regressive forces that Trump has thrived on.” For the moment.
Edsall quotes Robert Jones, the found and CEO of P.R.R.I., who writes: “If history has a lesson for us here, it is this: Where there is a massive wave of suffering and death, a second wave of racism and xenophobia is typically not far behind.” He continues: “Experiences of mass grief and economic stress easily generate a desire for someone to blame.” The political and social responses to an outbreak of infectious disease is also related to how severe the outbreak is. Edsall quotes the findings of Randy Thornhill and his colleagues who write: “populations characterized by a high prevalence of infectious diseases’ foster what they call ‘value systems’ characterized by ethnocentric attitudes, adherence to existing traditions, behavioral conformity, xenophobia and neophobia.”
The evidence is undeniable that the current pandemic “is not only wreaking destruction on public health and the global economy but disrupting democracy and governance worldwide” and “it risks exacerbating democratic backsliding and authoritarian consolidation.” In sync with this finding, Trump’s favorability ratings rose in March, but in an email from to Edsall, Stephen Walt, a professor of international affairs at Harvard, wrote that it was only a “minor bump” and “suggests that most Americans aren’t buying the con this time around.”
At the same time, some experts consulted by Edsall find that the pandemic is less likely to sway the views of ardent Trump supporters when it comes to the November election. However, others hold the view that the Covid-19 pandemic re-focuses the attention of at least some of Trump’s grassroots’ supporters on the problems of the health care system, sidelines the immigration issue, and increases faith in health-care experts, while accepting the widely proclaimed notion that health care workers are heroes. How all this play out in November no one knows. Though Edsall thinks one thing is clear: “The more Trump feels cornered, the more dangerous he and his angry, frightened followers can become.”
Presently, most Americans are wary of wholesale reopening of the economy and public spaces, but there are partisan divisions
Dan Balz and Emily Guskin address this issue in an article for the Washington Post, May 5, 2020 (https://washingtonpost.com/politics/americans-widely-oppose-reopening-most-businesses-despite-easing-of-restrictions-in-some-states-post-u-md-poll-finds/2020).
They cite a Washington Post-University of Maryland poll that finds “Americans clearly oppose the reopening of restaurants, retail stores and other businesses, even as governors begin to lift restrictions that have kept the economy locked down in an effort to combat the coronavirus pandemic.” According to the poll, “[m]any Americans have been making trips to grocery stores and 56 percent say they are comfortable doing so. But 67 percent say they would be uncomfortable shopping at a retail clothing store, and 78 percent would be uncomfortable eating at a sit-down restaurant. People in states with looser restrictions report similar levels of discomfort as those in states with stricter rules.”
The poll also finds that Americans tend to trust their governors more than Trump: “Trump’s ratings are 44 percent positive and 56 percent negative, in line with where he was two weeks ago and only slightly worse than a week ago. Governors earn positive marks from 75 percent of Americans, about the same as a week ago. Partisan differences remain sizable, with nearly 8 in 10 Republicans but just about 2 in 10 Democrats rating Trump positively. In contrast, governors earn big positive majorities across the parties.” Other findings, as follows.
- Americans also overwhelmingly approve of the way federal public health scientists, including Anthony S. Fauci, have dealt with the challenges from the coronavirus. Fauci’s positive rating stands at 74 percent. He maintains wide bipartisan appeal, winning positive marks from more than two-thirds of Republicans and independents, and nearly 9 in 10 Democrats. Public health scientists in the federal government overall are rated 71 percent positive.
- In announcing plans to ease the restrictions on businesses, governors have emphasized that their actions represent a gradual and cautious reopening of their economies. Nonetheless, when asked about eight different types of businesses, majorities of Americans say they oppose ending the restrictions on each of the eight. The Post-U. Md. poll asked about the following types of businesses: gun stores, dine-in restaurants, nail salons, barbershops and hair salons, retail establishments such as clothing stores, along with gyms, golf courses and movie theaters. The most significant opposition is to reopening movie theaters, with 82 percent of Americans saying they should not be allowed to open up in their state. There is also broad opposition to reopening gyms (78 percent opposed), dine-in restaurants and nail salons (both with 74 percent opposed).
Gun stores are next, with 70 percent saying they should not be reopened, followed by barbershops and hair salons (69 percent opposed) and retail shops such as clothing stores (66 percent opposed) and golf courses (59 percent opposed).”
At this point, there is not a clear resolution in sight for the reopening/pandemic delimma.Trump and his allies want to preserve a corporate-dominated economy, existing levels of inequality, and right-wing political control, if not dominance. However, the pandemic and its increasingly dire health and economic effects are unlikely to be resolved before there is an effective vaccine. And even then there is the political question of whether the dual crises will open up opportunities or not for opponents of the present capitalist system to transform the system, eliminate the rigged politics and the outrageous levels of inequality, as well as to strengthen the position of the broad working class , to win the rights to tens of millions of Americans to health care and other basic necessities, and in all ways to advance the common good and sustainable ecosystems. What has become clear during these crises is that Trump and his allies have a great tolerance for the death of ordinary Americans and an insatiable appetite for recovering the pre-COVID-19 status quo. What is not clear is whether there are enough Americans who want something different and can be mobilized to work and vote for a more liberal/leftist alternative, that is, if one is available.