Today, I am focusing on the ‘‘Families First Coronavirus Response Act,’’ passed by the House early Saturday morning, March 14 and by the Senate Wednesday afternoon, March 18. [For the full text see https://www.cnn.com/2020/03/13/politics/read-bill-text-families-first-coronavirus-response-act/index.html] With this focus, I am moving away from the theme of my March 6 commentary in which I lamented the failure of the federal government to engage in sufficient preparedness spending. That failure is based on a simple cliché that has been attributed to former President Ronald Reagan – “Government is not the solution. Government is the problem.” This is actually an incorrect version of Reagan’s economic philosophy because in fact he supported significant increases in federal government spending on the military. But saying that “government spending to help people is the problem” doesn’t have the same political cache that the more universal statement has. (There are a few sincere libertarians --- I have met a few --- who are more consistent than Reagan --- wanting to cut the defense budget as well as the rest of the budget.) Ever since the Reagan Revolution of the 1980s, there has been a consistent effort to cut back on the civilian side of the federal government. My focus back on March 6 was on how easy it is to cut spending on aspects of the federal government that satisfy what public finance economists call “option demands.”
Preparedness for a worldwide pandemic is a perfect example of that and it is no wonder that the Trump Administration, finding an entire task force within the Department of Homeland Security devoted to dealing with world-wide health emergencies would target that group for elimination. When challenged about that decision at a recent press conference (March 13, 2020), Trump denied having anything to do with that decision. [One can watch the exchange with the outstanding PBS reporter Yamiche Alcindor which includes his denial of knowledge here: https://www.theguardian.com/us-news/video/2020/mar/13/coronavirus-trump-slams-reporter-for-nasty-question-over-pandemic-response-team-video]
However, three weeks earlier at a February 27 press briefing, he had actually revealed his reasoning: “I’m a business person — I don’t like having thousands of people around when you don’t need them. When we need them, we can get them back very quickly.” [That entire briefing can be accessed at https://www.whitehouse.gov/briefings-statements/remarks-president-trump-vice-president-pence-members-coronavirus-task-force-press-conference/]
The argument that you can “get them back quickly” is nonsense. (Many business leaders maintain groups of experts doing nothing while waiting for projects that need their expertise to come along. Retraining a whole group of engineers, accountants, medical professionals, etc. is much harder than paying an already existing group to “wait around.”) The people who had staffed the task force dealing with international health emergencies had expertise that could not be immediately created out of whole cloth. The lack of preparedness has been dangerously obvious. The Administration had almost three months of warning once the first reports appeared in China. Absent the task force, there was no one in the administration raising the alarm about the coming pandemic. South Korea took its cues from China and has instituted wide-spread preventive measures. Italy was too slow to react and it is facing a health catastrophe. Most experts fear our future will look more like Italy’s rather than South Korea’s.
[For an incredibly prescient article, written on January 31 of this year, see https://foreignpolicy.com/2020/01/31/coronavirus-china-trump-united-states-public-health-emergency-response/ There is a lot of detail in there that supports the argument I made on March 6 and in the above paragraphs.]
For this commentary, I want to shift attention to the short term remedial efforts exemplified by the House Bill (finally thankfully passed by the Senate five days later). That action represents the DIRECTION that government policy has to go. Unfortunately, it also demonstrates the dangers of treating politics as “the art of compromise.”
First of all --- it is essential that all testing for the Coronavirus be free. If people cannot afford to be tested, we will never know the extent of the disease, where the hot spots are and therefore we will not know where to deploy our finite resources to combat it. The bill does that. A follow up which must be part of all future bills is that all treatment for the Coronavirus must be free. The reason should be obvious. Anyone not treated because he or she cannot afford to pay for the treatment is a threat to everyone else. In other words, it is worth it to me who is not sick with the Coronavirus to pay for your treatment so you won’t infect me. I hope that is obvious to everyone reading this.
Second --- It is essential that workers who lose their jobs because of the economic slowdown get extended unemployment benefits. This is a principle that even conservatives support --- one must help laid off workers sustain as much of their previous levels of consumption spending as possible in order to keep the economy from spiraling down even more --- turning a recession into a depression. Usually recessions occur when investment falls. Even people who are laid off from work try to maintain their previous levels of consumption spending. Unemployment insurance helps them do that. What turns recessions into depressions (the 1930s) or “great recessions” (2007-2009) is when consumption falls dramatically. Extended (and more generous) unemployment benefits will help prop up consumption. This is, of course, the idea behind the proposal by former Republican Presidential candidate Mitt Romney that every adult American be sent $1000 immediately. I would propose making that $2000 for every adult and $1000 for every child. I would make it monthly until the crisis passes. No matter how much or how little is in the package, the principle is basic economics --- when people’s incomes fall, paying them props up consumption spending.
(Relying on individual acts of generosity is not enough. Yes, it’s great that the superstars of the NBA are promising to pay the salaries of the workers in their teams’ arenas but that won’t work for most workers facing lay-offs. A national crisis requires national mobilization of resources.)
Third, the bill expands food assistance to make sure seniors and food banks get help as well. The Trump administration has actually proposed cutting the food assistance program (SNAP – previously known as food stamps). Hopefully, Congress will ignore that proposal.
Finally, – the bill needs to make workers who have the virus whole so that they don’t go to work while sick. The legislation includes 14 paid sick days for employees, as well as three months of paid emergency leave. Here is where I believe the House Democrats made a mistake by compromising. No doubt some have heard about the “concerns” of Republicans, especially in the Senate, that MANDATING paid sick leave might put an undue burden on businesses. The Republicans in Congress are more interested in protecting the profits of large corporations rather than the health of the people – though they cloak their preference by constantly referring to businesses as “job creators.” It appears that in the negotiations between House Speaker Pelosi and Secretary of the Treasury Mnuchin the scope of the required paid sick leave ended up being limited to businesses employing only 20% of the workforce.
Now it is true that some large corporations have sick leave in their contracts --- and some have voluntarily stated that they will extend sick leave to employees who are asked to quarantine themselves. Nevertheless, the scope of the bill is not wide enough. [For details, check out the editorial in the New York Times for March 17, 2020 “The Giant Hole in Ms. Pelosi’s Covid-19 Bill,” on page A 26.}
Here the tendency of the Democrats to want a bi-partisan bill interfered with their instincts to cover everybody. They compromised with the Repubicans I guess because they were more concerned with getting SOMETHING that would help workers rather than with fighting hard for complete coverage.
I personally think this desire to compromise is wrong. The Democratic majority in the House should have passed a “clean bill” without the Republican demanded restrictions and dare the Senate to reject it. If challenged about the cost imposed on corporations by mandating paid sick leave, they could remind us that Congress gave corporate America a giant windfall with the 2017 tax cut.
Now reasonable people can differ on what the appropriate political tactic should have been but from an economic point of view, --- NO ONE who is sick from the virus should be forced to give up their income in order to stay home from work so they won’t infect others.
I would like to predict that the next rounds of negotiations between Speaker Pelosi and the Trump Administration will turn into a fight over how much subsidy will go directly to businesses as opposed to individuals. We citizens need to watch those debates very carefully. The Republicans will emphasize the role of businesses as “job creators” and try to subsidize industries directly. We need to make sure the Democrats insist that most of the money go to the most vulnerable members of our population DIRECTLY. Why should Cruise Line investors be made whole for taking the risk of not insuring against pandemics? Business investors are constantly being praised for “taking risks” which is then the justification for the gigantic profits they make. Well, if the rest of us constantly subsidize them when they lose money, what risks have they actually taken? Help the people. Businesses will recover sooner the more money gets into the hands of ordinary people.
Right now, Senate is putting together what Senator McConnell calls “Phase Three.” Let’s hope the Democrats in the Senate demand a bill that subsidizes people directly --- and is focused on the most vulnerable among us. Let’s also hope that if the Senate Bill is inadequate --- or too heavily focused on the rich and powerful that the House majority will say no. Let’s hope the public at large joins in that assertion. This is not a time to satisfy the right-wing’s wish list for more socialism for the rich. This is the time to recognize that we truly all are in this together and that means we have to follow the Biblical injunction to take care of the “least among us.”
Maybe after 40 years of Reagan style policies, the Coronavirus pandemic will shock us to our senses, and we will begin to behave like the generous human beings we are rather than the brainwashed believers in the world of dog eat dog competition emphasized by too many of my fellow economists.
[For some really good suggestions, see an interview with economist Robert Pollin on the webgsite Truthout here: https://truthout.org/articles/we-are-facing-economic-collapse-on-top-of-a-pandemic-what-we-do-now-matters/]
Michael Meeropol is professor emeritus of Economics at Western New England University. He is the author with Howard and Paul Sherman of the recently published second edition of Principles of Macroeconomics: Activist vs. Austerity Policies.
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