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Invest Now To Head Off Another Great Depression

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Invest Now To Head Off Another Great Depression

President Donald Trump wants to restart the economy by ending the lockdowns and getting people back to work. However, based on U.S. spending, employment and consumption data, the economy started crashing well before lockdowns began in mid-March. Demand for transportation and other services began to collapse in mid-February and early March due to COVID-19’s dangers, and isn’t likely to naturally return to pre-crash levels until the risk of the virus recedes.

In late February through early March, COVID-19 deaths in the United States were about 20 to 30 per day. The daily U.S. death toll is now 1,000 to to 2,000 (and tens of thousands of Americans require hospitalization for severe symptoms). Polling data show that many Americans are reluctant to resume discretionary activities under the current circumstances. For example, 72% of fans in a recent survey said they wouldn’t attend a game at a stadium until a vaccine is available.

So even if all mandatory lockdown measures end, the economy won’t bounce back to January 2020 levels. The Economist described this scenario as a “90% Economy” -technically open, but (due to COVID-19 risks) operating at only about 90% of capacity, with high unemployment rates.

And this is the optimistic scenario.

If daily deaths and hospitalizations increase exponentially after mandatory lockdowns end, the economy will shut down again, either from renewed government-mandated lockdowns or chaotic spontaneous lockdowns as people fear leaving their homes. Economically, this could create an even more devastating downward economic spiral.

Perhaps COVID-19 will rapidly become less dangerous, maybe treatments will become more effective, a vaccine will quickly become available or some other deus ex machina will solve this crisis. However, we don’t prepare for war by assuming a best-case scenario about our enemies. We shouldn’t make policy based on best-case assumptions about COVID-19.

At the federal level, here’s how we should prepare:

Support state and local governments by replacing tax revenues they’ve lost due to COVID-19. Because they are the first responders, we must ensure they’re well-resourced. As we try to restart the economy, the last thing we need is large-scale layoffs that impact vital employees like teachers and police, fire and sanitation workers. Well-functioning and safe schools are vital to restarting the economy (if parents can’t send their children to school in the fall, it will be difficult for society to resume normal activities).

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We should also provide generous support for our public colleges and universities. They’re where many middle-class Americans get their education, and where much of our cutting-edge basic research takes place. We can’t afford to lose a generation of talent if these universities collapse and have to be rebuilt. Also, as large local employers, they bring significant economic benefits to their communities.

Invest in public health and health care. Trump called Americans warriors in the fight against COVID-19. We send our soldiers into combat with the best protection possible, and a guarantee of the best health care available if they’re wounded. COVID-19 requires the same commitment to America’s workers and consumers. The best chance to get the economy back on track is to make the workplace and consumer environments as safe as possible. A national Test, Trace, Isolate and Treat program, is an urgent priority. Health care is our frontline and it must be well-funded. In this crisis, we can’t guarantee Americans’ safety against COVID-19, but we must guarantee they’ll have health care coverage to battle its effects.

Steven Strauss is a lecturer and visiting professor at Princeton University, an economic development specialist and a member of USA TODAY’s Board of Contributors.

© Copyright (c) 2020 North Jersey Media Group Inc.

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