Bailouts Won’t Save the Economy. More Coronavirus Tests Will.
No sooner had the ink dried on the last $2 trillion round of economic relief from the devastation wrought by the coronavirus pandemic than President Trump and Congress began contemplating the next bill to address the crisis. There is, after all, crisis to spare. You might think the emergency on Washington’s mind is the rapidly escalating number of U.S. infections and deaths, or perhaps the shortage of lifesaving personal protective gear and medical equipment such as ventilators and the ongoing dearth of reliable and available tests.
But the disaster that the next round of stimulus will address, according to media accounts, is the same as the last one: the financial losses to businesses and workers caused by the social distancing measures put in place to limit the spread of the new coronavirus. The severity of current social distancing restrictions is necessitated in part by the United States’ lack of capacity to identify the infected, trace and test their social contacts, and quarantine the sick. If you can’t be sure that everyone outside isn’t contagious, then you must stay inside.
Congress remains perversely determined to treat the symptoms, rather than the illness. On Wednesday, Newsday reported, “Senate Majority Leader Mitch McConnell this week proposed adding $250 billion for the popular small-business loan programs already in the recently enacted $2.2 trillion CARES Act relief and stimulus package. But House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer demanded Wednesday that that interim bill also include $150 billion for state and local governments ... and $100 billion for hospitals and a 15% increase in the maximum benefit to supplemental nutrition assistance for families.” In other words, Republicans and Democrats both just more of the very same things they got last time. In fact, Pelosi explicitly pointed to the last bill as “a good model” because it managed to draw bipartisan support.
It is true that some of these expenditures, such as aid to hospitals and state and local governments, will partly aid the essential efforts to treat the sick. And putting money in people’s pockets goes hand-in-hand with social distancing policies, by defraying some of the costs of closing non-essential businesses, which in turn threatens the reliable paychecks of thousands of workers. But this approach, while vital, has at best only slowed the virus’ spread. The disease must be halted in its tracks to allow the economy to be reopened. The only answer is to rapidly ramp up widespread public testing for Covid-19 and its antibodies.
So here’s a radical suggestion: Why don’t we instead try to imitate the approach that has worked best in other countries? Specifically, we could look to South Korea, which implemented a comprehensive national program of widespread testing, contact tracing, quarantining and public mask-wearing, so it hasn’t had to completely stop all economic and social activity. Lawmakers who are not thinking along these lines aren’t thinking seriously about what’s at stake.
New York City, the worst Covid-19 hotspot in the U.S., is denying tests to patients who are likely sick with the virus due to its shortage of tests. As Mayor Bill de Blasio noted on Thursday, the city will have to keep social distancing rules in place longer than otherwise would be necessary if it cannot access an adequate supply of tests. “The city is far short of the test capacity it will need, and has no concrete plan for a large-scale expansion,” Politico reported on Thursday. “We would need more testing and we don’t have it yet,” de Blasio said at a press conference. “If we could get widespread testing, it would start to change the entire strategy,” de Blasio said. “We have had to, from Day One, ration testing in a way none of us wanted to do.”
“I can’t believe that here we are the second week in April and we’re still talking about testing,” said Ashish Jha, director of the Harvard Global Health Institute. “We still can’t test for a virus that has shut the entire American economy down. I talk to conservative economists, and I say, ‘You know, we’re costing the American economy hundreds of millions of dollars a day because we don’t have testing capacity.’”
As Aaron E. Carroll, a medical school professor at Indiana University, noted in The New York Times on Monday, before the economy can be safely reopened, “Every time an individual tests positive, the public health infrastructure needs to be able to determine whom that person has been in close contact with, find those people, and have them go into isolation or quarantine until it’s established they aren’t infected, too... Building that capacity will take significant time and money, and the country hasn’t even started.”
What would such a federal effort look like? For one thing, it would involve a lot more aid to state and local governments earmarked for the purpose. “It means a massive infusion at the state and local level, because the people who are going to do the testing, do the contact tracing, are all state and local people,” said Gregg Gonsalves, a professor of public health at Yale. “The last bill has $150 billion to state and local governments, but they’re losing sales and income tax revenue, so $150 billion doesn’t even begin to meet the lost revenue gap. Money has to flow to the states to do the shoe leather epidemiology.”
Congress also needs to direct the U.S. Centers for Disease Control and Prevention to give proper guidance and assistance to the state and local governments. “Contact tracing would have to be implemented by states,” said Jha. “But Congress could say, ‘You do it, we’ll fund it and put in some metrics to make sure it’s actually happening.’” The state and local departments of health would then, with federal dollars and oversight, hire staff of testers covered in personal protective gear such as masks and gowns.
We also simply must produce vastly more tests and build the lab capacity to turn them around quickly. Currently, patients can wait up to a week for results because the private labs that perform the tests often have a massive backlog. Jha estimates that, based on the current level of outbreak, roughly 500,000 to 600,000 Americans per day should be getting testing, which is roughly five times as many tests as we’re currently performing. It would also be helpful, since so many people who have been sick recently with flu-like symptoms don’t know if they had Covid-19, and many people who had it were asymptomatic, to develop and widely deploy a serological tests, which measure the disease’s antibodies in the blood. Then we’d have some idea of who can safely go back to work without risk of infection.
While experts tend to agree that the straightforward way to solve this problem would be for Trump to use the Defense Production Act to take over the private manufacturing facilities needed to ensure the test-production need is met, Trump is ideologically opposed to doing so. As an alternative, Jha suggests offering a massive innovation prize for companies that bring a rapid test up to mass production at the scale needed.
The Trump administration is taking the opposite approach to ramping up testing. The federal government is ending funding for coronavirus testing sites on Friday. Trump, despite his unhealthy obsession with economic indicators and his dangerous musings about the need to end the economic shutdown as soon as possible, doesn’t seem to appreciate the importance of widespread testing to achieve his own goals. In his press conference on Monday, Trump dismissed a question about the lack of access to Covid-19 tests for many sick Americans by saying it’s not the federal government’s job because, to his mind, there are 50 states that can handle the task.
This is idiotic and dangerous. The state of Wyoming has fewer than 600,000 people across a giant land area. Why would Trump assume that it has the personnel, data management systems, funding, and expertise at hand, ready to be deployed without a major infusion of federal cash and a program within the CDC to guide those efforts?
What’s needed, Gonsalves said, is “a giant national mobilization. It’s like the Works Progress Administration except for public health. We take the CDC and the state and local health depts and we give them the money and resources.”
Democrats must take advantage of the narrow window afforded by another round of economic stimulus to force the the federal government to do the common-sense thing that has the best chance of avoiding catastrophic levels of unemployment: Implement widespread testing for the virus, contact tracing, and quarantining that would make it safer for the uninfected to go about their lives and serological testing that would enable more people to get out of self-quarantine. Bailouts to businesses and $1,200 checks to idled workers aren’t going to deliver nearly as great an economic return. Perhaps that argument could carry more weight in negotiations with McConnell and Trump than the public health rationale.
“If you talk to economists, they’re not saying we need to end social distancing to reopen business, they’re saying we need to end the pandemic,” Gonsalves said. As former Obama White House economic advisor Austan Goolsbee said to Business Insider in March, “the number one rule of virus economics is that you have to stop the virus before you can do anything about economics.” Congress continues to ignore that rule at its own peril—and ours.