COVID-19 is an enormous challenge to America’s faith in individualism.
Before lawmakers went on recess last week, Congress dithered on a relief package that we believe might not have adequately relieved Americans’ suffering or stimulated economic recovery in a meaningful way. Even if there is a vaccine available tomorrow, Republicans deluding themselves into thinking there will be a V-shaped economic recovery, meaning a powerful climb in the GDP back to prosperity.
Because too many Republicans believe tax cuts automatically bring about productivity growth, it is unlikely that the Senate will ever pass a sufficient supplement to unemployment insurance rate or sustainable funding for state and local government. Without such income there will be no spending and, without spending, there will be no profits and investment. Poverty rates will soar. In this environment, generous unemployment benefits are a necessity.
Furthermore, Congress failed to debate, no less understand, the policies needed to ameliorate the pandemic’s long-term damages. One obvious example would be the increased use of tele-presence in the workplace. Some employers are projecting that one-third of their workforce will continue working from home. Businesses are already reducing their office occupancy, which affects the need for supporting services such as restaurants, building cleaning, ride-sharing, downtown entertainment, etc. People are learning to conduct business without traveling to meetings, which will dramatically affect public transportation and the travel industry.
All this will create long-term labor contraction and labor market adjustment. A decades-long trend of growth in urban vitality may be reversed as real estate prices fall.
How will government create a soft landing for the workers and businesses affected?
Many CEOs say that without new business loans, bankruptcies will increase. Restaurant associations have warned that two-thirds of our restaurants are unlikely to reopen. With small businesses disappearing across the breadth of the economy, there will be a resulting increase in the dominance of large corporations.
We know what corporate consolidation means to workers. Large corporations pay a smaller share of their earnings to their employees and a larger share to owners and investors. Income inequality and the concentration of wealth will rise. Have we really been better off with only four major airlines and technology behemoths? Think about that happening across a myriad of industries.
When voters consider reduced competition as a result of increased bankruptcies will they choose the president who is emasculating federal institutions designed to enforce our anti-trust laws or the party proposing more vigorous anti-trust enforcement? We think it is the latter.
Just about any crisis disproportionately hurts the poor, but this pandemic is also hitting women harder than men. With the closing of schools, daycare and camps, many families have had to decide who will leave the workplace to take care of the children. Also, there is more of a need to provide eldercare. Unsurprisingly, women have left the workforce in greater numbers then men to care for their families.
It is expected that this trend will affect the women’s labor market for decades unless we comprehensively address the national need for daycare. As Betsey Stevenson wrote for the Hamilton Project: “Childcare is not a women’s issue, it is not a personal issue, it is an economic issue.”
These are just a few of the economic challenges the country is likely to face well beyond 2020. A handful of Republican senators wanted to do nothing, arguing that the economy will bounce back on its own. This is a dangerous version of the neo-liberal economics that helped make the Great Depression of the 1930s so tragic.
Voters must ask themselves which party is more likely to address the long-term issues of the pandemic. Economic decline through the election is almost a certainty. Combined with some health experts’ predictions that more that 250,000 Americans will die of the coronavirus, President Trump’s defeat may now also be a near-certainty.
But the real question is, Will the country also turn the Senate over to the Democrats, giving a unified government the mandate to provide the necessary fiscal stimulus and reform to the economy?
Mike Abrams is former chairman of the Dade Democratic Party, a former state legislator and currently a policy adviser to Ballard Partners. Jeff Madrick is director of policy research at the Schwartz Center for Economic Policy Analysis, The New School.