| Hetitage Foundation March 28, 2020 |
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| America must go through a number of steps if it’s going to beat coronavirus and thrive thereafter. The COVID-19 pandemic will swamp state budgets. In a time of crisis many businesses are stepping up to help Americans. |
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| America’s path to recovery will take a multi-step process. James Carafano writes:You can endlessly debate the wisdom and timing of the administration’s actions in responding to the COVID-19, or coronavirus, outbreak. But one thing seems beyond dispute: The federal government is making an all-out effort to help.Further, the innumerable press briefings and public statements leave no question as to the administration’s overall game plan and what the White House sees as the likely endgame.To make sure we’re all on the same page, let’s review the game plan.The first step was to slow the arrival of COVID-19 to our shores. The president did that by restricting travel from overseas—starting with China, then extending that to other nations as the disease spread.[James Carafano, “The Coronavirus Game Plan: How We Got Here and Where It Ends,” The Daily Signal, March 26] The coronavirus tidal wave will have a huge impact on state budgets. Steven Malanga writes: The coronavirus economic shock came just as states were finally making up for the damage done by the Great Recession. Coming out of that downturn, state and local tax collections declined for two consecutive years—for the first time in the post-World War II era. A subsequent slow economic recovery made state revenue growth sluggish for nearly a decade. It took states, on an inflation-adjusted basis, until 2016 to get back to the levels of tax collections seen before the recession. But the economic expansion of the last three years, accompanied by a soaring stock market, had finally enabled states to stabilize their budgets, put money into areas (such as education) that some had neglected for years, and build up modest rainy-day funds. Now much of that stability seems gone. Even before any recession actually hits, states are tapping their reserves to pay for resources in the fight against Covid-19, meaning that they’ll have even less of a budget cushion should an economic downturn become severe. Washington State legislators, for instance, authorized drawing $200 million from their surplus fund for added health-care spending and to help pay for looming unemployment claims. Georgia has taken $100 million from its surplus fund to finance the coronavirus battle, and Maryland legislators have authorized Governor Larry Hogan to use $50 million for the same battle. The problem is that prior to the crisis, states collectively had only about $70 billion in these funds—enough to run state government for just eight days, on average. A few find themselves in even worse shape. A report by the Volcker Alliance, a budget watchdog group, estimated that Illinois has just a few million dollars in its fund, “enough to barely cover a few minutes of budget spending.” Pennsylvania had just the equivalent of 1 percent of its budget in reserves.[Steven Malanga, “The Crisis’s Impact on Budgets,” City Journal, March 22] The private sector is stepping up. Helen Raleigh writes:As confirmed Wuhan coronavirus cases in the United States surpass 60,000, our nation is in war mode. Winning a war requires all hands on deck. It appears American businesses and innovators are up to the challenge, however, as more and more private companies are contriving creative ways to play a part in beating this pandemic. In New York, Gov. Andrew Cuomo has been making apparent his state’s dire need for more ventilators. In the most severe cases of those infected with COVID-19, patients’ lungs become inflamed and fill with fluid, making them unable to breathe effectively on their own. For these patients, the medical ventilator makes the difference between life and death. The coronavirus pandemic, however, has induced a staggering global shortage in the ventilator-to-patient ratio. The U.S. government has 170,000 ventilators stockpiled strategically, but experts say this may not be enough if the number of cases continues to increase at its current rate. Cuomo explained his state needs 30,000 ventilators, and so far he has only 7,000. Cuomo has been vocal in demanding the federal government prioritize his state’s needs, but the federal government has more than one state to think about.[Helen Raleigh, “How Patriotic American Businesses Are Stepping Up To Beat The Wuhan Virus,” The Federalist, March 27] |
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