Tag: Coronavirus Case Plateau

Tax Revenue Has Never Been More Important

The Daily Escape:

Harris & Ewing “Less taxes, more jobs”, US Chamber of Commerce campaign in 1939. Photo via Shorpy. Maybe the sign should have said “lower taxes”. It was the first of 25,000 such signs put up all over the nation as part of a drive for a reduction in corporate taxes. And it worked. An alliance between the Chamber, Henry Morgenthau, Treasury Secretary, and Sen. Pat Harrison, (D-MS) conservative chair of the Senate Finance Committee, prevailed over the New Dealers. He blocked further tax hikes, and helped to create new corporate tax loopholes. Roosevelt went along, expecting that business would support him. The following year, the Chamber simply demanded more tax breaks, while backing Wendell Willkie. It’s all so familiar. Trickle down is an old idea, and everything old is new again!

 Here’s an interesting chart from End Coronavirus.org showing the progress of states toward beating the current COVID-19 pandemic. The numbers are through May 5. Those in green are winning the fight, those in yellow are nearly there, and the red ones still need more action:

There are four states in the green: Alaska, Hawaii, Montana and Vermont. Ten are nearly there, including Maine, Louisiana, New York and South Dakota. The remaining 37 still need work, some more than others. And many of the “needs more work” states are exiting their lockdowns this week.

So it goes in America. States and cities are going broke, primarily because of the sharp drop in tax revenues since the shutdown. They all face increased costs, from unemployment claims to spending on additional hospital capacity, and overspending on new purchases of PPE because of federal government inaction.

New York City says it will need $7.4 billion in federal aid, while NY state faces a $13 billion shortfall; Alaska’s budget gap might top $1 billion; Colorado’s at $3 billion. California? Its shortfall may be $54 billion. Red ink will be true for nearly every state, county, city, town and village in the country. States can’t deficit spend. They and their local governments must balance their budgets somehow, with some combination of federal aid, budget cuts, or tax increases.

In addition, the WSJ reports that some manufacturers that furloughed employees during lockdowns say their plants definitely won’t reopen.  Manufacturing output last year finally surpassed the 2007 previous peak, but factory employment has not returned to levels reached before the great financial crisis. It appears that in 2020, it will again fall below 2007 levels. And the more that job losses turn from temporary to permanent, the bigger the hit to unemployment insurance, to consumer spending, and to every company that relies on it—including manufacturers.

Wrongo spoke by phone with the mayor of his little town this morning. We are still not sure how we will balance the town’s 2020-2021 budget. In most years, the budget has been approved by the voters in May, but that will not happen this spring. The consequence is that, regardless of how the budget gets balanced, the town’s recovery will likely take several years.

So, states and cities think they have little choice but to reopen. They need the tax revenue, while they face even higher costs if they start an aggressive test and trace program. And they can’t expect the federal government to fund that new testing and tracing.

So most states are moving toward opening, regardless of whether they are red, or blue.

But, states may not all be EQUALLY reckless in what they choose to open, some are planning a phased reopen, followed by a re-evaluation before moving forward to the next step. Some are opening up just about as fast as they closed businesses six – eight weeks ago.

We are living in a federal system with a broken central government. The federal government has handled the pandemic badly, and shows no interest in trying to do better now. Even a robust federalism will fail if there is no federal financial help for the states.

It is a hell of thing to be shown clearly and in no uncertain terms that your federal government doesn’t give a shit if your citizens live or die.

Or if your state suffers a debilitating blow to its finances and future.

Wrongo can’t be sure, but this is probably how black people have felt forever. Now it applies to the rest of us.

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Saturday Soother, Covid Plateau Edition – May 2, 2020

The Daily Escape:

Spring flower bloom at Keukenhof Garden in Holland. (Hat tip to Ottho H.)

Remember when we had fifteen COVID-19 cases, and they were just going to be gone, like a miracle?

If you ask Trump, that’s where we are, plus a few orders of magnitude. All of the recent happy talk about reaching or being past the peak have omitted the detail that so far, “flattening the curve” isn’t substantially reducing the number of cases, or deaths.

The theory was that once we “flattened the curve”, we could ease up on social isolation, mask-wearing and get back to work. When we think about the downside of the curve, we think bell curves, with a sharp rise and fall from a high peak. As Wrongo said on April 20, that was unlikely to be the outcome, because it didn’t happen like that in countries that started fighting the virus long before us. And that’s how it seems to be working out. Here is where we are:

Source: Washington Post

The chart tracks a 3-day average of cases, since that smooths out some of the big day-to-day variances. As of April 29, it seemed clear that we have reached a peak, but we’re not showing any real signs of a rapid decline. This means the COVID-19 curve could remain elevated for a long time.

And we should remember that 878,839 cases are still active.

Politicians are obsessed with “the peak.” Are we at it? Are we past it? When will it come? Has it come? Now they’ve turned to communicating their plans for reopening the economy. That makes sense. Re-opening is becoming urgent, with more than 30 million Americans out of work, but it’s dismissive for politicians to say we’re past the worst of it “medically” while more people go to the ICU every day.

Massachusetts governor Charlie Baker (R), sees the plateau, and wonders when the curve will start to decline:

“Baker focused on hospitalizations and ICU admissions, saying, we’ve basically been flat for 12 days. We’re flat at a high level. But 12 days, 13 days counting today — you’re not going to find a lot of other places that just sit like this for 13 days.”

Former FDA Commissioner Scott Gottlieb MD, an advisor to Baker, tweeted:

IHME (mentioned in the tweet) is a closely watched model from the University of Washington Institute for Health Metrics and Evaluation.

What we do over the next few weeks will determine whether we get this right, or whether COVID remains a large ongoing threat. We need to understand the potential risks that come with a decision to reopen, and make plans to mitigate these risks as best we can. Some states, like Connecticut, are planning carefully.

If we look state by state, in about half of the country, the numbers of cases are still rising. In about another third of the country, there is a leveling off. Only in a minority of states are the numbers actually coming down on a daily basis. New York, Washington, Louisiana and Idaho have had reductions of more than 50% from their peaks in new infections.

According to STAT, there are several possible outcomes: Recurring small outbreaks, a monster wave of cases, or a persistent crisis. And no one knows which outcome is most likely. We should expect new infections to start rising again in states without much testing, but with large populations that opened early like Texas, Florida and Georgia.

We should also realize that in some states, cooking the books about new cases and deaths will happen. Newsweek reported data compiled by Florida medical examiners was no longer being reported by the state government. The official state data has not been updated in over a week.

Acting like we’re flattening the curve when we really don’t know if we are, is likely to create a San Andreas-sized political earthquake if cases spike again.

But let’s try to get past all this, because it’s time for another Saturday Soother, when we stop checking Twitter, and think about spring.

Here on the fields of Wrong, the pear, plum and cherry trees have flowered, while the crab apples are soon to bloom. We have bluebirds nesting in both bluebird houses. Our weather remains cold and wet, so stay indoors and brew up a hot mug of Bengal Spice tea.

Now grab a socially distant chair and have a few minutes of fun with a song parody by the Opera Guy, Matthew Ciuffitelli. Here’s his parody of “Phantom of the Opera”, called “Phantom of the Quarantine”. Wrongo promises you won’t be disappointed:

Those who read the Wrongologist in email can view the video here.

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