Published on May 7, 2020 / Leer en español

Edited by
Sergio M. Marxuach

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1) We had plenty of warning

One of the main themes of the White House’s narrative about the COVID-19 pandemic is that it was impossible to predict. And since no one could have seen it coming, the Trump administration could not be blamed for the faulty response. It actually sounds convincing but for one small detail: we did have plenty of warnings.

As Uri Friedman writes in this article for The Atlantic: “We were warned in 2019 of the grave hazards of a new influenza pandemic by the U.S. intelligence community in its annual ‘worldwide threat assessment.’ They had also cautioned us in 2018. And in 2017. And in 2016. And in 2015. And in 2014. And in 2013, when intelligence officials pleaded, ‘This is not a hypothetical threat. History is replete with examples of pathogens sweeping populations that lack immunity, causing political and economic upheaval.’ (The 2020 worldwide threat assessment, which reportedly yet again flagged America’s vulnerability to a flu pandemic, has been postponed without explanation.)”

So, to be fair to President Trump, his predecessors had plenty of warnings and none did much to prepare the nation for pandemics, including the MERS and SARS scares. However, when the COVID-19 virus was first detected in China last December, the Trump administration played down the threat and did not take the necessary precautions to prepare the U.S., even though government agencies, academics, and think tanks had been warning about a big outbreak for years. It will be up to historians, though, to apportion responsibility for the current crisis.

2) Democrats and Republicans disagree about the scope of the next relief package

As has been widely reported, Democrats and Republicans don’t see eye to eye with respect to the contents of the next coronavirus relief bill, especially regarding aid to the states. But as Roll Call reports, there are plenty of other contentious issues dividing negotiators at this point. According to Roll Call: “Difficult decisions await on issues championed almost solely by one party: President Donald Trump wants to cut payroll taxes and block funding for sanctuary cities. Republicans insist on liability protections for businesses as they reopen and some want to cap unemployment benefits. Democrats are pushing relief for undocumented immigrants and to require states to conduct the presidential election with mail-in ballots.”

On the issue of liability protection for employers, Senator McConnell has already stated it is a “red line for the Senate”, meaning that a bill without any such protections for employers stands no chance of being approved by the chamber. Meanwhile, the issue of a payroll tax cut appears to be President’s Trump own red line issue: “we’re not doing anything unless we get a payroll tax cut”, he said Sunday. However, the chief Republican vote counter in the Senate, Majority Whip John Thune, “acknowledged the GOP is unlikely to get Democrats to agree to both liability protections and a payroll tax cut.” Not to be outdone, Democrats are pushing hard for undocumented immigrants to have access to free COVID-19 tests and to treatment. An issue that is unlikely to gather much support from the other side of the aisle.

It appears that a deal on the next coronavirus relief bill is still way far off into the future.

3) Economic slowdown forces states to cut Medicaid spending

One of the reasons states need Congress to get moving on that new relief package is that the economic downturn induced by the COVID-19 pandemic has reduced states revenues. Governors are being forced to cut spending to balance their budgets and for many states, Medicaid spending is the largest budget item. The irony is that Medicaid was designed to help people precisely in times like these.

As reported in Politico, “Medicaid programs, among the largest budget items in most states, provide health insurance to roughly 70 million poor adults, children, the disabled and pregnant women. The federal government on average pays roughly 60 percent of program costs, with poorer states receiving a higher share. States have the latitude to adjust benefits, payments to health care providers and eligibility requirements with oversight by the federal government.”

But now, governors need Congress’s help as it works on a new package to rescue state budgets battered by the pandemic. “They’re asking lawmakers to provide a bigger boost to Medicaid payments and provide hundreds of billions of dollars in aid to shore up state budgets.” Unfortunately, as we stated above, that relief may take a while.

4) The second wave

Ironically, that additional Medicaid funding is needed right now more than ever. As more than half the states begin lifting shelter-in-place restrictions, many public health experts are worried about a “second wave” of the COVID-19 pandemic hitting the United States. There is evidence that many states are opening up before they have met the federal threshold criteria issued by the CDC a few weeks ago. In addition, many jurisdictions do not have in place the kind of public surveillance mechanisms that are required to keep any outbreak in check. As the AP reported recently “If we relax these measures without having the proper public health safeguards in place, we can expect many more cases and, unfortunately, more deaths.”

That is precisely what we are beginning to see in more rural states such as Georgia, Mississippi, Iowa, and Nebraska, even as reported cases and deaths decline in large urban areas. Partly in response to the actions of these states, “this week, the researchers behind a widely cited model from the University of Washington nearly doubled their projection of deaths in the U.S. to around 134,000 through early August, in large part because of the easing of state stay-at-home restrictions. Newly confirmed infections per day in the U.S. exceed 20,000, and deaths per day are running well over 1,000.”

The real danger here is that “we risk complacency and accepting the preventable deaths of 2,000 Americans each day, epidemiologist Caitlin Rivers, a professor at Johns Hopkins, told a House subcommittee in Washington.” That would indeed be dangerous and morally unacceptable.

5) The Federal Reserve publishes survey results on the impact of COVID-19 on communities and the entities that serve them

The Federal Reserve System carried out a survey to collect information about the impact of COVID-19 on communities across the 50 states and territories and the entities that serve them. The survey “was fielded by all 12 Reserve Banks and the Board of Governors of the Federal Reserve System between April 8 and April 10, 2020, and resulted in 3,899 responses.” The principal findings of the survey are:

• “Nearly 7 out of 10 respondents (69%) indicated COVID-19 was a significant disruption to the economic conditions of the communities they serve and that recovery is expected to be difficult.
• Income loss, business impacts, health concerns and basic consumer needs were the most frequently cited impacts of COVID-19.
• Over one-third of respondents (35%) indicated it will take more than 12 months for their communities to return to the conditions prior to the disruption from COVID-19.
• 72% of respondents indicated COVID-19 is causing a significant disruption on the entity they represent, with 41% expecting to bounce back quickly after recovery begins.
• Nearly 2 out of 3 respondents (66%) indicated demand for their services has increased or is anticipated to increase, and more than half of the respondents (55%) noted a corresponding decrease or anticipated decrease in their ability to provide services.
• A quarter of respondents (25%) indicated their entity could operate for less than three months in the current environment before exhibiting financial distress.”

This could be a valuable tool as local and regional financial institutions plan for ways to increase their impact in their communities.

Quote of the Day

“Out of every crisis, every tribulation, every disaster, mankind rises with some share of greater knowledge, of higher decency, of purer purpose. Today we shall have come through a period of loose thinking, descending morals, an era of selfishness, among individual men and women and among nations. Blame not governments alone for this. Blame ourselves in equal share.”

—Franklin D. Roosevelt, Address Accepting Presidential Nomination, 1932.

Note from the editor

Many people are talking about tradeoffs these days. About how 2,000 deaths a day are an acceptable price to pay to reactivate the economy. After all, thousands of people die every year from car accidents and guns and we don’t prohibit them. Regardless of the merits of those arguments (few, if any, in my view) what strikes me is that in Puerto Rico all the important tradeoffs have already been made, in some cases, a long time ago.

There used to be a time when Puerto Rico had a decent and relatively effective public health system. And we traded that away for what?

There used to be a time in Puerto Rico when the legislature approved bond offerings for the “Fondo de Mejoras Permanentes”, usually in the amount of $400 to $500 million per year. The proceeds of those transactions were ostensibly earmarked for public works. We used them for gazebos, skating rinks, and water parks, among other trivialities. We traded hard currency for shiny baubles, which are of little use right now and left us bankrupt.

There used to be a time when Puerto Rico had a real education system. We now have warehouses to store children during the daytime. And so on with the economic development agencies, the electricity company, the state university…

So please don’t ask me about tradeoffs. All the important ones have already been made by others before me. We are left with the ruins.

“Nothing beside remains. Round the decay\Of that colossal Wreck, boundless and bare\The lone and level sands stretch far away.” (excerpt of Ozymandias by Percy Bysshe Shelley)

This is the end of today’s briefing.
Stay safe and well informed!