Unsanitized: The COVID-19 Report for June 23, 2020

Whistling Past the Economic Graveyard.
Plus, a case spike update and the travel coupon idea.

 

Activists with Make the Road New York (MRNY), a support organization for
immigrant and working class communities, demonstrate in Queens in May.
(Bebeto Matthews/AP Photo)

First Response

When we last left the economy, one better-than-expected jobs report had
the policymakers with unfortunately significant control over the
country's next moves thinking that the nation was wholly back on
track. Optimism swept the land. So did spiking coronavirus cases, which
may have put a kink in that narrative. But well before that, you could
already see the storm clouds forming.

Federal policy is starting to expire; for example eviction protections
for federally-subsidized properties run out at the end of July. But in
the states, many of which enacted their own moratoria, renter
protections are already running out. In New York City there was a
decent-sized rally
Monday
protesting the imminent opening of housing courts. You can expect
thousands of eviction cases the moment courts reopen. Moving up the
housing ladder, the delinquency rate on mortgages has more than doubled

since March, to its highest level since 2011. This could be leveling
off, but with boosted unemployment running out in five weeks, that
cresting could be temporary.

I've been serially collecting stories of closing small businesses.
Here's one for shops
in
the Santa Clarita Valley, California, and here's another for
restaurants in L.A.
Some
high-risk storefronts turn over all the time, but every community in
America is experiencing this at a higher level right now. At the
higher-class edges of Main Street, business mega-bankruptcies with over
$1 billion in debt are expected to hit a record

in 2020. And smaller businesses won't be restructured in bankruptcy,
but liquidated.

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That's why the layoff figures we see now are of a different type than
the big numbers from back in March and April. These feel more permanent
, the
result of businesses throwing in the towel or cutting back to avoid that
scenario. The permanent job loss phase has arrived.

That's even more true in the public sector, where the carnage from
lost revenues

has created a scramble. Every last scrap of gimmickry is being
generated-somehow a California budget deal was reached yesterday
,
though it relies in part on an expected $14 billion in federal
money-but you cannot fully paper over such an historic collapse. In
particular, we're seeing rapid cancellation of planned infrastructure
projects

at the state and local level, much of which is funded by road and excise
taxes that aren't being used as people drive and move things around
less. Even if the feds pony up funds for infrastructure, it won't fill
the gap, because federal funding has to be matched at some level
locally, and if the money isn't there, the projects won't go
forward. (There's also a five-year extension of the surface
transportation bill expiring in September!)

In short, we have a mess. And it was a predictable one. While everyone
was patting each other on the back for the wonderful prevention of
poverty and boost to low-end income from the emergency relief, it was
plain to see that it would fade too soon
,
essentially holding the poor and the near-poor and the unemployed
hostage to a Washington power play. This was bad policy, as the second
round never matches the first, even though in this case the needs will
be greater. We had a temporary bridge in March; we have growing pockets
of permanent joblessness and bankruptcies and state budget holes now.

The golden boys of economics, Obama and Bush veterans, have mapped out a
plan for recovery

that has a couple of good elements-automatic triggers for federal
benefits and more work-sharing is solid-along with "incentives for
work" that seem to race past the near-term crisis (including the
crisis of unsafe workplaces) and go right to the fun recovery stuff.
Nathan Tankus gives this a much longer treatment
.

Too many policymakers, when not outright ignoring the pain out in the
country, pretend that there are a couple dials to tweak with a problem
as big and complex as this one. It's astonishing that there won't be
talks on another round of immediate relief until next month, per
Republicans in the Senate. The outlook is pretty dire and they're
playing a game of leverage. It's revolting.

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South by Southwest

Here's a semi-regular update on the spiking states in the South and
Southwest. Arizona saw a new high for hospitalizations on Monday,
suggesting that even if deaths are muted

so far, the virus makes people sick enough to need serious treatment.
About 84 percent of ICU beds are in use. Texas Governor Greg Abbott is
very, very cross

with the state over the rising case numbers, enough to... ask pretty
please if people will stay home and maybe wear a mask, but not requiring
anything because that would destroy freedom. Hospitalizations there have
doubled.

We probably won't know much about the state of hospitals in Florida
before long, because the state has altered ICU reporting

to only list those patients who require "an intensive level of
care." ICU stands for Intensive Care Unit. Feel free to roll your eyes
at this point.

Here's Max Nisen

on how to manage this, mainly through contact tracing, social distancing
and crowd control indoors, and mask use.

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Double Coupons!

As we begin to seriously discuss additional economic stimulus, we're
also likely to unseriously discuss it. That brings me to the proposal
from Martha McSally, well on her way to losing her second straight
Senate election. Her latest Hail Mary, reported last night by Steven
Dennis ,
would give $4,000 to each American as a tax credit if they take a
domestic vacation. (It appears to be good for 2020 and 2021, meaning
that you could conceivably grab $8,000 in all.)

This manages to be unbelievably dangerous short-term and a giveaway to
the rich long-term. It's not a refundable tax credit, so you only get
the money if you have tax liability, ruling out millions of households
that don't make enough. Also you'd have to front the money since you
only get it back come tax time, likely ruling out millions more. It's
best understood as a tax cut for the rich to take trips they'd already
be inclined to take, especially in 2021. And sending people
criss-crossing across the country right now to pollinate touristy areas
with the 'rona just speaks for itself.

Lest you believe that McSally has terrible ideas, I must inform you that
she is a very busy senator, what with the fundraising and fundraising
and such, and she doesn't trifle with such banalities as "writing
legislation" or "coming up with them." This idea came entirely
from the U.S. Travel Association
, the
travel industry trade group, right down to the $4,000 number and the
dates in the plan. It's itself a version of the first-time homebuyer
tax credit, another "stuff well-off people with money" concept used
during the financial crisis, which merely pulled spending forward

and offered no net boost whatsoever.

You'd think a Republican like McSally wouldn't need help writing a
"throw free money at rich people" bill, but that's lawmaking, 2020
style.

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Days Without a Bailout Oversight Chair

88
.

We Can't Do This Without You

Today I Learned

* I think Trump has long admitted that he slowed down testing in March,
but that was when the CDC was mostly in charge. I think he's just
being a loudmouth now
,
though that's redundant. (Politico)

* The immigration executive order
,
by contrast, is not just talk, it's an appalling policy with the
pandemic used as an excuse (Washington Post)

* More pandemic excuses for deregulation, this one severely damaging
mortgage underwriting
.
(National Consumer Law Center)

* How consolidation

made the airline industry impact from coronavirus worse. (ProMarket)

* Just what we needed, toxic hand sanitizer
.
(New York Times)

* The pandemic is the "biggest psychological experiment

in history." (Scientific American)At least TJ Maxx is doing well
.
(Wall Street Journal)

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