Unsanitized: The COVID-19 Report for July 11, 2020

Just One Week to Stop a Calamity
Also, why a bridge to a vaccine hasn't been constructed

 

A rare photograph of Democratic and Republican leaders in the same room
together. This won't happen again for another week, with a crisis
looming. (Tom Williams/CQ Roll Call via AP Images)

First Response

We are two weeks away from the expiration of enhanced unemployment
payments, the critical lifeline

for over 30 million Americans and counting. The spread of the virus puts
most of those people in no position to find a job or return to work. The
imminent and dramatic loss of income, combined with ends to eviction
moratoria, sets the stage for a mass homelessness crisis when the safest
place to be right now is at home.

Yet amazingly, there have been no face-to-face talks between Democrats
and Republicans on what to do next. And there won't be any for another
week
,
since the Senate is out of session until then. That means there's
going to be just one week to stop a calamity.

All negotiations thus far have been conducted through the media. After
House Democrats passed a $3 billion package called the Heroes Act, Mitch
McConnell rejected it as a fantasy wish list. The White House has
countered with a $1 trillion cap
on the next
bill, when experts have said $1 trillion is needed just for state and
local governments, let alone enhanced unemployment, possible stimulus
checks, school funding that provides the only path to reopening in the
fall, small business support, etc.

Speaker Pelosi quickly rejected

that $1 trillion cap, though she called it "an interesting starting
point." Everyone is saying there will be a bill

by the end of July
,
but the two sides are trillions of dollars apart
.

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As I have throughout, I look to the leverage. Republicans don't have
very much left that they really want, although you'd think
self-preservation would be a factor as they stare down the barrel of a
second depression. The major plank on the Republican side is business
immunity for workers or customers contracting the virus on their
premises. They will try to make that the tribute for any increase in
spending off their initial offer.

I've heard Republicans talking about a second stimulus check means
tested for those making only $40,000 or less
.
This would still get money to at least 80 million households. But if it
was absurd to means-test stimulus payments in March when a few million
had lost their jobs, it's even more so now at 30 million. The income
threshold will be based on last year's tax return, and if you lost
your job in the crisis, last year's earnings are a fleeting memory.

I've also heard about dropping unemployment to $200 a week from $600.
This would cut more than 30 million incomes by close to half (depending
on the state share; in Florida, for example, where the maximum benefit
is $275, it would be a 46 percent cut). What do you think happens to an
economy if you cut incomes by half for close to 20 percent of the
workforce? You get less spending and more unemployment. Even with our
current supports, permanent job losses are rising. They'll go through
the roof with this kind of cut.

And as I've been stressing
,
you cannot do just unemployment enhancement without boosting state and
local government grants, because it puts too much pressure on mayors and
governors to re-open. (I'll have more on this on Monday.) If you limit
state and local spending, you'll have the same spiraling effect that
comes from limiting the unemployment boost. The CARES Act was inadequate
because of the lack of state and local aid; son of CARES Act is poised
to be inadequate because of a lack of support across the board. It would
also be nice to spend some money to, you know, stop the virus, since
that's the primary hurdle to economic recovery.

We are hurtling toward disaster, and this is a moment where lawmakers
need some pressure. We have engaged in a large demonstration project
over the efficacy of cash payments, and whaddya know, they work
.
But they can't work in isolation; forced austerity at the local level
created a bad dynamic, and a lack of infrastructure for contact tracing
and other methods to mitigate spread left us unprepared for the
inevitable surge. This time, Congress needs to look at pandemic response
as a coherent system, where actions (and lack of actions) have
consequences. Otherwise we will continue our unblemished record as the
worst country at handling the crisis in the developed world.

Of course, when you engage in down-to-the-wire negotiations and give
yourself one week to design such a system, you shouldn't be surprised
at the insufficient outcome. The kakistocracy
rolls on.

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No Money in Immunity

A lot of money has been put into finding a vaccine for COVID-19. But a
group of doctors and researchers think there's already a usable bridge

to that far-off day: plasma injections of blood from coronavirus
survivors, rich in antibodies. So far this is more theory than practice,
though the theory is plausible. Blood of survivors is being used
selectively to treat sick patients; why wouldn't it help those who
haven't gotten the virus fight it off? There have been adverse effects
to using this
kind of treatment with respect to other pathologies, some of them
serious, and it shouldn't be attempted without research. But even that
isn't happening; the idea has been rejected by federal officials and
pharmaceutical firms. Why?

Some argue that plasma should go to treating the sick, not prevention,
and we need evidence that it works in the sick first. That's
reasonable but I suspect it's not the real issue. "Advocates for the
immunity shots say businesses are reluctant to invest in a product that
could soon be replaced by a vaccine," the article notes, "so the
government should offer financial incentives to offset that risk."

There is a lot of money going to vaccine research, though not nearly
enough; only about 8 percent

of federal coronavirus response spending has gone to fighting the
pandemic. This immunity shot wouldn't even cost that much; you could
finance it without much trouble. But the real head-shaking part of this
is how the allegedly immutable laws of capitalism take precedence over
the laws of saving lives. It's just not considered cost-effective to
create a possible short-term solution to the most cataclysmic public
health event of our lifetime. You can't get rich off it. So nobody
does it.

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Days Without a Bailout Oversight Chair

106
.
The Fed announced some more bond purchases
,
including blue-chippers Apple, Disney, and GE. Apple, at least, has
definitively said it issued bonds to fund buybacks and dividends
.
So the Fed is using an economic rescue program to reward investor
payouts. Could be a good topic for the bailout oversight chair we
don't have!

We Can't Do This Without You

Today I Learned

* Former FDA commissioner Gottlieb estimates nearly 1 percent of the
country

is infected, which is a lot but also makes the "herd immunity" idea
absurd. (CNBC)

* PPP just wasn't enough: 1 in 5 small businesses plan to lay off
workers

after the loan runs out. (Bloomberg)

* The scramble from foreign students

after the ICE ruling effectively deporting them is intense and
self-destructive. (Washington Post)

* Full-up hospitals

in Houston. (ProPublica)

* An outbreak in Syria

sounds like an absolute tragedy. (AP)

* Another prisoner release

in California to protect against more spread. Good. (Los Angeles Times)

* It's a good thing federal policy facilitated Boeing getting a $25
billion loan, now that it can't sell its planes

anywhere. (Wall Street Journal)

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