The Imperious and Tone-Deaf Congress; An Alternative Virus Strategy Worth Considering
Author: Greg Valliere
March 23, 2020
WE FERVENTLY HOPE AN OUTCRY from the public and the markets will shame Congress into passing emergency legislation by this evening. It will take real leadership.
LAWMAKERS ARE BITTERLY DIVIDED, and the perception is clear — they care more about partisan issues than victims of the virus; some members of Congress even have time for their swimming pools and their stock portfolios.
THERE’S PLENTY OF BLAME TO GO AROUND, but we would be remiss not to note that Bernie Sanders quite clearly views this crisis as an opportunity to enact his agenda — student loan forgiveness, dramatic Medicare expansion, etc. He has taken advantage of Joe Biden’s inexplicable absence from the national stage (Biden apparently will emerge this week).
EVENTUALLY THE STIMULUS BILL will pass, probably in the next few days, with a price tag of close to $2 trillion. There will be a compromise on Treasury oversight, unemployment benefits, and curbs on corporations’ executive compensation and stock buybacks. Individuals will get enough immediate cash to pay for food and basics for a couple of months and small businesses will get desperately needed aid.
THE TONE-DEAF MOOD IN CONGRESS, where everyone is so eager to spin and score political points, contrasts dramatically with the mood in the trenches. Fast-rising politicians — Andrew Cuomo, Gavin Newsom, Larry Hogan, Mike DeWine, etc. — are desperate for aid and have no time for political fighting (despite their outrage over the Trump Administration’s confusing signals on medical supplies).
THIS WILL BE A VERY DIFFICULT WEEK; deaths and new infections will spike in the U.S. We continue to believe that mammoth monetary and fiscal stimulus will help avoid a crippling recession, but there’s only two possible developments that will ease this crisis: first and foremost, an improvement in the numbers coming out of Europe, and second, real signs of hope on new drugs.
EVENTUALLY THERE WILL BE IMPROVEMENT in the Italian numbers, followed by Spain, Germany, the U.K., etc. Maybe there’s some hope for a leveling off there in April. And maybe there’s some hope of a leveling off in the U.S. by May. As for drugs, there’s an encouraging piece in this morning’s Wall Street Journal by former FDA Commissioner Scott Gottlieb about new (and old) therapies.
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AN ALTERNATIVE SCENARIO: We talked this weekend with a very smart fellow who has a different view of what must happen. Locking down the entire country for months, he argues, is unthinkable — it could tear apart the country’s social and economic fabric. Is there a choice?
THE COUNTRY MAY HAVE TO COME TO A CONSENSUS that low-risk individuals, taking extreme precautions, may have to venture out and help the country get back on its feet. Even if the second half of the year is rocky, there’s the huge Washington stimulus, the hope for new drugs, and perhaps the greatest hope of all — that the virus eventually burns itself out.
IF THE ALTERNATIVE IS A DRACONIAN LOCK-DOWN, subjecting the country to a severe recession, there may be a sobering debate soon on taking a different path by summer. It’s a war, of course, which means there will be casualties even on the winning side.
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