Jon Margolis is a VTDigger political columnist.
You know that old line: cheer up; things could get worse.
So cheer up. Things are about to get worse. In the whole country. Perhaps in the whole world. And even in (relatively) privileged Vermont.
We know this because things – meaning the pandemic and the economy – have already gotten worse, with no prospects for speedy improvement. Without improvement, stagnation is possible but deterioration is more likely.
It has already begun. Last month more Americans got sick and more died of Covid-19 than ever before. By the end of the month, more people were filing for unemployment. The end of the month was also the end of the year’s second quarter, in which the nation’s economy contracted by 9.5 %, by almost a third on an annual basis.
All of which would have been far worse had the federal government not poured trillions of dollars into the economy and into suppressing the virus. Now – astoundingly – that same federal government is dithering and bickering over whether to pour in new trillions, even though most officials know that the likely result of not doing so is nothing less than mass impoverishment.
Because, it seems, some of them (Republicans) worry that continuing to provide the $600 weekly supplement to unemployment compensation would mean that some people would earn more by staying home, and therefore refuse to return to work.
Of course, this will happen. Everything happens. But not much. Wages are not the only reason people work. Work is where most Americans get their health insurance. Staying insured is a powerful economic incentive. Besides, people like to go to work. It gets them out of the house. It offers variety and a structure to the day and week. The vast majority of people are likely to head back to the shop or office as soon as they think it is safe.
Meanwhile, they need money. And everybody else needs them to have money so they can spend it. For better and for worse (it’s both) 70% of the U.S. economy is consumer spending. Consumers cannot spend what they do not have.
So absent quick action by Congress and President Donald Trump, the economy could collapse. Most of the households relying on unemployment insurance have little if any money in the bank. That includes more than 32,000 unemployed Vermonters.
Or more. Unemployment in the state fell in June (to 9.4%), as it did in most other states. But it almost surely rose again last month (figures will not be available for another week or so),
Eliminating that payment would mean something like $20 million fewer dollars per week coming into the Vermont economy. That’s an annual loss of about $1 billion (an estimate; not all the unemployed got the $600 supplement) in a $35 billion economy.
No, it is not likely that either the state or the nation will revert to a Great Depression level of poverty, with homeless drifters riding the rails, gathering in makeshift “Hooverville” campsites, committing petty (and not-so-petty) crimes just to get something to eat. The social welfare systems enacted over the last 90 years should prevent things from getting that bad.
But even a step in that direction will not be pretty. Working men and women deprived of both work and income can get desperate. Who knows what desperate people may do?
We probably don’t want to find out.
Especially because – as no less perceptive an observer than Donald Trump pointed out – the plight in which these desperate people would find themselves “is not their fault … it’s China’s fault.”
Perhaps so, but it’s also his fault. From China, the virus spread to almost every country in the world, most of which dealt with it more capably than did the United States. Only in the United Kingdom, Chile, and Peru have a greater percentage of the population died of Covid-19 than in the U.S. The richest and most technologically capable country in the world still can’t do enough testing and tracing, still has overcrowded hospitals staffed by ill-equipped doctors and nurses. This is, without a doubt and without a close second competitor, the greatest failure of government in American history.
Under ordinary circumstances, any president would be held responsible for this failure. But Trump has brilliantly altered Harry Truman’s motto. Truman’s version was: “The buck stops here.” Trump’s is: “There is no buck and there is no here.” In some circles, this seems to be working for him.
For the most part, Vermont is not in those circles. The danger here is that people will fail to recognize the depth of the peril because right now the state is in (relatively) good shape. The stores are open and so are the restaurants. Most people are going to work and going shopping. Life seems (relatively) normal.
That’s not just because Gov. Phil Scott and his administration were responsible and cautious in dealing with the virus. They had it easier than many other governors. This state is richer, healthier, and better educated than most, with few people who don’t speak English or live in cramped quarters. The local culture does not look kindly on egomaniacs who think having to wear a mask diminishes their liberty.
Still, everybody plays the hand at hand, and Scott, Health Commissioner Dr. Mark Levine, and other Vermont officials have played theirs rather well. The virus is not gone from Vermont; it is under control. There’s a reason 83% of Vermonters approve the way Scott has handled Covid-19.
But no state is an island, entire of itself. Covid-19 rebounds nearby and does not recognize political boundaries. As the week began, Congress and the White House had not agreed on a plan to save the economy.
They may. But another good old line is: hope for the best; prepare for the worst. It may be coming.
