22 United States The EconomistMarch 28th 2020
21net decidedly more European, at least tem-
porarily. The federal government would
pay to top up unemployment-benefit lev-
els by $600 a week—an enormous increase,
given that the current weekly average is
$385. The set of people eligible for benefits
would also be expanded to include inde-
pendent contractors, such as gig-economy
workers. Those who have been laid off but
not fired could receive compensation for
lost hours. And the length of the benefit
period would be extended from the usual
26 weeks to 39 weeks. The cost of all of this
is thought to be $260bn: a serious expan-
sion of a targeted programme.
A similarly gargantuan wad of cash—
$250bn—will be spent on a less targeted
scheme, sending cheques to Americans di-
rect from Uncle Sam. Below some generous
income thresholds ($75,000 a year for a
single person and $150,000 for a married
couple) every family can expect $1,200 per
adult and $500 per child. This is the best
version of a cash transfer that was pro-
posed. Previously the White House had
pushed the idea of a payroll-tax holiday; an
early version of the stimulus bill ignored
people who did not file taxes. Both would
have excluded those with the lowest in-
comes from an ostensibly universal pro-
gramme. Reaching everyone eligible now
will require ingenuity, such as using ad-
ministrative data from states, says Sam
Hammond of the Niskanen Centre, a think-
tank. But even if sent quickly, the cheques
could be both too small for those who need
them and too big for those who do not.
The government is also expected to set
aside $500bn to stabilise firms and states.
The capital could facilitate lending several
times larger than that. Democrats in Con-
gress and the White House got stuck on a
(relatively) small portion of the pro-
gramme, the $75bn set aside to bail out em-
battled big firms like airlines and those
deemed critical to national security—be-
cause of the latitude the treasury secretary
would have to set and disclose the terms of
loans. A compromise struck in the dead of
night bulked up independent oversight.
A more intriguing scheme is the $350bn
set aside to save small and medium-size
firms (those with fewer than 500 employ-
ees). The programme would give loans of
up to $10m without interest or fees to pay
for employees, rental costs and sundry oth-
er expenses. These would then be forgiven
in proportion to the share of staff spared
the sack: a firm that kept all employees
would owe nothing; one that dispensed
with half would owe half, and so on.
This is a more complicated idea than
those devised by European finance minis-
ters facing down the pandemic. Rishi Su-
nak, the British chancellor, pledged to pay
up to 80% of wages for furloughed workers;
the Danish government could pay up to
90% of the costs. The added hurdle inAmerica may mean that the most sophisti-
cated operations get the grant-loans (or
“groans” in bureaucratic argot), while
mom-and-pop operations languish. It may
also mean that even more money will be
needed. Research from Glenn Hubbard, an
economist at Columbia Business School,
and Michael Strain of the American Enter-
prise Institute, a think-tank, estimates that
total needs could amount to $1.2trn—
roughly triple the sum allocated. With the
ink not yet dry on the phase-three bill, big-
ger bail-outs may be needed in future.
The extraordinary legislation is not in-
tended to avoid the recession that already
seems to have arrived, but to spur the fast-
est possible rebound. This of course re-
quires that the cause—the covid-19 pan-
demic—is effectively dealt with first.
But after a brief period of taking the vi-
rus seriously, President Donald Trump
seems eager to lift restrictions as soon as
possible. He has taken to saying that “the
cure cannot be worse than the problem it-
self”, and that he wants the country
“opened up and just raring to go by Easter”,
which epidemiological projections sug-
gest is unwise. The collapse of the stock-
market, which used to be Mr Trump’s ba-
rometer of success, may be spooking the
president. Markets jumped in anticipation
of the coming stimulus. But pre-emptively
relaxing the restrictions would harm both
public health and the economy.
Because health authority is devolved to
the states, it is unlikely that Mr Trump
would pre-empt local declarations of
emergency. But some states could follow
suit, and the president’s supporters might
not adhere to the recommended course of
social distancing. Already, the lieutenant-
governor of Texas has suggested that the el-
derly might risk death for the sake of the
economy. Liberty University, an evangeli-
cal Christian institution led by a devotee of
the president’s, is proudly inviting thou-
sands of students back to campus in de-
fiance of public-health advice.
Mr Trump appears to be defaulting into
an old playbook—vacillating wildly in the
hope of winning concessions. What may
work with Democrats or North Korean dic-
tators has no chance against a virus, how-
ever. And as things worsen, as seems likely,
such irresolution may look like political
malpractice. Already, New York appears to
be a new disease hotspot. “The apex is
higher than we thought and the apex is
sooner than we thought,” said Andrew Cu-
omo, the governor of New York, in his ad-
dress to citizens. He is warning that the
city’s health system could be overwhelmed
by lack of ventilators and protective equip-
ment for staff. The medicine—a controlled,
national shutdown of the economy—may
be strong stuff. But a premature reopening,
leading to rampant transmission of the vi-
rus, could produce something far worse. 7A
mong manyworrying data points from
the coronavirus crisis, one in particu-
lar has struck Americans. In a report pub-
lished on March 18th the Centres for Dis-
ease Control and Prevention (cdc) showed
that of the 508 known patients to have been
hospitalised in the United States by March
16th, two-fifths were younger than 55. Of
those, half were between 20 and 44. For a
virus that is meant mostly to affect elderly
people, those figures were extremely wor-
rying. In the overall population adults aged
19 to 55 make up 47% of the population.
The report set off a storm. On March
22nd Anthony Fauci, a leading member of
the White House’s task-force on the dis-
ease, noted that young people are certainly
not immune. “All bets are off, no matter
how young you are, if you have an underly-
ing, serious medical condition,” said the
doctor. Alexandria Ocasio-Cortez, a 30-
year-old Democratic congresswoman, told
young people they should be concerned
not only for their elderly relatives but also
for themselves: “Let me tell you something,
in the state of New York, about 55% of our
cases are with folks 18 to 49.”
It remains to be seen whether young
people will continue to make up such large
proportions of those hospitalised. But it
seems unlikely. Since the cdc’s research
was published, the number of confirmed
cases in America has leapt from 4,226 toYounger Americans have so far been
more vulnerable. This may not lastViral exceptionalismThe bills you have
to pay
Gee my life’s a funny thing