An editorial by The New York Times paints a rather grim, not to say marginally insane, picture. US states are suffering from massive costs, and the Trump administration is debating whether to support Democrat states at all.
Basic issues are simple enough:
The Blue states are all major revenue earners. Red state economies are much smaller and contribute far less to revenue.
If the state finances hit the wall, so does the country, in the most unambiguous possible ways.
Now, the theory which is likely to give America its very own DIY Depression:
Reopening America will stimulate the economy, generating revenue.
Sure it will. Unless a massive spread of the virus forces further, longer lockdowns, which it’s likely to do. The US has had a hell of a time trying to test, let alone manage, this pandemic. The virus won’t go away as a result of a few slogans and smug squeakings from politicians.
A much longer lockdown, which is a real possibility if the virus gets out of control, would be horrendous economically. Revenues would implode. No new money would be coming in. State bankruptcies are also a real possibility if it gets that bad.
Yet, that’s exactly what reopening too soon is likely to do. The dumbest first-year economics student would be expected to know that. The Red states will be hit hardest because the sources of their funding are unable to support them.
The big cities have the highest cost bases. If their revenues go, they can’t provide services or even employ people. That effect will snowball through the wider economy as contracts and other work dries up, further depressing revenue.
A brutal reality for the US
The United States currently accounts for 1/3 of total infections and 1/4 of deaths. The nation is in no position to assume opening the already-battered remains of Main Street will solve anything, let alone everything.
The obsessive insularity of Washington to basic human needs is well-known. A hopelessly outdated “political culture” is so far removed from reality that it’ll never see the asteroid coming, let alone dodge it.
Think the Dust Bowl, the Great Depression, and the GFC, and double them, at least. This could be a train wreck from coast to coast. There is no basis to believe reopening can deal with any of the real issues, or do anything but set up revenue for a massive collapse down the track. America really is looking fiscal death in the face.
