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It’s State vs Fed As Economy Faces 18 Months Of Shutdown

State vs Fed

Now that the number of new cases of coronavirus has declined over two consecutive days, the U.S. administration sees a window of opportunity to argue for the reopening of the country, despite the opposition of governors, economists and health experts, some of who foresee another 18 months of lockdown.  Unemployment has skyrocketed in the U.S. over the last few weeks as state and local governments have ordered businesses to close their doors in a bid to contain the spread of the virus. Almost 17 million people have filed for U.S. unemployment benefits in the last three weeks, which suggests a rate of joblessness that hovers around 13% or 14%.

The new model by the Institute for Health Metrics and Evaluation at the University of Washington, cited by the White House, says that there will be no resurgence of the virus in the summer months. 

Dr. Christopher Murray, the creator of the model, says this proves that social distancing measures are working.

"It leads to a situation where every case is infecting less than one other case, and that means if you keep the course, you'll get transmission essentially down to zero," Murray said. 

More than 23,600 people have died from Covid-19 in the US, but the daily tally of deaths and new cases dropped over the weekend.

The University of Washington model release coincides with the White House's desire to "reopen" the country soon. 

Last week, Treasury Secretary Steven Mnuchin said the administration was eyeing May 1st as a target date for restarting the U.S. economy, for whatever that means, exactly. 

However, experts warn that different states will see different peaks. Dr. Robert Redfield, director of the Centers for Disease Control and Prevention, says that the economy has to reopen correctly, “community-by-community, county-by-county.” 

Director of the National Institute of Allergy and Infectious Diseases Dr. Anthony Fauci, whose comments have now rendered him a target by Trump, says that a partial reopening of the economy could possibly begin in May, but cautioned that the outbreak could flare up again in the fall.

Federal Reserve Bank of Minneapolis President Neel Kashkari said that without an effective therapy or a vaccine for the novel coronavirus, the U.S. economy could face 18 months of rolling shutdowns as the outbreak recedes and flares up again in waves. 

“We could have these waves of flareups, controls, flareups and controls until we actually get therapy or a vaccine. I think we should all be focusing on an 18-month strategy for our healthcare system and our economy,” Kashkari said on CBS’s ‘Face the Nation’. 

Yet, Trump insisted earlier this week that he alone could declare the United States reopen for business, despite the fact that state governors, including the Republicans, claim that it is their prerogative to maintain or end shutdown measures. 

It’s the neverending battle now between state and federal control. 

Related: Oil Stumbles On IMF's Gloomy Economic Forecast

“For the purpose of creating conflict and confusion, some in the Fake News Media are saying that it is the Governors’ decision to open up the states, not that of the President of the United States & the Federal Government. Let it be fully understood that this is incorrect,” Trump tweeted on Monday.  

Later that day at a press conference, Trump told reporters that “when somebody’s president of the United States, the authority is total… And that’s the way it’s got to be. It's total. It’s total. And the governors know that.” 

And that may be true, if you’re Kim Jong-Il.

In the United States of America, however, there is a Constitution, which governors are now keen to highlight.  

Governors in multiple U.S. regions announced their intention to take the lead when it comes to reopening their states. Stressing that the U.S. has a Constitution and not a king, New York Governor Andrew Cuomo rolled out a plan for a  regional working group on how to safely reopen and ease stay-at-home orders.

Democratic governors in the Northeast — as well as Republican Massachusetts— and along the West Coast on Monday announced separate state compacts to review potential steps toward restoring business. In separate announcements, the governors said they had agreed to let science, not politics, determine when to lift social and business restrictions.

In the meantime, the harrowing notion of another 18 months of shutdowns forebodes an economic disaster on top of a major health crisis. The only real question is whether another 18 months of shut down would take less of an economic toll than reopening the economy too soon and allowing COVID-19 to relaunch with renewed fury. 

By Josh Owens for Safehaven.com 

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