Trump wants the economy ‘raring to go’ by Easter. Economists reject that idea

A Fed official sees unemployment rising as high as 30 percent

Rep. Liz Cheney, R-Wyo., says the economy won't return to normal if hospitals are overwhelmed by the pandemic.
 (Photo By Bill Clark/CQ Roll Call)
Rep. Liz Cheney, R-Wyo., says the economy won't return to normal if hospitals are overwhelmed by the pandemic. (Photo By Bill Clark/CQ Roll Call)
Posted March 24, 2020 at 3:02pm

As some Republicans, including President Donald Trump, push for lifting social distancing measures in place to slow the spread of the novel coronavirus in order to help the economy, economists are joining public health experts in saying such a move risks making everything much worse.

On Tuesday, Trump raised the idea of returning the economy to normal as soon as April 12. 

[Economists say policy timing key to fast coronavirus recovery]

“I’d love to have the country opened up and just raring to go by Easter,” he said on Fox News. "We'll assess at that time and we'll give it some more time if we need a little more time, but we have to open this country up… We can socially distance ourselves and go to work."

He said in a tweet Monday that he would make a decision after a 15-day social distancing period ends about whether to continue such measures.

The idea is drawing quick rejection from some economists.

"As you read various arguments floating around that perhaps we should ease public health restrictions to help the economy, I want you to notice that IN NO CASE ARE THESE ARGUMENTS BEING MADE BY ACTUAL ECONOMISTS," Justin Wolfers, a University of Michigan economics professor, tweeted on Tuesday.

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The economists seem to agree with public health experts that the best cure for the economy is treating the COVID-19 disease first. The faster the health crisis ends, the sooner the nation can get back to work, which means a shallower and shorter recession, without the risk of viral rebound that sends the nation back into a panic.

“We’re not going to get a sense of stability in markets or the economy until we can really marshal the resources we need to really address this virus that’s on par with the resources being put out to address the economic repercussions of this crisis,” said Stephen Roach, a fellow at the Yale School of Management and former chairman of Morgan Stanley Asia. 

“This is a public health crisis. That needs to be addressed, first and foremost, by a massive mobilization of scientific and public health resources aimed at bringing this COVID-19 virus under control,” he said. 

Roach pointed to South Korea as a model for the United States to follow. Both nations reported their first coronavirus cases on Jan. 1, but extensive testing in South Korea has led to more targeted social distancing measures and more businesses staying open, softening the economic agony. 

“The glaring failure of testing and taking this seriously at the start is showing up right now in what’s happening to communities and individuals and the complete free fall of the economy,” Roach said. “We’ve never seen the U.S. economy go down as fast and hard as it’s going down right now.”

But facing a potentially deep contraction — St. Louis Federal Reserve Bank President James Bullard suggested unemployment could hit 30 percent and GDP could shrink 50 percent — some Republicans have said it’s time to face the virus head on.

Texas Lt. Gov. Dan Patrick told Fox News he was “all in” on lifting the social distancing measures, saying seniors like him should accept the risk in order to save the economy.

The idea has also been promoted by Richard Epstein, a conservative legal scholar at the Hoover Institution, who has argued that the U.S. response to the pandemic has been overreaction that “will cause countless dislocations of its own.”

Mike Konczal, director of progressive thought at the Roosevelt Institute, noted the contrast between the health care sector of the economy facing acute strains because of demand for COVID-19 treatment and the rest of the economy where demand is plummeting. 

“We’re going to have pandemic industrial policy,” said Konzcal. “But for health needs, you absolutely have supply chain problems and it’s good to divorce that out from the economy as a whole.” 

Stan Veuger, a resident scholar at the American Enterprise Institute, said it would be hard to even weigh the economic impact of the coronavirus until the U.S. gets the epidemic under control.

“First and foremost, it’d be good [if] we dealt with the public health crisis,” he said. “We don’t know how the public health threat will evolve.”

He said he was surprised at how little progress has been made. 

“We’re not up and running in testing, haven’t produced extra ventilators, we haven’t ramped up facial mask production even,” he said.

Trump invoked the Defense Production Act (PL 81–774) last week but delayed utilizing its power until Tuesday. He resisted activating the statute last week, saying that governors should take the lead on ordering medical supplies and that the private sector was stepping up production voluntarily.

At least some Republicans don't agree with the idea of rushing back to normalcy before the pandemic abates.

Wyoming’s Liz Cheney, the number three Republican in the House, voiced her opposition, echoing the views of Scott Gottlieb, Trump's former Food and Drug Administration head, who said on Twitter that "there's no such thing as a functioning economy and society so long as covid-19 continues to spread uncontrolled in our biggest cities.”

Cheney, retweeting Gottlieb, said, “There will be no normally functioning economy if our hospitals are overwhelmed and thousands of Americans of all ages, including our doctors and nurses, lay dying because we have failed to do what’s necessary to stop the virus.”