Economists Say Pandemic Needs to End Before U.S. Economy Returns to Normal

WASHINGTON — Economists warned Congress Tuesday of long-term damage to the U.S. economy if the coronavirus pandemic is not brought under control soon.

They cautioned during two separate congressional hearings that the slow improvement to the economy since the pandemic hit the United States eight months ago could be short-lived without a vaccine and improved stimulus policies.

“The federal government cannot keep the American economy on life support forever,” said Adam Michel, senior policy analyst at the Washington, D.C.-based Heritage Foundation, a conservative public policy foundation.

The government cannot “tax and spend their way back to economic prosperity,” Michel told the House and Senate Joint Economic Committee during a hearing.

Instead, businesses and schools should be allowed to open with appropriate virus protection measures, he said.

He also suggested that Congress approve a liability shield for employers whose workers might get sick and lengthen the hourly thresholds before they need to start paying overtime.

Some of his suggestions are being debated as Congress considers another round of an economic relief package, also known as the HEROES Act. So far, Democrats and Republicans have not agreed on the amount of money they are willing to spend for it.

The economists and medical experts who testified criticized the slow U.S. response to the pandemic compared with other countries.

Austan D. Goolsbee, a University of Chicago business professor, said that if the United States had reacted as promptly as Germany and other industrialized countries to require social distancing and wearing masks in public, “We would have fewer than 100,000 people dead from this virus.”

Instead, the government reported the U.S. death toll surpassed 200,000 on Tuesday. Unemployment rose to about 14% at the peak of the outbreak in July.

In Germany, unemployment rose by only 1%. In South Korea, the unemployment rate is down because of their prompt response to coronavirus, he said.

“The numbers speak for themselves,” Goolsbee said.

The economists’ criticisms won agreement from most Republicans and Democrats on the Joint Economic Committee.

Republican Rep. Jaime Herrera Beutler said many business owners in her home district in southwest Washington are concerned about permanent losses of their businesses. 

“They’re dying on a vine right now,” Beutler said.

Other lawmakers said part of the blame fell on individuals rather than government policy. Some people who refuse to wear masks complain the requirement infringes on their personal freedoms.

Ashish K. Jha, dean of Brown University’s School of Public Health, said concerns about freedoms go beyond individuals who believe masks impose on them.

“It’s about what kind of society we live in,” he said.

He talked about his three children whose school remains shut down because of the pandemic.

“Their inability to go back to school is an assault on their freedoms and ours,” Jha said.

In a separate hearing before the House Financial Services Committee, Federal Reserve Chairman Jerome Powell said the U.S. economy was improving but “the path ahead continues to be highly uncertain.”

Only after Americans are convinced they can return to their normal activities can a full recovery be expected, Powell said.

Meanwhile, a Centers for Disease Control and Prevention advisory group met Tuesday to discuss who will get the first doses of a vaccine when it becomes available.

A preliminary plan calls for health care workers and essential personnel to be first, followed by elderly persons and others at risk of contracting the disease.

No date is set for approval of vaccine distribution.