(Bloomberg Opinion) -- President Donald Trump’s speech about the coronavirus pandemic did not go well. His travel ban on Europe made him seem confused and poorly informed; because the virus is already rapidly expanding within the U.S., closing the borders won’t help. And his plan didn’t have as big of an economic stimulus as investors had hoped for, causing stock futures to fall.
There were two bright spots in the otherwise disastrous address. First, Trump said that he had persuaded insurance companies to extend coverage to coronavirus testing and waive co-payments for tests. If this happens, it will help improve the U.S.’s dismal record on testing.
A second piece of good sense in Trump’s speech was his proposal to extend $50 billion in loans to small businesses. This is a decent start, but $50 billion is nowhere near enough. The number needs to go up, and fast; credit needs to be extended to larger businesses as well and the program should include grants in addition to loans.
The goal of business-support programs should be threefold -- prevent workplaces from spreading the virus, support idled workers until they can return to work and help businesses stay afloat. Much office work can be done from home, at least for a few weeks. But factories, restaurants, stores and transportation can’t stay open without putting workers and customers at risk of infection. If a business faces a choice between closing and laying off workers or spreading the coronavirus, there are no good options. And if local governments avoid locking areas down out of fear of putting restaurants and stores out of business, that will spread the virus.
Offering emergency low-interest loans to manufacturing, retail and transportation companies, and paying at least some portion of the salaries of workers who stay home, would allow these businesses to resume operation quickly when the danger is over. This is going to cost a lot more than $50 billion, but it will be worth it in terms of economic growth and public health.
There were two very important emergency measures that Trump left out of his speech: paid sick leave, and expanded medical services.
Paid sick leave is a crucial tool for stopping the spread of the virus. If people have to choose between going to work with coronavirus and being unable to pay their bills, many will choose to work, where they’ll infect their coworkers, making the epidemic much worse.
It’s also important for helping low-income workers avoid economic devastation. As economist Gray Kimbrough has noted, workers at the lower end of the wage distribution tend to have less access to sick leave:
Without paid sick leave, low-wage workers who choose to stay home will fall behind on rent, miss car or credit-card payments or even be unable to buy food. The plan being put forth by Democrats in Congress includes paid sick leave; Trump was widely expected to include it in his proposals, but he left it out.
Trump also neglected measures that would directly attack the epidemic. Fixing the country’s woeful testing situation is job No. 1, and Trump’s earlier $8.3 billion measure is utterly inadequate. The president should have promised more money, as well as streamlining regulations that hamper testing across the country. The U.S. should be approving and purchasing foreign test kits and materials while allowing labs across the country to make and use their own tests. And wherever possible, the government should be footing the bill.
But testing alone won’t be enough; a huge number of Americans probably will need hospitalization. But unless the government takes drastic steps, the hospitals are going to overflow. Although the U.S. is a rich country, it doesn’t do much of its health care in hospitals; as a result, it has fewer beds relative to its population than most other countries struck by the pandemic.
This normally isn't a problem, but if coronavirus patients start to overwhelm hospitals, as has happened in Italy, it will quickly become catastrophic. Death rates will rise, and infection rates may also increase as surplus patients are cared for by unprotected family members instead of professionals.
To head off this disaster, the U.S. must immediately spend on constructing makeshift hospitals and hiring and training more medical workers. The U.S. may be unable to match China’s speed, where a new hospital was reportedly built in just 10 days. But if it starts now, the government can expand capacity substantially. Furthermore, the government should pay for all coronavirus-related hospitalization costs.
These emergency measures will cost a lot of money, but with U.S. government borrowing costs at or near historic lows, the extra debt will be cheap to finance. And the spending will act as fiscal stimulus that buoys the flagging economy. The health and safety of the public is the government’s foremost duty. Trump needs to do much more than he’s doing. He needs to support and sign the Democrats’ plan to provide paid leave and other economic supports, and he needs to vastly expand both testing and hospital capacity. The U.S. is running out of time.
To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.
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