Recent Updates

  • UK: Gilt Issuance (Sep)
  • Belgium: Business Surveys (Oct), Capacity Utilization (Q4)
  • Flash PMIs: Australia, Japan, France, Euro Area, Germany, UK, US (Oct)
  • Lebanon: Trade in Goods (Aug)
  • more updates...

Economy in Brief

Taxpayers Could Have Been Saved $674 Billion and Had the Covid Spread Curbed
by Paul L. Kasriel  October 13, 2020

I'm from the late Senator Dirksen school of fiscal prudence, i.e., "[a] billion [dollars] here and a billion [dollars] there and pretty soon you're talking real money". The way I figure it, the taxpayers of America, perhaps more accurately, the future taxpayers of America, could have been saved $674 billion in the six months ended August and the spread of Covid could have been curbed if superspreader activities had been shut down and the owners/employees providing these superspreader activities had been compensated for their income losses. (That sentence passed the Word grammar check!) Instead, the federal government mailed adults up to a certain income level, a check for $1,200 and their minor children a check for $500, regardless of whether they had experienced any income loss. Moreover, the federal government topped up individual unemployment insurance benefits by $600 per week through the end of July, regardless of whether that resulted in an increase in the claimant's income compared when she was still employed. Over the six months ended August 2020, the cumulative total of these Covid-related transfer payments to households totaled $2,422.2 billion (see blue line in the chart below).

I looked through the detailed data on nominal personal consumption expenditures in an effort to isolate those expenditures that entailed NOT wearing a mask, were indoors in close quarters or involved large gatherings of people. The categories I identified were dining/drinking outside the home, casino gambling, packaged tours and sporting/concert/museum/library events (the red bars in the chart). I then took the nonannualized but seasonally-adjusted nominal dollar amount of these combined activities in February, the 2020 high to date, $291.3 billion, and multiplied that amount by six for the six months subsequent to February. The product of this multiplication was $1,748.0 billion. The dollar value of these expenditures would include the wages earned by employees in these categories as well as the profits to the owners. This is approximately the nominal dollar amount that owners and employees in these categories would have needed to receive in order to fully compensate them if their operations were mandated to be suspended for the six months ended August. Although I'm no epidemiologist despite having stayed in a Holiday Inn Express one night, I would guess that temporarily suspending these activities would have reduced the number of Covid cases that were actually reported in the six months ended August.

So, if various levels of state and local governments had mandated that these superspreader household activities be verboten through August and the federal/state governments had fully compensated the owners and employees that provided these activities for their loss of income at the February level, $674.2 billion (the $0.2 billion is included to show you that I have a sense of humor) of taxpayer dollars could have been saved compared to the payments governments actually made to households in reaction to Covid in the six months ended August. Moreover, with the suspension of these superspreader activities, the number of new Covid cases would almost assuredly been reduced. For example, in my state of residence, Wisconsin, indoor dining and drinking was allowed to resume in mid May. Is there any wonder why Covid cases are now growing exponentially here? And this $674.2 billion saving most likely underestimates the true saving given the other handouts the federal government has provided businesses.

Viewpoint commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
close
large image