We Need a Shadow Government

Republican rule in the US is a horror show.  We get incoherent ramblings from our president on injecting bleach into our veins, calls for the states to file for bankruptcy from the Senate majority leader, a veto of modest IMF support for developing countries hammered financially by the virus, and a complete absence of guidance on the most crucial aspects of public health.

We already know this.

The greater tragedy is that the Democrats are barely better.  Their program, to the extent it makes sense to speak of one, is protecting the immediate interests of their key constituents.  This begins with the financial sector, and since the Republicans share the same commitment, their multi-trillion dollar bailout zipped right through.  Small business is also important to both parties, if not quite as much, and upwards of a billion will wend its way to them—via the banks, of course.  Lots of health sector money flows to the Democrats, and Pelosi and Schumer found a way to bail them out too.  Beyond this it has been hit or miss.  The unemployed will get greater wage replacement, even above 100% for the bottom end of the labor market.  There may be future money for the states.  A few billion for testing, and that’s about it.

What all this adds up to is top-heavy interest group protection.  It’s not a plan.

The irony is that informed opinion has largely converged in the two key areas of public policy.  To overcome the pandemic we need four things:

• A rapid increase in the production and dissemination of personal protective equipment, first to the health care sector and then to other workers who can’t avoid social contact.  This should be mandated and organized by the government through established emergency powers.

• Mandatory use of face masks in public by everyone—no exceptions.  Masks, even simple homemade cloth coverings, are highly effective in reducing transmission.  (No, they don’t do much to shield the wearer from ambient exposures; yes they eliminate most transmission by the wearer.)

• The government should make an immense expansion of testing capability its top priority.  No resources should be spared.  In addition, all available R&D capability should be directed toward improving the specificity and sensitivity of testing methods.

• Measures should be taken immediately to establish a network of local and regional contact tracing systems.  Doing this in a manner that minimizes broader loss of privacy risks should be a primary concern.  Between vastly expanded testing and contact tracing, we have a pathway out of economic lockdown without inviting an even more devastating second wave of infections and deaths.

Economically, we need three broad initiatives:

• A payments moratorium, with no accrued interest.  No rents, mortgages, premiums or other payments for essential services.  This means stopping the clock for the duration of unavoidable economic restrictions.

• Universal income maintenance.  Income streams disrupted by the response to the pandemic should be sustained at public expense, with some percent reduction to reflect reduced spending opportunities—especially if a payments moratorium is also in effect.

• Liberal use of the Fed’s asset book to finance public services and sustain incomes.  We should have unrestricted ability to borrow to achieve all of the above, and the Fed should be authorized to purchase all such loan instruments.  Money should never be a constraint on policy, only real constraints like people, skills, resources and productive capacity.

My reading of the policy chatter is that, while emphases differ, in broad terms both agendas have overwhelming professional support.  What they lack is a political vehicle.

In a better world, that vehicle would be the Democratic Party, which would establish a shadow government to refine these proposals and push for their adoption.  It would assemble committees for particular policy areas, conduct regular—even daily—press briefings, organize petition campaigns, and in general act as though it had responsibility for progress in this country in economics and public health.  In their absence, which is the world we actually live in, no one is assuming this responsibility, and policy is in chaos.

Note that this is separate from the debate over how progressive the Democrats should be—whether they should campaign for Medicare for All, free public higher education and other reforms.  The need for leadership on matters of basic governance is prior and does not depend on resolving political disagreements over the future of the country once the pandemic has passed.