Bailout fatigue?

Bailout fatigue?

The federal government has already allocated upwards of $3 trillion responding to the coronavirus pandemic. But with the U.S. economy continuing to crater, much more spending will be needed to help families and businesses survive. Just as important is making sure state and local governments have the resources they need to continue providing critical education, healthcare and public safety services. The New York Times’ Neil Irvin reports that some in Congress are growing uneasy about providing more help, having learned the wrong lessons from the 2008 financial crisis and its aftermath. 

“A key lesson from the 2008 period is that crises can have long shadows if there is damage to the economic structure,” said Karen Dynan, a Harvard economist and a former Treasury Department official. “The economic scarring if lots of businesses go bankrupt and households are wiped out financially in this episode would be a failure of policy. Based on the 2008 experience, a real concern is that we will tire of fiscal stimulus before the need for that money runs out.” Already, there is uncertainty about the federal government’s willingness to support states financially — which has a particular parallel with the not-too-distant past.

Senate Majority Leader Mitch McConnell has been a leading proponent of this new austerity, telling an interviewer recently that he opposes additional aid for state and local governments and suggesting that declaring bankruptcy is a better option. Gov. John Bel Edwards called that idea “grossly irresponsible,” and Nola.com | The Advocate’s Stephanie Grace agrees

Louisiana did the right thing in shutting down quickly once the spread of virus here became clear, and before that by stabilizing its bottom line and expanding Medicaid to cover some of the new health costs. And Congress did too when it offered aid that can be used specifically for coronavirus-related expenses, $1.8 billion of which is coming to Louisiana. Still, with its reliance on a hard-hit tourism and oil and gas industry, the state is staring down a potentially long economic recovery. To add public sector layoffs and reduced government services when so many citizens are already in need? Some might say calling that grossly irresponsible is an understatement.

 

Higher ed back on the chopping block
With state revenues declining, Louisiana’s public colleges and universities are bracing for another round of budget cuts. LSU faculty leaders have been told to prepare for cuts of up to 10% in the coming year. But Mark Ballard reports for Nola.com | The Advocate that the cuts may not sting as much as in the past, since the state has already reduced its support for higher education to the point where tuition and fees make up a far greater percentage of university budgets. 

Still, given that higher education money is the Legislature’s traditional go-to source when revenues are short, administrators are understandably skittish facing a new world in which efforts to slow the community spread of the novel coronavirus has thrown more than 351,000 people out of work.

 

Serving time in the time of corona
Prisons, like nursing homes and meatpacking plants, are some of the most vulnerable places for the spread of coronavirus because of their close quarters. Last week six people – three inmates and three prison employees – died from the virus, and nearly 1 in 5 female inmates held by the state Department of Corrections has tested positive. Nola.com | The Advocate’s Matt Sledge and Lea Skene take a detailed look at the state’s spotty efforts to safeguards prisoners and staff. 

Even if best practices are implemented, epidemiologists caution such mitigation efforts will only go so far within the close confines of prisons such as Rayburn. Like nursing home patients, inmates often have to share the same dining surfaces and bathrooms, and they depend on staffers who sleep nights in the outside world. Bruce Reilly, deputy director of VOTE, said even when inmates can routinely wear masks, packed dorms will still pose a transmission threat. “People are not going to wear these things when they sleep. All it takes is one snoring volcano,” he said.

 

Schools are in flux during shutdown
With Louisiana’s public schools closed for the remainder of the school year, big gaps have emerged between various districts in how they are reaching out to students to make sure they continue to learn. Nola.com | The Advocate’s Will Sentell reports that 1 in 4 Louisiana school districts are not providing feedback to students, and more than 200,000 children lack access to a school-issued laptop. 

Educators said the coronavirus pandemic has exposed a national digital divide that is especially jarring in a state like Louisiana, where about two-thirds of students — nearly 500,000 youngsters — live in low-income households.

 

Number of the Day
$0.25 – Median liquid assets (checking, savings, money market and prepaid debit card balances) for a Black family in Baton Rouge in 2018 for every $1 in liquid assets held by white families. (Source: J.P. Morgan Chase)