The U.S. economy is at last moving into the recovery stage from the coronavirus, at least in most states.
One definite pattern has emerged: Republican states are reopening much more swiftly than Democratic states. A most notable case in point is the revival strategies of the four largest states. California and New York are closed for weeks to come; Florida and Texas are getting back in business now.
Unfortunately, most blue-state governors, with a few notable exceptions, are imperiling their states’ recoveries and the very survival of their businesses by remaining shuttered.
Arthur Laffer and I conducted a study for Laffer Associates that finds the “start date” for reopening a state will have a significant impact on how deep and long the recession will last. States that start to open up immediately will have fewer small-business bankruptcies and steeper declines in unemployment and poverty rates this summer and fall than states that keep commerce shut down for another month or longer.
The blue states, which already suffer from a steady reverse migration of employers, workers, and capital because of higher taxes and more onerous anti-business regulations, will have more painful recessions, in part because businesses will accelerate their exodus from these “closed for business” states.
It’s vital that when states reopen their economies, they do so with the smart and health-conscious strategies such as masks, gloves, disinfectants, social distancing, screening, etc. This is critical not only to minimize the chances of people getting ill but also to avoid a recurrence of the virus.
Governors such as Ron DeSantis of Florida are adopting the best health practices by allowing people to get out of their homes and enjoy outdoor activities and go to stores, while taking special care to protect seniors in nursing homes. They reject the media narrative that this puts residents in danger. The evidence is now clear, as shown in an analysis by Edward Pinto of the American Enterprise Institute: There is a minimal, if any, relationship between how strict a state has been in stay-at-home orders/business lockdowns and death rates from COVID-19.
The Committee to Unleash Prosperity and FreedomWorks teamed together and constructed a report card on the 50 governors’ performances by taking into account a range of factors: severity of business lockdown orders, hospital and outdoor activity orders, stay-at-home requirements, and the degree of punitive actions in enforcing these measures. Most importantly, we measure the governors’ start dates for reopening. We take into account the risk quotient from reopening based on the number of deaths per 1,000 people. It is much safer to open in states such as Idaho, with few cases, than states such as New York, with higher fatalities.
The governors who get an A grade for protecting their economies from devastation go to Gov. Jared Polis of Colorado, a Democrat, joined by Republicans Ron DeSantis of Florida, Brian Kemp of Georgia, Pete Ricketts of Nebraska, Kevin Stitt of Oklahoma, Kristi Noem of South Dakota, Bill Lee of Tennessee, and Mark Gordon of Wyoming. The governors who get an F and have put their states in the most economic peril are Govs. Phil Murphy of New Jersey, Tom Wolf of Pennsylvania, Ralph Northam of Virginia, and Tony Evers of Wisconsin.
New York Gov. Andrew Cuomo received a C grade, which may seem too charitable, but the Empire State suffered the most cases and deaths. These grades are being updated each week on the Committee to Unleash Prosperity website.
Saving lives must remain the highest priority for governors. Still, the blue Northeastern and Midwestern states that are still in economic paralysis need to worry about avoiding a depression scenario. By continuing a lockdown, those states risk high and prolonged levels of unemployment, a surge in the rates of child poverty and economic deprivation, trillions of dollars of reduced wealth and household savings, and millions of small-business failures—with all of the human misery that is associated with these economic maladies.
For a robust national recovery, we also need California, Illinois, and New York to get up and running, now.
