During the 2008 economic crisis, we became aware of “stress tests” for banks and other lending institutions. A “stress test” is basically an assessment of whether a bank or lending institution has enough cash on hand to be able to cover its debts and the demands of its depositors. In other words, can the bank survive under the financial stresses of the recession.
Today, the coronavirus pandemic and resulting worldwide economic downturns are testing our institutions as they have rarely been tested before. Do our governmental institutions have the strength and ability to handle this double crisis? How does our government rate on a stress test?
• Federal Reserve Board. The Federal Reserve Board, under chair Jerome H. Powell, has responded impressively to our current crisis. It is reusing several strategies deployed in the 2008-09 financial crisis, yet it has gone well beyond past practices. Thus, the Fed is now lending money to large corporations as “bridge financing.” Its “Main Street Business Lending Program” is creative and unprecedented, as is its widespread buying of corporate bonds.
• CDC, NIH, National Health Services. Seventy-nine-year-old NIAID Director Anthony Fauci, Ambassador Deborah Birx, U.S. Surgeon General Jerome Adams and other top health officials have helped reassure and guide the national government’s response. These offices are seldom in the limelight, yet they are now reminding us of the many invaluable and affirmative activities of our national government.
• The vice presidency. One of America’s most ambiguous and paradoxical institutions, the influence of the vice presidency depends on the whim of a president. Vice President Mike Pence has stepped up to his assignment as chief coordinator of the government’s coronavirus task force. We have heard from him more than at any other time in his three years of service. He has appeared to be bipartisan in his work with federal agencies, Congress and the nation’s mayors and governors. He builds upon the leadership previously shown by vice presidents, such as Henry Wallace during WWII, as well as Dick Cheney with George W. Bush and Joe Biden under Barack Obama.
• Governors and mayors. The current crisis reminds us once again that our government, unlike that of China, Russia or Saudi Arabia, is a distinctively federal system made up of 50 states as well as the national government. Many of the policy-making and problem-solving responsibilities of governing reside at the state and local levels. Both Democratic and Republican state governors, and some big city mayors, have shown resilient leadership in dealing with the pandemic.
• The role of government. War, recession and now a pandemic inevitably alters the shape and scope of governmental power. Americans traditionally have loved freedom, liberty and a smaller rather than a larger heavy-handed government. While today we may understand the urgency of social distancing and medical guidelines, still we have never liked the idea of the government telling us how to lead our lives.
Crises inevitably bring calls for more governmental action, more centralization and, people fear, the diminishing of civil liberties and personal freedoms. The current crisis is no exception. It raises the perennial issues of freedom vs. authority and individual vs. collective rights. These are issues debated by Machiavelli, Hobbes and the American founders over the centuries.
• American elections. We have never — even during the Civil War and through World War II — postponed a presidential election. Yet we are postponing state presidential primary elections, virtually suspending the 2020 presidential campaign. There is a big push right now for more states to follow the path of Colorado, Oregon and three other states that have demonstrated the virtues of voting by mail-in paper ballots. But there is considerable uncertainty about how best to conduct county and state assemblies and prepare for this summer’s national nominating conventions.
Former Vice President Joe Biden has essentially been side-tracked in his campaign for the Democratic nomination. It is awkward for him to second guess the Trump administration at a time like this. It can be done, yet it has to be done delicately.
Meanwhile, Biden’s major opponent, Bernie Sanders, has highlighted the reality and the injustice of inequality in America, yet lecturing about a needed new revolution seems ill-timed as the country copes with a pandemic attack and likely recession.
President Donald Trump has had to cancel his popular rallies, yet has managed to exploit the almost daily televised coronavirus health briefings. He has worked to reassure the country and support his health advisors. He also has made confusing and at times misleading ad-hoc comments about the pandemic. His gratuitous criticism of the Chinese and Obama are notably unproductive. No one benefits from this type of blame-gaming.
• Congress and the Treasury. Kudos to 80-year-old House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin for persevering in crafting an economic stimulus and “recovery” package. Congress seldom acts quickly, and this is one of the most complicated and high stakes pieces of legislation ever enacted. Congress is just doing its job when it haggles, negotiates hard, and slowly works toward compromise and, eventually, action.
Americans are not happy about “bailouts” of banks, automobile companies, airlines or other industries. The idea of bailing out cruise line companies is jolting in a country with hundreds of thousands of homeless. Then there is the question of Boeing. But it’s one of our largest and most strategic companies. We need it, and it needs a bailout.
Many Americans will rightly wonder why a government that has not achieved health insurance for everyone can favor bailouts for businesses large and small.
• FEMA, U.S. military, National Guard. The Federal Emergency Management Agency, the military and the National Guard all deserve praise for mobilizing resources to help the hardest-hit areas of the country.
The crisis has produced countless heroes who are working incredibly long hours under the most exacting of circumstance. Our hospital system is being tested as never before. Our medics and first responders can’t shelter in place. They have demanding jobs to do. Kudos too to the drug researchers and drug companies racing to devise better testing and new vaccines.
• Good neighbors. Difficult times bring out the generosity from good people. We are all hearing about younger neighbors volunteering on behalf of older neighbors, corporations donating to the unemployed, star athletes providing funds to their arena’s furloughed “gig workers”, and churches, food banks, and countless others stepping up and helping those in need.
There is a limit to how much any of our governments can do for us during hard times. National, state, and local are being stress-tested as never before. They have survived such tests in the past, and they will survive this one.
Tom Cronin and Bob Loevy regularly write on American politics and Colorado.