Testing for COVID-19 will be vital to restarting the $21 trillion-plus U.S. economy, former National Economic Council Director Gary Cohn told Yahoo Finance, warning that the risk of ending the lockdown prematurely could easily come back to haunt the government.
“I don't think we can go through a full fledged reopening of our economy without testing,” Cohn said on Thursday. “We would jeopardize ourselves going back into another full fledged outbreak in the United States and then having to shut our economy down again.”
Cohn was one of the architects of the historic 2017 Tax Cuts and Jobs Act, which over the last few years helped grease the wheels of a record expansion — until the coronavirus crisis brought the global economy crashing to a catastrophic halt.
The former Goldman Sachs executive said that once the outbreak is under control, “the right answer is to start incrementally bringing people back to work in a very thoughtful process.”
3/ Consumers will have pent-up demand & seek places that take #coronavirus safety measures seriously. Suppliers will offer discounts & incentives to get production & sales moving. Govt can offer sales & other consumption tax breaks, toll breaks & personal/business tax incentives.— Gary Cohn (@Gary_D_Cohn) April 8, 2020
Teams A, B, C, D
Cohn has proposed a mix of tax breaks, incentives and regulatory reforms for businesses to ignite economic growth after the COVID-19 crisis passes. Yet he warned that large businesses will have to consider dividing their workforce into teams to prevent a future outbreak of the coronavirus.
For example, “the A team comes in Monday morning, the B team comes in Monday afternoon, and then the C team comes in Tuesday and the D team comes in Tuesday afternoon,” he told Yahoo Finance’s “On the Move.”
Cohn says the key is to isolate the teams from each other so “the Monday crowd and Tuesday crowd never cross, because if someone gets sick in the A and B crowd, we don’t want them to contaminate the C and D crowd.”
The success of this strategy, however, depends on regular testing for COVID-19. “If we don’t have testing when someone starts feeling ill and we don’t know what group to isolate, we’re going to end up having to isolate everyone again,” Cohn added.
No ‘overnight big bang’
The latest unemployment numbers indicate a challenge to bring millions of people back into the work force anytime soon. The Department of Labor on Thursday reported 6.6 million people filed for unemployment last week, bringing the total number displaced by the COVID-19 economic shutdown to more than 16 million people.
Cohn suggested that putting them back to work will be a long process.
“This is not going to be an overnight big bang,” he said, underscoring how cities and states will have to approach restarting their economies differently.
“The mayors and the governors are going to play a crucial role in this. There will be certain cities and states that can open much quicker than other cities and states,” Cohn said.
Rural states with more open space will be able to open much faster than others because their population centers are less dense, Cohn stated. That differs from “states where you’re highly densified, where you’re dependent on public transportation, where you’re dependent on elevators to get people in and out of buildings,” he said.
Just as the unemployment figures were revealed, the Federal Reserve announced up to $2.3 trillion in expanded and new historic lending facilities to support main street businesses struggling to survive. That’s in addition to the more than $2 trillion Congress and the Treasury are allocating to navigate the economic storm.
Cohn praised the programs, but stated monetary authorities will be able to increase the speed at which the desperately needed funds are dispersed.
“I would like to see 80% of the first stimulus bill get out into the economy before we start talking about the second stimulus bill,” he said. However, he added that “what they’re trying to do is exactly the right things.”
Adam Shapiro is co-anchor of Yahoo Finance’s On the Move.