COVID-19 | National Rescue Packages

April 9, 2020, updated April 11—The national social-distancing shutdown to slow the spread of COVID-19 has left nearly 17 million filing for unemployment insurance as of the first week of April, more than 10 percent of the employed.

The flood of unemployment insurance claims was such that In New York State, the shortage of workers and flood of claims brought down the system's phone-answering system, with people saying they called 200 times in one day to try to get through.

The Congress came through with an unprecedented package through the CARES Act, which through the SBA assists smaller companies with direct aid in maintaining their payroll for eight weeks and provides loans for the period after that. It also provides extra funding for the Economic Injury Disaster Loan (EIDL) program of the SBA. In addition, it adds extra weeks to the Unemployment Insurance program, to 39 weeks, according to new guidelines. The Federal Reserve followed up with its own package of $2.3 trillion in lending facilities, including the Main Street Lending Program that sets aside $600 billion to guarantees 95 percent of loans to larger companies, and another program that sets aside $500 billion to provide aid to state and local governments.

The CARES Act seeks to rescue the economy from the virus by offering loan funds from two sources:

• The Small Business Administration (SBA) Economic Injury Disaster Loan (EIDL) Program. The loan is not forgivable, but provides an advance of up to $10,000 that does not need to be repaid; he said it took him only 10 minutes to apply. “This is first come, first served,” said Carl Irace, an attorney in East Hampton, N.Y. The PPP loans will be available through June 30, but the Treasury Department said it expected funds to be fully depleted unless another $250 billion is added by Congress. Many applicants, like applicants for unemployment insurance, had more difficulty than Irace in getting through to the SBA and to a bank that would lend them money. When they did they found that the loan program was capped at $15,000, which doesn't go very far even for a small business. A Long Island SBA official said in a webinar April 10 to call 800-659-2955 and keep trying.
• The new Paycheck Protection Program (PPP), a $349 billion loan fund to cover two months (actually, eight weeks) of payroll costs, including benefits, plus utilities, rent, and interest on mortgages. loans are available to all businesses with fewer than 500 or 1,000 (sources differ) employees, including nonprofits and sole proprietors, and since April 10, independent contractors and the self-employed. The loans are fully forgivable as long as business owners retain (or rehire) their staff at their pre-COVID levels. Irace said that the PPP loan is “bigger” than the disaster loan but “the application will take a little more time,” because employers must “certify in good faith” that their business was in operation and had employees on payroll on February 15, 2020, and that “current economic uncertainty makes this loan request necessary.” Also, 75 percent of the loan must be used to cover payroll costs and the applicant must document other expenses. The loans carry a 1 percent interest rate and a two-year term but the loans are forgiven after eight weeks if payrolls are kept up. (It is okay to rehire laid-off employees; that is part of the intention.) The loans are provided by SBA-approved lenders and other federally insured banks and credit unions. Irace said that he used an accountant to find a participating lender. Joe Gaviola, an investment adviser, the keeper of the Montauk Lighthouse, and the director of finance for the Montauk Historical Society’s nonprofit Lighthouse Committee, also got a PPP loan for the Committee. The Lighthouse, closed during the pandemic, has six full-time staffers to maintain the property and guide visitors. Gaviola applied through People’s United Bank on April 3 and got word on April 6 that the loan was approved.

Demand for the PPP loan has been high and Wells Fargo made the maximum number of loans that it was permitted, under a special limit, in a single weekend. However, anecdotes are mounting that many banks are having liquidity and staffing problems and are not being responsive to requests for loans under this program. A major advantage of the PPP would be that it relieves the huge burden on Unemployment Insurance offices in every state, the economic equivalent of ICUs in hospitals. The Act include nonprofits as qualifying companies.

It became clear soon after the Act was passed that at least two groups were left out of the PPP funding:

• Middle-sized companies that have more than 1,000 employees but are not in the category of the huge companies with more than 10,000 employees who usually have easy access to capital markets. An example is Eileen Fisher, which just exceeds the 1,000-employee limit.
• "Gig" workers and temporary workers that don't qualify for their employers' payroll loan program. One example among many is that of free-lance journalists who work for publications or media that can't afford to put them on the payroll. Independent contractors are supposedly included, but they have to get past the lender's scrutiny of records and income.

Middle-Sized Companies–Now, the Main Street Lending Program

In the next few days, the Chairman of the Federal Reserve Board has announced a facility that will add to the PPP funding support for middle-sized companies to maintain their payroll for eight weeks. The Fed's $2.3 trillion injection of loan funds will assist middle-sized companies in keeping their employees on the payroll for the anticipated period of the lockdown, to slow the spread of the COVID-19 disease.

The Main Street Lending Program and Main Street Expanded Loan Facility will be part of Title IV of the CARES Act, Section 4003, says the Treasury. It will finance four-year loans to businesses with up to 10,000 employees or revenues up to $2.5 billion. Principal and interest payments will be deferred for the first year. Unlike the PPP loans, they do not have a grant feature and are fully repayable. The loans are originated and issued by banks, which will retain 5 percent of the loans while the Fed will buy the remainder. The Main Street facility will be operated through a Federal Reserve-Treasury arrangement and will purchase from banks up to $600 billion of loans. (In addition, the Fed says it will lend $500 billion to struggling state and local governments, and will broaden some of its earlier lending programs to help big corporations.)

Principal and interest payments will be deferred for one year. Firms seeking Main Street loans must commit to make reasonable efforts to maintain payroll and retain workers. Borrowers must also follow compensation, stock repurchase, and dividend restrictions that apply to direct loan programs under the CARES Act. Smaller firms that have already taken advantage of the SBA program for small businesses may also take out Main Street loans. The Federal Reserve will oversee loans of $1 million to $25 million with a four-year maturity that would not be forgivable. The Federal Reserve is accepting recommendations until April 16.

COVID-19 STATUS | U.S. Summary in One Table

April 5, 2020—The largest number of Americans have been suffering from the COVID-19 virus in eight states and the District of Columbia. As of April 4, the states were, in order of death rates: New York, New Jersey, Louisiana, Michigan, Connecticut, Washington, Vermont, Massachusetts. Their death rates all exceed the national average death rate to date of 2.6 per 100,000 population. The list of the worst-hit states underscores the role of social interaction in spreading the disease. New York City was the first big U.S. city to suffer from the pandemic, and its hospitals have quickly been overwhelmed by its spread. Governor Andrew Cuomo provides a daily briefing on his handling of the public health crisis.

Confirmed Cases and Deaths

Two main measures are being used to gauge the progress of the disease: confirmed cases and deaths. Both measures have built-in problems.

Confirmed cases provide an earlier estimate of the extent of the spread of the disease than deaths. It can take a week or more for symptoms to appear, and then it may take another week or more for recovery. Patients can be hospitalized for weeks before recovering or succumbing to the disease.

However, confirmed cases depend on the availability of testing equipment and personnel, and in the early days of the pandemic in the United States tests were in short supply.  

For this reason, a low rate of cases to population may simply mean that fewer people are being tested in a state rather than that the disease is not spreading in a state. For the same reason, the case fatality rate is a less reliable number than deaths relative to population.

Deaths by cause would seem to be a simple enough number to keep track of. In a democracy it is hard to hide a dead body for long. Deaths are closely observed and recorded and whistleblowers historically have not been, as in dictatorships, punished for speaking out. A cause of death must be listed. The course of the COVID-19 disease is easy enough to spot. There are in fact some problems with the data, but let's look first at the reported numbers.

New York State tops the ranked list of deaths per 100,000 population, with 18.3 recorded as of today. Within New York State, the most densely populated counties are suffering the most.

New Jersey and Louisiana both have half the severity of New York State, about 9 per 100,000. Michigan and Connecticut are 5 per 100,000. These numbers are rising daily.

As a comparison, the average number of deaths in the United States from traffic fatalities in a year is 12.4 per 100,000. (Note that the traffic fatalities number is the sum of events happening over a year's time, whereas we have only three months of pandemic data.) 

The overall U.S. death rate to date from the coronavirus is 2.6 per 100,000 population.

Issues with Cause of Death Data

Two kinds of issues with the data on death rates are emerging: 

• Underreporting of COVID-19 deaths. Some jurisdictions require that a test for the presence of the virus have been conducted in order to list it as a cause of death. So the absence of testing kits both lowers the number of cases and the number of deaths.
• Lack of data about victims. Even when the deaths are properly recorded, the hospitals or doctors signing the death certificates may be so pressed for time or staff that they are not recording demographic data about the victims. Ibram X. Kendi, in “Why Don’t We Know Who the Coronavirus Victims Are?” The Atlantic, April 1, 2020, suggests that African Americans are disproportionately the victims, but in many states we don't know. He asks why other states don't report this information—the problems including multiple illnesses and the lack of a test to prove that the victim had the virus; the coroner may be insisting on such proof (here is the Suffolk County, NY procedure for reporting a death). 

Who Are the Victims?

The evidence so far is that more blacks are victims than their proportion of the population, and men are much more likely to be victims than women.

Kendi cites data showing that African Americans are 14.6 percentof the Illinois population, but are 28 percent of confirmed cases of the coronavirus (Latinos, however, are a smaller percentage of deaths than in the population). An even more striking disparity has occurred in Milwaukee, where blacks account for 26 percent of the population but are half of the reported cases and 81 percent of deaths. In Michigan, blacks are 14 percent of the population but 41 percent of the victims.

Support for Masks, Shutdown

Support has been growing for closing meeting places like restaurants and wearing face masks in public. The support for these actions has bubbled up from the states rather than having been led from Washington. The White House at first did not give credence to the pandemic's arrival in the United States and then expressed concern about interfering with economic activity to slow the progress of the disease.

Among the top nine victims of the virus, blue states predominate. Some of the governors of these states have clashed with the President on getting support in the form of supplies, equipment or a national shutdown or mask-wearing policy. 

Democratic New York City and State, with more than 18 deaths per 100,000 population in the state, have supported closing public meeting places. Four other states and D.C. have Democratic leadership. These leaders of these states were early in supporting closing public places until the apex of the disease has passed and in calling for an immediate end to tariffs on medical supplies from China.

The other three states (Louisiana, Vermont and Massachusetts) are purple. Two have Republican governors and one has a Republican senator. Among the next nine states, ranked by death rates, three are red states and two are purple (Colorado and Pennsylvania).

In states with Republican or mixed party leadership, leaders have often appeared to wait for direction from the White House. This has sometimes led to disagreement between Republican Governors and Democratic Mayors over delays in locking down or advice on social distancing.

Note on Data: Confirmed cases and deaths by state are as of April 4, 2020 from the Johns Hopkins University Coronavirus website. A convenient tabular form of the JHU data was posted by The Guardian later on the same day. Total number of U.S. cases and deaths added by JT Marlin. Population data are from the U.S.Census Bureau, Population Division, Table 1. Annual Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico: April 1, 2010 to July 1, 2019 (NST-EST2019-01), December 2019. The Census Bureau documents its estimation methods. Calculations of cases/population, deaths per 100,000 population and case fatality rates by JT Marlin.