Obama economists say Trump ‘averted a new Great Depression’
A new study by Obama alumni, economists David M. Cutler and Lawrence Summers, says that the total tab for the COVID crisis will be $16 trillion over the next several decades while acknowledging that Trump policies “averted what would likely have been a new Great Depression,” by enacting legislation that offset money missing in the economy due to COVID lockdowns.
The report highlights the importance of why the country needs to get back to work as soon as possible.
“The federal government offset much of the initial loss owing to the shutdown, which has averted what would likely have been a new Great Depression. But the virus is ongoing, and thus full recovery is not expected until well into the future,” said the study published in the Journal of the American Medical Association.
“These costs far exceed those associated with conventional recessions and the Iraq War,” says the study.
They also tacitly attacked lockdown policies that have hurt the country in more ways than one by saying that loneliness and isolation have created about $1.6 trillion in mental health liability.
“The proportion of US adults who report symptoms of depression or anxiety has averaged approximately 40% since April 2020; the comparable figure in early 2019 was 11.0%. These data translate to an estimated 80 million additional individuals with these mental health conditions related to COVID-19,” which total $1.6 trillion or 90 percent of one-years’ worth of GDP.
Broadly speaking, the report breaks down the costs into two categories: the economy and health.
In direct costs to GDP, the report says losses are $7.6 trillion. Health costs, including loss of life, are $8.5 trillion.
The study also compares the COVID costs with the recession of 2008-2009, pegging COVID cost as four times the “Great Recession,” and saying that the “economic loss [from COVID] is more than twice the total monetary outlay for all the wars the US has fought since September 11, 2001, including those in Afghanistan, Iraq, and Syria.”
In fact, the cost may be higher than the study indicates. Because of the effect of compounding growth on the economy, production lost on just this year’s $7.6 trillion in reduced GDP will be another $200 billion at just 2 percent GDP growth over 10 years. And the longer the economy is locked down, the higher those costs get.
The report will certainly be used as fodder for those who think that China must reimburse the U.S. and other countries for the costs of the pandemic, not out of greed but because it’s the likeliest way of getting China to cooperate in the future with other pandemics that come from the communist country.
“The world must make China pay in order to create incentives that will force it to improve its behavior. That may well demand measures that will force China to experience the full costs of its recklessness,” says John Yoo, a visiting scholar at the American Enterprise Institute.
“Without such incentives, China may inflict this kind of tragedy on the world again,” Yoo says.
PHOTO: SAUL LOEB/AFP via Getty Images
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