Finley: Data says most of state can reopen
State unemployment benefits now form the largest payroll in the nation, and perhaps in the history of the world.
That’s the analysis from economist Patrick Anderson, who estimates jobless payments nationwide total $16 billion a week. In Michigan, the figure is $840 million weekly.
"We can’t sustain it," says the chairman of Anderson Economic Group in Lansing. "Part of my serious issue with the decision-making at the state level is the failure to be frank with people about the cost of these shutdowns and restrictions.
"They will have a crushing impact on lives, and on the ability of state government to deliver services to residents."
Government does not have the resources to replace such a large segment of the private economy. The feds can print money and add the bill to the deficit for future Americans to pay. But states like Michigan are constitutionally obliged to balance their budgets. The state will have to slash spending or raise taxes or both to cover a virus-related shortfall estimated as high as $3.5 billion — or more than a quarter of its General Fund.
So President Donald Trump was telling the truth when he said states have no choice but to reopen their economies. Friday’s jobless report of a 14.7% unemployment rate — highest since the Depression — makes that clear.
Gov. Gretchen Whitmer has grudgingly begun the reopening process, allowing construction to resume last week and manufacturing on May 18. Other large sectors, including retail and personal services, are awaiting their go-aheads.
The reopen could have started much earlier, and mitigated the cost. While Whitmer says science and data are guiding her decisions, that’s not quite true.
Anderson has been using data to track the progress of the pandemic in Michigan. His numbers show the outbreak peaked here in early-April. But Whitmer, he noted, last week was using projections of 3,800 new cases a day to justify her orders. In actuality, the peak was 1,800 a day and the trend was 1,300 a day.
The true numbers, Anderson contends, indicate the state could have began a cautious reopening a month ago, as many business leaders urged. Instead, the governor tightened the shutdown, adding provisions against travel to second homes, motor boating and buying gardening supplies.
Today, Anderson's data indicates most of the state could be safely open with minimal restrictions. That would exclude hot spots such as Metro Detroit and Kent County.
Instead of adding to a bill we have no idea how to pay, we could be reducing the number of Michiganians who are drawing state benefits — and easing the misery of those who aren’t eligible for assistance.
"If you are in a majority of counties in Michigan, there’s no basis for extending a stay-at-home order," Anderson says. And yet the governor extended it to May 28 statewide.
The virus is not the singular threat to Michigan. A state government that can’t afford to properly operate schools, provide assistance to the poor, maintain its parks and fix its roads also will cause its citizens hardship.
The reality is Michigan can’t afford to keep spending at this pace to try to make up for the damage the needlessly broad shutdown is doing to the economy.
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