Our government officials have confronted many difficult choices in response to the COVID-19 pandemic. Faced with an initial prediction of 33,000 Colorado deaths if no preventive measures were taken, they responded with restrictions that few could have imagined as recently as Super Bowl Sunday.
Whether those decisions were right or wrong, the reasons for those choices are understandable: if disaster strikes and might have been prevented, the public will be much more understanding if elected leaders tried to “do something” than if they “did nothing.”
Unlike medical predictions, the economic costs of those decisions were not so easily calculated because they were unprecedented. When government turns off wide swaths of the economy, it can’t simply flip the switch and return to normal. The financial destruction created by the shutdown may be just as severe as the medical threat it aimed to avoid.
That devastation isn’t confined to businesses and workers; it spills over to all levels of government, as well. The resulting fiscal catastrophe offers a once-in-a-lifetime example of the essential role that our businesses play in making government possible.
Let’s conduct a thought experiment and give benefit of the doubt to the governor and other officials for the decisions they made to protect the public health. Let’s say those decision will save about 4,500 lives (comparing 6,639 deaths predicted in early April to 2,000, which the upper end of current projections).
No doubt, that accomplishment is praiseworthy. But even laudable accomplishments can incur severe costs.
Economists for the state legislature now estimate a $3.3 billion budget shortfall – equal to 25% of all expenditures made possible by income and sales taxes. That’s because when businesses are closed, they don’t generate tax revenue and because 420,000 Coloradans – one in six workers – lost their jobs due to the COVID-19 shutdown.
Even before confronting the most difficult budget choices, Democratic legislators were literally in tears over budget reductions that will now be necessary, including cuts to:
- Services for people with intellectual and developmental disabilities.
- Health insurance for low-income children.
- At-home care for elderly people who need nursing-facility services.
- Health-care subsidies through a re-insurance pilot program.
- Per-pupil funding for K-12 schools.
Meanwhile, Republicans were lamenting lives mired in financial ruin and businesses that will never re-open.
But what if COVID-19 surges again? Should Gov. Polis resort to the same restrictions if it means $3 billion more in cuts? Strangle the economy long enough and you’ll be closing schools, throwing people off Medicaid, and releasing violent criminals.
Could this be a time when both Democrats and Republicans can look at decisions made by government officials and agree that costs imposed on the marketplace are costs that directly reduce government capacity?
In less dire circumstances, legislators debate the costs of increasing mandates on business:
- Annual increases in the minimum wage,
- Paid family leave,
- Health insurance,
- Retirement benefits,
- Frivolous lawsuits,
- Unemployment insurance, and
- Workers compensation, among others.
Each of those is yet another burden on men and women who often risk their life’s savings to keep their businesses afloat and provide jobs. Though not as conspicuous as a statewide shutdown, the cumulative cost of these mandates is just as real. Greater costs imposed by government inevitably result in slimmer margins, lower salaries, and less innovation by business, followed by less tax revenue for government.
Even if the two parties can’t agree on government spending priorities, can they now agree that a thriving business climate benefits all Coloradans? A robust economy pays for schools and the social safety net that Democrats hold dear, while pleasing Republicans with greater prosperity and less reliance on government assistance.
Today, it’s inescapably clear that a healthy economy isn’t a given. It must be cultivated and nurtured by both political parties.