Trust Article

The Impact of the Coronavirus

As the virus roils the globe, what are the consequences for public health, government finances, and America’s world role?

August 21, 2020 Read time:

In this Issue:

  • Summer 2020
  • The Impact of the Coronavirus
  • The Art of Science
  • Focusing on Facts
  • Planning, Preparation, and Purpose
  • Seagrasses are Vital to Ocean Health
  • A History of Progress and Results
  • Noteworthy
  • Did That Drone Just Tell Us to Stay 6 Feet Apart?
  • New Reforms for Over-the-Counter Drugs
  • 15 Facts About Oysters and the Need to Protect Them
  • Informing Public Debate
  • When Art Is a 'Necessity'
  • Will the COVID-19 Pandemic Reverse Philadelphia's Progress?
  • Return on Investment
  • 10 Points About Race and Policing in the U.S.
  • View All Other Issues
The Impact of the Coronavirus
As COVID-19 continues to roil the globe, The Pew Charitable Trusts and the Pew Research Center are analyzing fiscal data and surveying public attitudes about the virus’ long-term implications for public health, government finances, and America’s world role.

 

Zhang Yuwei Xinhua eyevine/R edux

Most Americans Expect a Vaccine Within a Year

Nearly three-fourths say they would get vaccinated

By Cary Lynne Thigpen and Cary Funk

Most Americans are optimistic that medical advances to treat or prevent the coronavirus are on the horizon, and around 7 in 10 say they would get a vaccine forCOVID-19 if it were available, according to a Pew Research Center survey conducted April 29-May 5.

Americans’ expectations for the year ahead include an effective treatment or cure for COVID-19, as well as a vaccine to prevent the disease: 83% and 73% of U.S. adults, respectively, say these developments will definitely or probably occur. At the same time, 83% of adults expect another coronavirus outbreak within the year, and 69% expect the focus on the coronavirus to delay progress on other disease treatments.

Around 7 in 10 adults (72%) say they would definitely (42%) or probably (30%) get a coronavirus vaccine if one were available, while about a quarter (27%) say they would not. The survey comes amid concerns that activists and others who are hesitant to get vaccinated for other diseases might not get inoculated against the coronavirus.

Majorities across demographic groups say they would get vaccinated for the coronavirus, but there are some differences by race and ethnicity, partisanship, religion and other factors.

Black Americans are less likely than white and Hispanic Americans to say they would get a vaccine. A little over half of Black adults (54%) say they would, while 44% say they would not. By comparison, 74% of both Hispanic and white adults say they would get a vaccine if one were available. (In a Pew Research Center survey in 2019, Black adults were also less inclined than white adults to see strong preventive benefits of the measles, mumps and rubella vaccine.)

Republicans and white evangelical Protestants are also somewhat less inclined to get a coronavirus vaccine. Among Republicans and Republican-leaning independents, 65% say they would definitely or probably do so, while 34% say they would not. Among white evangelical Protestants, 62% say they would get a coronavirus vaccine and 37% say they would not.

The path to new treatments can be a long and uncertain one. The Food and Drug Administration requires new treatments to go through a process of test runs—known as clinical trials—to establish that they are safe and effective in treating people with a specific disease.

In the new survey, about two-thirds of U.S. adults (64%) say the process of clinical trials is very important, “even if it will lengthen the time it takes to develop new treatments.” Around 3 in 10 (31%) say the clinical trial process is somewhat important, and just 5% say it is not too or not at all important.

Democrats place more importance on clinical trials than Republicans. Around three-quarters of Democrats and Democratic leaners (74%) call this process very important, compared with 54% of Republicans and GOP leaners.

The new survey also asked Americans to consider the overall risks and benefits of access to experimental treatments before the completion of clinical trials. (This process is already happening for some patients with the coronavirus.) Around 6 in 10 Americans (59%) say the benefits of allowing more people to access experimental drugs outweigh the risks, while 40% say the risks outweigh the benefits.

Republicans are more likely to say the benefits outweigh the risks (69% vs. 29%), but Democrats are about evenly divided (50% vs. 48%). Black adults are more likely than white and Hispanic adults to say the risks of experimental treatments outweigh the benefits: A 57% majority of Black adults say this.

Cary Lynne Thigpen is a research assistant and Cary Funk directs science and society research at the Pew Research Center.

Jeremy Hogan SOPA Images/LightRocket via Getty Images

Why State Budget Officials Worry About COVID-19’s Impact on Sales Taxes

These revenues helped weather earlier recessions, but they’re likely to drop significantly.

By Jeff Chapman and Mike Maciag

Sales taxes have provided a relatively stable source of revenue for states in previous downturns, helping to smooth out the ups and downs in taxes collected from more volatile economic activities such as capital gains, corporate income, or oil extraction. But the coronavirus pandemic and its sudden hit to the economy may be different. With consumer spending severely limited by social distancing and orders for people to stay at home, sales tax revenue is likely to plummet, creating deep holes in state budgets.

Nationwide, total spending on retail and food services from March through May was down 11% from the same period last year. Such a sharp drop in consumer spending poses problems for states and their budget writers because general sales taxes raise nearly one-third of their general tax revenues, according to the latest census survey figures.

Only personal income taxes raise more. General sales taxes are particularly crucial for the six states where they accounted for more than half of all fiscal 2018 tax collections: Florida, Nevada, South Dakota, Tennessee, Texas, and Washington.

In past economic downturns, sales taxes helped to ease at least some of states’ losses. For example, Michigan, which typically derives about an equal portion of revenue from sales and individual income taxes, struggled during the Great Recession as major automakers and parts suppliers implemented massive layoffs. Net individual income tax revenues dropped about 9% in fiscal 2010, but sales tax revenues recorded a marginal increase and helped to mitigate other declines.

A review of tax revenue volatility data over the past two decades from Pew’s Fiscal 50 research shows that sales taxes have been a more stable source of revenue than several other taxes—personal or corporate income, severance, and property—in all but four states where they are levied.

Sales taxes have traditionally been more stable than other taxes because household spending usually doesn’t drop quite as dramatically as household income. Families don’t spend all of their income on taxable retail sales and can use personal savings or debt to maintain spending during tough times.

In the current climate, however, this scenario likely won’t hold true. Stores, restaurants, car dealerships, and countless other types of businesses that normally generate tax revenues are either closed or only partially open for business. Many of their customers are opting—or required by local or state governments—to stay at home.

To be sure, sales taxes weren’t immune from steep declines in the last recession. Consider Washington—one of the states most reliant on these taxes to fund its budget. Purchases of goods and services subject to the state’s sales tax decreased by 4% in 2008 before dropping another nearly 12% when the economy bottomed out in 2009. By 2010, they had fallen a total of more than 15% from their prior peak.

However, loss of sales tax revenue in that period was largely concentrated in specific areas of the economy. As the housing bubble burst nationwide, related spending fell dramatically. The market for auto sales collapsed during the same period. Washington experienced a 31% total drop in taxable retail sales in construction, two related retail industries (furniture stores and building material stores), and auto sales between 2007 and 2010. The decline in all other industries combined was only 6%.

Complicating today’s situation, several industries now subject to state-mandated closures or restrictions because of the spread of the novel coronavirus managed to avoid major losses during the Great Recession. Washington’s restaurants and bars, hotels, general merchandise stores, and other types of retail establishments recorded at least slight gains in total taxable sales from 2007 to 2010. These businesses, however, find themselves confronting far greater challenges in the current economic climate. A broader hit to sales taxes—an increasingly likely scenario given all the restrictions in place to mitigate the outbreak—would pose even greater financial hurdles for states than those faced a decade ago.

Although it’s difficult to gauge the eventual fiscal impact of the pandemic, early signs aren’t promising. Nearly all types of brick-and-mortar retail establishments sustained losses in the government’s March sales report. Only grocery stores recorded large gains, but groceries aren’t subject to sales taxes in most states. In addition, the latest projections from Moody’s predict that sales tax collections will remain depressed throughout most of 2020. If these projections all hold true, what has generally been a dependable source of funding won’t provide as much relief for states this time around.

Jeff Chapman is a director and Mike Maciag is an officer with The Pew Charitable Trusts’ state fiscal health project.

This article was previously published on pewtrusts.org and appears in this issue of Trust Magazine.

Craig F. Walker The Boston Globe via Getty Images

How the Pandemic Could Alter Government Higher Education Spending

Historical trends suggest state dollars will drop as federal share increases—but the impact will depend on critical decisions at both levels

By Phillip Oliff and Laura Pontari

If past recessions are any guide, the economic challenges resulting from the coronavirus pandemic will  likely accelerate the major shift in government support for higher education that has been playing out over the past two decades. Overall, state dollars for colleges, universities, and students have fallen since 2000 while federal funding has risen, after adjusting for enrollment changes and inflation. But there is a great deal of uncertainty, and the actions of both state and federal policymakers will shape the amount and type of public support for students and institutions going forward.

Among the key factors:  

  • Higher education frequently bears the brunt of state cuts in downturns, but the level of cutbacks will depend on the size of state budget gaps and choices by policymakers.
  • Federal aid can mitigate the need for states to make cuts.
  • And funding for federal support for students—the largest category of federal spending on higher education—has tended to increase in recessions.

State allocations often cut during downturns

In past downturns, state higher education funding has been a major target of recession-driven budget cuts, but the extent this time will depend on the size of the challenge that states face and the actions that policymakers take to address their budget shortfalls.

When the economy weakens, states see revenues drop, creating gaps between the amount of money they take in and the amount they need to sustain services. Policymakers must fill these holes and in past downturns have relied heavily on spending cuts to do so. And higher education has often taken the biggest hit.

Most recently, state higher education spending fell sharply in the wake of the Great Recession, dropping by 29% per student—adjusted for inflation—between fiscal year 2008, when the recession began, and fiscal 2012 (not including student loans and tax benefits that offset higher education costs).

COVID-19 could present a greater threat to state budgets. The pandemic has already created fierce economic headwinds that are driving down revenues as states face significant additional expenses in responding to the public health emergency and its economic ripple effects.

A few states, including Nevada and Ohio, have already acted, or considered plans, to cut higher education spending.

But the overall size and scope of any cuts will depend on the scale of state budget shortfalls and policy decisions at the state and federal levels. Although the outlook for states appears ominous, policymakers don’t yet have the data they need to know the depth of the revenue holes they face. States also can mitigate the need for sudden spending reductions in a downturn through policy actions such as tapping rainy day funds.

Level of cuts will depend on the amount and nature of federal aid

In recent recessions, the federal government has provided assistance, including money targeted to higher education, to bolster state budgets and economies and lessen the need for state tax increases and spending cuts.

As part of the American Recovery and Reinvestment Act (ARRA), Washington provided roughly $40 billion between 2009 and 2011 to bolster state K-12 and higher education spending. To receive this funding, states had to maintain their education spending at a minimum of 2006 levels. Cumulatively,  they used about $8.3 billion in federal dollars to sustain support for institutions of higher education.

The federal government also provided other support to states in the aftermath of the last recession, most notably by increasing federal funding for Medicaid, the health care program for low-income Americans jointly funded by states and the federal government. Such additional funding can help states pay for health care while also freeing up dollars that can be used to meet spending needs and plug holes elsewhere in their budgets—including higher education.

In response to the pandemic, Congress provided $30 billion in aid specifically targeted to education in  the recently enacted coronavirus relief package. Of that total, $14 billion will flow directly to public and private post secondary institutions to help address costs associated with the coronavirus in the current and next fiscal year. And at least half of that money must be spent on emergency grants to students.

Most of the remaining aid will go to K-12 education and flow through the state governments. To draw down that funding, states must maintain most of their K-12 and higher education spending at the average level of the last three years. Secretary of Education Betsy DeVos can waive this requirement for states facing big revenue drops.

In addition, the federal government provided states and localities with $150 billion specifically to help them address the increased costs of responding to the COVID-19 public health emergency—but not their revenue shortfalls. Congress also boosted states’ Medicaid funding again.

State decision-makers expect to need more help that directly addresses their revenue shortfalls. For example, the National Governors Association recently called for an additional $500 billion in federal aid to respond to the expected budget challenges.

Federal funding often rises during a downturn

Federal support for higher education programs has tended to increase as state spending has dropped following recent recessions. In part, this happens automatically as a result of the design of federal programs, but policymaker choices have also played an important role.

As states cut back during the Great Recession, federal support for post secondary education spiked.  Overall, spending per student rose by 15% between fiscal 2008 and 2012 (not including student loans or tax benefits that offset higher education costs, and after adjusting for inflation).   

Financial assistance to students and families to help pay for higher education amounts to the largest category of federal support. Pell Grants, the American Opportunity Tax Credit, veterans educational benefits, and federal student loans—which, unlike the other programs listed, must be paid back—are among the biggest examples in dollar terms.

Each of these programs saw significant growth following the Great Recession. In part, this happened in response to trends such as rising enrollments and increasing student financial needs. Higher education enrollment tends to surge during recessions, but the nature of the pandemic has introduced significant uncertainty about whether that will happen this time, particularly in the short term.

Federal policy choices also influence these trends. For example, around the time of the Great Recession, policymakers in Washington expanded who was eligible for, and the amount of aid students could receive through, key programs aimed at helping Americans pay for higher education. All of this suggests a continuing shift from state to federal funding for higher education in the near future, at a time when postsecondary institutions and students face unprecedented challenges. Still, much is unknown about how this will play out.

Phillip Oliff is a senior manager and Laura Pontari is an associate with The Pew Charitable Trusts’ fiscal federalism initiative.

This article was previously published on pewtrusts.org and appears in this issue of Trust Magazine.

Steve Pfost Newsday RM via Getty Images

Why Tests for the Virus Were Delayed

Physician and public health expert Joshua M. Sharfstein explains the slow start.
Courtesy of Joshua M. Sharfstein, M.D.

Testing for the novel coronavirus in the United States has not kept pace with the enormous demand despite national efforts to ramp up capacity. Increased testing is critical to control the spread of the virus and eventually to enable a return to normal daily life. But from the early stages of the outbreak in the U.S., a number of obstacles—including delays in the development of test kits, critical supply shortages, and unclear guidelines on whom to test—have contributed to ongoing testing shortfalls.

Joshua M. Sharfstein, M.D., the vice dean for public health practice and community engagement at Johns Hopkins Bloomberg School of Public Health, has served as secretary of the Maryland Department of Health and Mental Hygiene, principal deputy commissioner of the Food and Drug Administration, and commissioner of health for the city of Baltimore. The Pew Charitable Trusts asked him to explain the timeline for how testing was developed and the guidelines for how testing should be prioritized moving forward.

Q: In the first few weeks of the coronavirus epidemic, the Centers for Disease Control and Prevention (CDC) developed a test to detect the virus, but it had problems. What happened?

The first test to detect the presence of the 2019 novel coronavirus was developed by CDC under an emergency use authorization (EUA) granted by FDA on Feb. 4, 2020, the same day that the Department of Health and Human Services declared a public health emergency. EUAs are temporary authorizations that permit the use of unapproved medical products—or unapproved uses of approved medical products—in order to respond to a national public health emergency. At first, only CDC was granted an EUA, which meant its test was the only one that could be used to diagnose COVID-19. It began sending initial tests to each state during the first week of February, in roughly equal batches per state.

However, the state labs had trouble getting CDC’s test to work, likely due to contamination of one of the reagents, which are chemicals used as part of the testing procedure. This meant that patient samples had to be sent to CDC’s Atlanta headquarters for analysis, adding several days to the time it took to get results back. By Feb. 10, CDC had notified FDA about the problems associated with the test but still hadn’t fixed the problem. By Feb. 24, state laboratories contacted FDA, wanting to develop their own tests. But developing those tests took still more time.

In addition, testing was initially limited to only those who had recently traveled to China or had close exposure to someone with the virus, neglecting the emerging community transmission that was simultaneously occurring throughout the country. We needed tests in these areas, but those states didn’t have enough tests available during the beginning stages of the outbreak.

Q: Why couldn’t other labs and hospitals develop their own tests in response to the coronavirus? 

During an emergency, FDA has flexibility regarding the requirements it sets for product developers. In this case, FDA initially required labs to submit the tests to the agency for authorization before they could be used on patients. However, given the problems in CDC’s lab, this process did not sufficiently boost testing capacity in the early weeks. So on Feb. 29, FDA issued updated guidelines on how labs can perform basic validation for these tests. The agency also said that labs could begin testing patients without FDA authorization as long as they submitted their applications within 15 days of when they began testing. Since that time, the agency has granted authorization to more than 100 tests.

Q: How have these actions affected testing capacity?

With the updated guidelines allowing for more tests to be developed, capacity has expanded. However, many labs have reported major supply shortages, both for the reagents that are used to run the tests and key equipment such as swabs. So while the goal of testing everyone with symptoms of COVID-19 remains a top priority, testing capacity is still inadequate in many parts of the country.

Q: Who should be getting tests while supplies are limited? 

CDC guidelines continue to evolve as we learn more about this disease and as the availability of tests increases. As of June 13, the agency advised that hospitalized patients and health care workers showing virus symptoms should have the highest priority. This will help to maintain the health system infrastructure and lessen the possibility of patients and health care workers getting infected while inside the hospital.

The next priority is those who are at the highest risk of complications from infection, including the elderly with symptoms, those in long-term nursing care facilities with symptoms, those with underlying conditions who show symptoms, and first responders with symptoms.

After them, the next priority is individuals living in areas with increasing numbers of hospital cases who should be tested to help slow community spread. Testing should still be targeted to health care workers and first responders, critical infrastructure workers (such as grocery store employees) with symptoms, individuals with mild symptoms and who live in communities with a large number of coronavirus hospitalizations, and, finally, individuals who show symptoms but do not meet any of the above categories.

Gary Hershorn Getty Images

How Americans Envision a Post-Pandemic World Order

By Mara Mordecai

Many Americans are anticipating changes in the global balance of power and the importance of international cooperation even as the coronavirus outbreak continues to rage across the United States and around the world, according to three recent Pew Research Center surveys. Americans are divided in their outlooks, mainly along ideological lines, but are more united on opinions relating to China’s place in the world.

Here are four key findings on how Americans view the reshaping of international relations from surveys of U.S. adults conducted from March to May 2020.

Mara Mordecai is a research assistant focusing on global attitudes at the Pew Research Center.

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