President Trump’s contraction of Covid-19 doesn’t seem like an immediate economic story. But it is. Let’s enumerate why.
First, House Speaker Nancy Pelosi said Trump’s diagnosis revived the possibility of new stimulus spending soon. The latest bill looked effectively dead, and Pelosi seems content to stall until after the presidential election, hoping to have more control over the next bill if Joe Biden wins. So she might not mean it when she says she wants to get back to work on a bill now. But Trump’s illness could change the politics around the bill and make Democrats look more obstructionist if Congress can’t produce something—even something small—to help unemployed workers and moribund businesses before the election. More stimulus now would be a net positive for the economy, even if it’s way less than the $2.2 trillion Democrats say they want.
Second, Trump’s infection will affect the presidential election in ways we probably can’t predict just yet. But we can guess. At a minimum, Trump will be unable to campaign for at least 10 days as he quarantines at the White House. If he recovers quickly and fully and hits the trail again, it might seem like a kind of victory tour, with Trump boasting of how he beat the virus, and America will too. But the fatality rate for somebody Trump’s age—74—who gets the coronavirus is around 5%, indicating how serious it can be. Trump may be at higher risk because he’s overweight. But he also has the best medical care available. It’s highly likely he’ll survive, but that doesn’t mean smooth sailing.
Trump might get a bit of a sympathy vote, but there’s also the obvious irony of Trump dismissing Covid for months, then contracting it himself. Trump’s illness underscores the failure of his own policies. It also reveals the recklessness of holding rallies and political events with guests packed close together, maskless. Trump was always the most protected person at those events, far from everyone, up on a podium, with constant testing of anyone in contact with him. Yet he still got it. Trump rally attendees would be justified if they felt like they had been invited into a Covid trap.
If Biden benefits from Trump’s illness by even a point or two in the polls, it could seal Trump’s political demise and bring the Full Biden agenda to Washington next year. If Democrats controlled the White House and Congress, the first move would probably be a large stimulus and perhaps infrastructure bill to address remaining holes in the economy, plus new measures to dramatically beef up the federal role in defeating the virus. Those would be large economic positives in the short-term. There are more questions about tax hikes Biden wants to impose, to pay for yet more spending, along with the added debt from any additional stimulus. But those might be issues for year 2 of a Biden administration, when it’s possible coronavirus will be behind us.
A third possible factor is Trump getting religion on the coronavirus, and if he wins reelection, doing more to promote the use of masks, impose reasonable restrictions where there are hotspots, and do more at the federal level to choke off the virus everywhere. The United States is doing a lousy job at controlling the virus, which has left the economy in a big hole we’re digging out of way too slowly. The latest jobs report—the last one before the election—showed a gain of 661,000 jobs in September and a decline in the unemployment rate to 7.9%. But the bigger story is a slowing pace of job gains that means it will take many months before we’ve regained all the 22 million jobs lost since the crisis exploded in March. That probably won’t happen until the coronavirus is vanquished for good.
We’re suspending our Trump-o-meter score this week, amid sobering news that requires a bit of suspended judgment. In a fourth scenario, Trump could be incapacitated leading up to Election Day, requiring Vice President Mike Pence to assume the duties of president and perhaps even become the Republican presidential nominee. That would obviously be a wild development, but Pence could exert a firm hand on the economy and perhaps tamp down Trump’s notorious chaos. The last few weeks of the 2020 election could be more tumultuous than anything that has happened up till now.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: [email protected]. Encrypted communication available. Click here to get Rick’s stories by email.
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