U.S. Economy Caught in Trump Tug-of-War Over Reopening Schools

The U.S. economy is caught in the middle of President Donald Trump’s tug-of-war to reopen schools — and could end up damned no matter what happens.

The full-fledged restart the president is pushing for would boost economic growth by allowing parents to go back to work instead of staying at home to care for their children. But it also would risk a more-rapid spread of viral infections that are already surging in some states, sapping the momentum of the nascent recovery.

“It’s really important for students have good learning opportunities,” said Emiliana Vegas, co-director of the Center for Universal Education at the Brookings Institution. “The problem in the U.S. right now is reopening the schools in the midst of rising numbers of cases. No country has done that so far.”

There’s little doubt the closings have a deleterious effect — in the short and long term. A four-week shutdown costs the economy more than $50 billion in lost output from working parents who can’t do their jobs, according to calculations by Brookings analysts. It also increases unemployment by a couple of percentage points, said Vicky Redwood, a senior economic adviser at Capital Economics.

These costs fall disproportionately on people least able to afford them: single parents and low-income earners who can’t perform their jobs remotely. Health-care workers also are more affected, Brookings Senior Fellow Ross Hammond said.

Safe Restart

A smooth economic recovery depends on the country finding a way to restart classes safely, Federal Reserve Bank of Atlanta President Raphael Bostic told reporters Wednesday.

“The schools are really important” he said. “If parents can’t get child care and they are worried about those sorts of issues, they are not going to be as productive in the workplace.”

If young people fall seriously behind in their education and social development, the economic impact can be long lasting. Four months of lost education could cost the U.S. $2.5 trillion in students’ future earnings, Vegas calculates.

Trump intensified his pressure campaign on Wednesday, attacking the U.S. Centers for Disease Control and Prevention over guidelines he said are too onerous and threatening to cut federal funding to schools that don’t bring students back to the classrooms.

Despite Trump’s eagerness to reopen, the decision about whether, and how, to do so rests with governors, mayors and local administrators and not with the president, a point several of them are making.

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In California, which reported a record number of coronavirus deaths on Thursday, Governor Gavin Newsom said any decision will be based on the case count when the academic year starts. And in New York, once the U.S. epicenter of the epidemic, Governor Andrew Cuomo said Trump has no authority to order classes to resume.

“We will open the schools if it is safe to open the schools,” said Cuomo, who frequently sparred with Trump over restarting businesses. The state will make a decision in early August, he added.

Reopening won’t come cheap. Total costs for improved cleaning, new staff to help with health protocols, protective equipment and safe transportation to and from schools might amount to almost $1.8 million for the average district, according to a study by the Association of School Business Officials International and AASA, The School Superintendents Association. There are about 13,600 districts in the U.S.

Congress earmarked $13.3 billion in the CARES act to assist in reopenings. Democrats in the House of Representatives have proposed setting aside about $100 billion more in the next aid bill, while the Republican-controlled Senate also is studying additional support.

Skittish Parents

Nobel laureate economist Paul Romer argues that Congress needs to pay for frequent and widespread Covid-19 testing at schools so students can safely return to their classrooms. He reckons the cost could be as high as $22 billion for the school year, but it would help reassure skittish teachers and parents worried about the virus’s spread.

More than one-third of parents aren’t comfortable with their children returning to school in the fall, according to a CivicScience study of more than 1,300 released this week.

The big numbers being bandied about for aid to schools could give Trump leverage in his push for full-fledged reopenings –- depending on how the programs are structured, said Frederick Hess, director of education-policy studies at the free-market American Enterprise Institute.

He proposed something akin to the Paycheck Protection Program, which enticed small businesses to keep their workers when the economy tanked. Under his proposal, school districts that receive aid to reopen must meet certain standards for educating students or risk losing out on a commensurate amount of future federal funding.

The U.S. spends about $700 billion a year on kindergarten through 12th grade education, with about 90% of the financing coming from local sources, including property taxes.

Hess said he fears the default option for many districts will be to have students spend two days a week socially distancing at school and the rest of their time with “lousy virtual learning.”

“If schools are not going to resume in full capacity — which seems likely — it’s going to be a limiting factor for the broader economic recovery,” said Michelle Meyer, head of U.S. economics at Bank of America Corp.

— With assistance by Steve Matthews, Emma Court, David R Baker, and Erik Wasson

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