In the early days of COVID, the key objective was herd immunity. Today, we are there, or very nearly so. We should declare victory. It has been a costly victory. It may be a Pyrrhic victory, unless we pivot rapidly from COVID to the economy.
According to CDC data, we have reached herd immunity, consisting of immunity conveyed by vaccination plus natural immunity borne of survival of the virus. 250 million, or almost 80% of, Americans have received at least one shot, and 65 million, or about 20%, have contracted COVID and survived. We are about as close to full herd immunity as we are likely to get. Tragically, about 850 thousand American have perished, and more will perish as the last casualties of the pandemic.
While there is regional variation, the Omicron wave is receding rapidly in many places. In New York City, the seven-day average daily case rate has plunged in less than two weeks from a peak of 40,000 on January 8th to less than 22,500, according to the New York Times.
Omicron has a bright silver lining. A large study comparing Omicron to the Delta variant found that Omicron is 90% less lethal, leads to hospital stays that are 70% shorter, is 75% less likely to lead to ICU admission, and, among the Omicron patients studied, not a single case required mechanical ventilation.
COVID is here to stay. No one is absolutely immune. Vaccines are imperfect. Yet, the pandemic is over.
It is time to address the economic damage wrought by the wholesale shutdown of the economy in response to COVID. At the outset, many observers, including this writer, expressed grave reservations about the shutdown.
The worst economic result of the shutdown is inflation that has attended re-opening. It clocked in at 7% last year, a 39-year high. Economists focus on “core inflation,” which increased “only” 5.5%. “Core” excludes volatile food and overall energy, which were up 6.6% and an alarming 29.3%, respectively.
American families can’t “exclude” food and energy. Gas prices skyrocketed a stunning 49.5%.
Energy is a component of virtually every product and service in the economy. Reducing energy costs is critically important, and it should be easy. Oil and gas are very sensitive to the law of supply and demand.
The additional benefit of this surge has been, and would be, significant reduction in U.S. greenhouse gas emissions. For more than a decade, U.S. emissions have declined absolutely, as natural gas has replaced coal, which emits twice the GHGs.
The Biden administration shut down Keystone pipeline project, eliminating an important boost to global oil supplies, leaving other nations using more coal at margin. It should re-authorize it and halt its many other anti-petroleum initiatives. Our European allies are re-embracing petroleum, with natural gas poised to be approved as a green energy investment.
Another critical area is jobs. The U.S. labor force contracted drastically during the shutdown. It is still 2.2 million below its pre-pandemic level. In general, an economy can only expands if the labor force expands. During the pandemic, benefits were provided to the unemployed. Now, incentives should be extended to encourage people to take jobs.
Yet another problem is illegal immigration. While not a consequence of the pandemic, illegal immigration has surged to crisis proportions at the southern border with an estimated 2.1 million border crossers in calendar 2021 under Biden. Illegal immigration is extremely costly in an almost completely unacknowledged fashion, with its true cost lost in partisan misrepresentations.
An alternate and neutral benchmark might be Germany’s cost for the roughly one million mostly Mideastern immigrants it admitted in 2015. Germany has tracked costs carefully. While the German system and experience is not exactly comparable to ours, it provides a reasonable guide to general costs.
In 2015, Germany’s estimated cost was $22.5 billion; in 2016, $23.6 billion. In 2017, the government projected a cost of $77.6 billion for 2017 through 2020, bringing the six-year total to approximately $125 billion.
By this benchmark, the cost of the Biden administration’s mismanagement of the border in just its first year would exceed $250 billion.
In August, a federal court forced reinstatement of the prior administration’s policies which Biden had revoked. The prior policies had reduced illegal immigration to about 400,000 in calendar 2020. Biden appealed the decision and lost. Now, he has appealed to the Supreme Court. He should drop his appeal.
Agree or disagree with these recommended policies on energy, jobs and immigration, but embrace the need to shift focus from the pandemic, which is behind us, to the enormous economic challenges before us.
The national debt has increased $5.3 trillion, or more than 30%, from $17.4 trillion to $22.7 trillion, an amount almost equal to U.S. GDP. With interest rates rising, that debt will become significantly more costly. We need to craft policies to maximize and optimize economic activity.
Jahncke is president of The Townsend Group Intl, LLC and proprietor of The-Red-Line.com