By: Grady Means – thehill.com – May 5, 2020

The coronavirus has led to the greatest economic catastrophe in our lifetimes. Record losses in the market, record bankruptcies, record unemployment and, soon, record insolvency of local governments. This social and economic firestorm will lead to massive shifts in political alignment. The question is, which way will politics shift this year and over the next several years?

Powerful arguments can be made on all sides. But a few factors are worth considering.

First, there’s no more money. The huge bailouts easily strain the budget and debt capacity of America to the limit. It is difficult to imagine how the country will be able to dodge substantial inflation and there will certainly be calls for cutting the budget. Although some will call for higher taxes, that will just dig a deeper hole for the country whose economy is stifled by failing businesses, and thus, taxing capacity — it is no time to throw more rocks into that boat. Similarly, there will be a huge need for private investment to get new businesses up and running and drive new jobs and lower unemployment. Calls for financing huge new public works projects will, again, only stifle private investment and dig a deeper hole. Excess spending/taxes/inflation/capital flight/price controls/civil unrest is not an option.

When the dust settles, cutting the budget and tax restraint is the only viable road to recovery.

Second, it’s likely that many local governments will become insolvent. Again, the pandemic has eliminated any rational option to increase taxes. The long-festering public employee pension scandals throughout the country will come to a head and be resolved through bankruptcies. Local government bankruptcies are painful for residents who see essential services, schools and infrastructure erode.  If the public is paying attention, there may be a pendulum swing toward more conservative city and county management to navigate through that mess and try to avoid it in the foreseeable future.

Third, a significant number of colleges and universities will collapse. Endowments have taken a hit, tuition revenue has been cut, students are unwilling to pay full tuition and fees for online courses, and there already was a pushback building against high tuitions and resulting mountains of college debt. Many private colleges and universities, facing huge operating costs, may be unable to weather the storm and be forced to liquidate. Even state colleges and universities, facing many of the same pressures, may find their states have burned through reserves, have collapsing revenue, and will be unable to support them.

The fallout of a collapse of America’s higher education system would be dramatic. Less expensive, online education may become the norm. “Branded” universities will begin to offer “e-degrees” to a vastly larger number of students. The “campus experience,” involving vibrant exchanges of ideas, teenage socialization and play groups and, yes, a little baby-sitting, will be replaced, perhaps by “villages” of students taking online courses from a variety of different schools.

Corporations may choose to simply expand their in-house training and education systems to develop the precise type of employees they need. Trade schools, also online, may expand. Many failing science and engineering schools may try to “monetize” and attempt to incubate their ideas and developments into profitable businesses. A more pragmatic and isolated student population may become aligned with majors that lead to good jobs. Liberal arts almost certainly will suffer in higher education settings. The ultra-liberal, socialist education engine may finally hit a wall.

Medical care is on a similar trajectory. Restrictive pandemic policies, outlawing elective surgery and discouraging many of the sick from visiting emergency rooms, is bringing on financial collapse of part of the American health care system. The system started with major capacity issues, brought on by the increased demand from the Affordable Care Act. The current collapse of capacity leaves zero room for the gigantic expansion of demand that would come from “Medicare for All” or a single-payer system. Those ideas now are, officially, DOA. We just need to inform their sponsors. The most likely result in health care is that the systematic consolidation of the industry into a few large companies, which was occurring before the pandemic, will accelerate and bring with it new finance and care models that are much more efficient and wholly independent of the endless Washington debate.

In foreign policy, it is already clear that a bipartisan suspicion and fear of China is driving America toward a more conservative “nationalistic globalism,” protecting strategic industry but actively participating in the global economy.

Of course, many politicians will try to appeal to those displaced by the pandemic, offering even more free, government-provided aid. Those appeals will fall flat in a contracting economy, without the government’s financial capacity to go beyond the extensive social safety nets in place. It is also likely that voters, not a little irritated with the recent ham-fisted and authoritarian style of many local politicians, and coming off the lowest unemployment rates in history, will be eager to get back to work.

Bottom line: America is a centrist country. The pandemic was a shock and restructured the economy and major sectors. Americans will take a breath and get back to work. The result may be a substantial shift to the more pragmatic right of center.

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Source: America’s post-pandemic political shift to the right | TheHill