The COVID-19 pandemic will exact a $16 trillion toll on the U.S. — four times the cost of the Great Recession — when adding the costs of lost lives and health to the direct economic impact, according to former U.S. Treasury Secretary Lawrence Summers and fellow Harvard University economist David Cutler.
About half of that amount is related to lost gross domestic product as a result of economic shutdowns and the ongoing spread of the virus, while the other half comes from health losses including premature death and mental and long-term health impairments, Cutler and Summers wrote in an essay published online Monday in in the Journal of the American Medical Association.
“The immense financial loss from Covid-19 suggests a fundamental rethinking of government’s role in pandemic preparation,” the authors wrote. “Currently, the U.S. prioritizes spending on acute treatment, with far less spending on public health services and infrastructure.”
The $16 trillion amount is equal to about 90% of annual U.S. GDP; it’s also more than twice as much the U.S. has spent on wars since Sept. 11, 2001, including those in Afghanistan, Iraq and Syria, according to the essay.
Policies including wide-scale population testing, contact tracing and isolation can reduce the spread of infection and prevent some of these losses. Spending on testing and tracing strategies is about 30 times less expensive than the projected economic cost without those policies, the authors said.
Testing and tracing should be permanent investments by the U.S. government, and shouldn’t be dismantled when the pandemic recedes, wrote Cutler and Summers, who’s a paid contributor to Bloomberg Television.