The COVID-19 Emergency Declaration Is Over. What Next?
It’s time to plan for the next emergencies
When President Trump first declared a national emergency in response to the COVID-19 pandemic, few Americans could have imagined that it would continue for the next three years. But given that President Biden allowed the declaration to expire on May 11, it is a particularly good time to reevaluate how we respond to unexpected events.
Unplanned spending causes real consequences for policymakers. Fiscally speaking, by accelerating the growth in the national debt, the federal response to the pandemic contributed to hitting the debt ceiling sooner—the implications of which we are now seeing. Federal actions of the last few years mirrored the government’s reaction to past crises, but not just in terms of the nation’s finances. Unexpected crises like COVID-19 are also a key impetus for expanding executive power in the name of more rapid responses to emergencies.
These concerns are especially worrisome considering that the number of emergency declarations has exploded in recent years, whether dealing with the opioid crisis and baby formula or wildfires and hurricanes. Although President Trump’s declaration may have been the first in the nation’s history for a pandemic, federal public health emergencies alone have been issued or renewed at least 131 times since 2005.
Emergencies are supposed to be “sudden,” “urgent,” “unforeseen” or “temporary,” but as the last few years indicate, presidents have gotten good at extending emergencies well past the initial crisis. We must become better at foreseeing potential emergencies, so we can help control the resulting financial damage as well as executive power grabs that easily evolve from temporary to permanent.
Consequences of the Emergency Epidemic
One direct result of this epidemic of emergencies has been an explosion in off-budget federal spending. Before COVID-19, America dealt with crises ranging from the attacks on 9/11 and subsequent armed conflicts in Afghanistan and Iraq to hurricanes, floods and other natural disasters, as well as an unexpected financial crisis.
But the pandemic, of course, was unprecedented. By the middle of 2021, the annual budget deficit topped $4 trillion, an all-time high, driven by record federal spending in response to the public health crisis. And yet, little public conversation has taken place, even in the wake of all this spending and the problems that come with it, about how to prepare better for future emergencies.
One reason may be that, when thinking about the nation’s finances, it can be easier to focus on spending that is easier to predict, like entitlement programs. Entitlements like Social Security and Medicare comprise the bulk of the federal budget, and most official projections credit them with driving future growth in the national debt. Since these programs are largely on autopilot, accurately estimating their future expenditures just requires good projections of influencing factors like demographic trends and healthcare costs. While it may not be politically easy to address entitlements, the options that should be on the table are well documented.
Crises, in contrast, are—by definition—unknown. Although we may expect certain kinds of events in the future—say, hurricanes or another pandemic—the specifics are rarely known. It’s typically impossible to know exactly where a hurricane will strike or when a virus might mutate.
And yet, while it may be easier to forecast entitlement spending, recent history shows that unexpected events account for a substantial portion of the growth in spending and debt. At the start of 2000, the Congressional Budget Office anticipated surpluses for many years to come and, while there were some causes for concern, it declared that “the outlook for the budget under current policies over the next decade continues to be bright.”
What forecasters couldn’t foresee, however, were all the world events that would impact those projections over the next two decades. The 9/11 attacks set in motion multiple overseas engagements, with unanticipated costs exceeding $8 trillion. Hurricanes like Katrina, Harvey and Sandy decimated parts of the country and prompted numerous supplemental spending packages. And most recently, the COVID-19 response contributed another $5 trillion in unplanned spending.
To be clear, emergency situations inevitably will arise, and it is eminently reasonable for the federal government to respond to them. But how lawmakers respond—and for how long—should be driven by a concrete plan for dealing with unforeseen events, rather than off-the-cuff responses after such events occur.
Crises vs. Emergencies
Consider a brief analogy. Responding to a car accident is a classic example of an emergency. A car accident is a sudden, unforeseeable event that necessitates an urgent response. Accordingly, first responders have special powers, such as the ability to cut through traffic to save lives. In contrast, rehabilitation for injured persons, while also important, is not an emergency. People on their way to rehab do not share the same special power to cut through traffic with first responders. An initial crisis might constitute an emergency, but such powers are rarely justified in use long after the initial instigating event.
The recent war in Ukraine provides a more direct, real-world example. Russia’s initial invasion may have been unexpected and justified an immediate response. But after the United States’ involvement in the conflict was decided, it is not appropriate to repeatedly use emergency processes like off-budget supplemental requests meant only for true crisis situations.
Indeed, the expansion of emergency powers, especially by the executive branch, has become the norm in recent years as well. The Defense Production Act in particular, a law enacted during the Cold War meant to give the president the ability to mobilize private industry during wartime, has been abused by presidents of both parties under the guise of an emergency to achieve numerous nonemergency ends. President Trump used the law to manipulate energy markets and later “expanded its reach” at the height of the pandemic, while President Biden has used the law for everything from critical minerals to baby formula to solar panel and heat pump production. President Trump also famously declared an emergency on the border in an attempt to redirect public funds to the building of a wall. Perhaps most alarmingly, partisans on both sides have called for presidents to declare new emergencies on issues ranging from border security to climate change and gun violence.
The expansion of emergency powers and increased emergency spending work hand in hand and are essentially flip sides of the same coin. Expanding such powers enables the expansion of emergency spending, and an increased willingness to spend off-budget only helps raise the demand for a more aggressive use of emergency powers.
Potential Solutions
As I outline in a new report, many solutions exist to address these problems. For example, Sen. Mike Lee’s (R-Utah) bipartisan ARTICLE ONE Act would sunset national emergency declarations automatically, while reforms to the Defense Production Act could limit executive power after emergencies are declared.
There are also more fundamental spending reforms that would be welcome. Fiscal rules like those utilized in places like Switzerland or Sweden would restrict spending in aggregate based on expected tax revenue and force more concrete discussions about tradeoffs between priorities. A federal “rainy-day” fund, used effectively by such countries as well as many U.S. states, would allow Washington to have immediate funding available for unforeseen events. Indeed, such funds were instrumental in states’ ability to respond quickly at the onset of the pandemic.
There is also strong empirical evidence that countries like Switzerland and Sweden were better able to weather unforeseen events like the 2008 financial crisis. Common sense also dictates that being on stronger financial footing going into a crisis provides more flexibility once the emergency is underway—an argument made many times during the pandemic.
And let’s not forget that better planning isn’t just the responsibility of governments. There are many proposals that could incentivize individuals to save more to prepare for such situations, such as creating HSA-like emergency savings accounts or better utilizing existing insurance markets meant to hedge against such risks.
The underlying point, though, is that we have an established budgeting process and checks on governmental power for important reasons. Not following those procedures or otherwise using emergencies to expand such power can misalign incentives and leave us less prepared to address future crises.
As our repetitive debt limit fights illustrate, it is very difficult to restrain expenditures when there’s little plan once we’re faced with a disaster, either real or perceived. Now is the time to rethink how we plan and respond to unexpected crises so that we don’t blow up the budget when the next one strikes.