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How a Century of Real-Estate Tax Breaks Enriched Donald Trump

Twenty-five years before he was elected president, Donald J. Trump went to Capitol Hill to complain that Congress had closed too many tax loopholes. He warned that one industry, in particular, had been severely harmed: real estate.

The recent demise of real-estate tax shelters, part of a landmark 1986 overhaul of the tax code, was “an absolute catastrophe for the country,” Mr. Trump testified to Congress that day in November 1991.

“Real estate really means so many jobs,” he said. “You create so many other things. They buy carpet. They buy furniture. They buy refrigerators. They buy other things that fuel the economy.”

Mr. Trump was sounding a theme that has made real estate perhaps the tax code’s most-favored industry.

Legislators lapped it up. Mr. Trump and his fellow real estate investors got much of what he wanted, including the ability to fully deduct losses — sometimes only on paper — against other income.

Mr. Trump’s low taxes over the years were largely a product of his businesses hemorrhaging money, according to federal tax records obtained by The New York Times. But the records also show that so-called depreciation losses and other benefits for the real estate industry have helped Mr. Trump reduce his federal income taxes. In 2016 and 2017, Mr. Trump paid $750.

From the beginning, the real estate industry, with its claim to be a bedrock of the American way of life and its formidable lobbying power and lavish campaign contributions, has held disproportionate sway over how tax laws are written.

Tax breaks for real estate have been embedded in the federal income tax law for a century. New benefits sprouted up every few years. Even when lawmakers cracked down on business-friendly tax treatment, they often made special exceptions for real estate.

“The real estate industry has enjoyed the most lucrative tax breaks for decades,” said Victor Fleischer, a tax law professor at the University of California, Irvine, and former chief tax counsel for the Senate Finance Committee. The industry “thinks of the tax code as a basket of goodies to feast on rather than a financial obligation of doing business.”

The perks come in many varieties. One allows real estate investors to avoid capital-gains taxes when they sell properties as long as they use the proceeds to quickly buy others. Another gives developers a big break on taxes when they spend money on historical preservation.

Foremost among them is a deduction for depreciation, a provision originally included in the federal tax code in response to lobbying by the railroad industry.

Taxpayers are allowed to deduct from their annual taxable income a portion of the cost of an asset such as a locomotive or a building, as well as money spent on improving that asset. If you buy a building for $270,000, you can deduct $10,000 a year from your taxable income for 27 years. A profitable business can actually report losses on its tax returns because of depreciation deductions.

The tax benefit was meant to reflect the deterioration in value over time of an asset. But for the real estate industry, it can be a boondoggle: Many buildings kept in reasonable repair increase in value over time, unlike, say, cars or computers.

Depreciation is the ultimate tax shelter, critics say, because it permits real estate investors to take deductions for spending other people’s money. If a bank lends an investor $70 million to buy a $100 million office building, and none of the principal gets repaid for a decade — a common structure for such loans — the investor still gets to deduct that $100 million over several years, even though only $30 million of that is his own money.

In 1962, Congress passed rules that made the depreciation tax break less lucrative when someone sold the asset on which they had been taking deductions. But Congress exempted real estate.

“The real estate lobby always had a stronghold,” recalled Donald Lubick, at the time a top tax official in President John F. Kennedy’s Treasury Department.

Image
Credit…Zach Gibson for The New York Times

Mr. Trump has taken hundreds of millions of dollars in depreciation deductions, his tax records show.

Most but not all of his depreciation expenses since 2010 stemmed from money he spent improving his golf courses and on transforming the Old Post Office building in Washington into a luxury hotel. Some of that spending was done with nearly $300 million that he borrowed from Deutsche Bank.

“That’s Trump’s story,” said Michael Graetz, a top tax official in the first Bush administration and now a professor at Columbia Law School. “His losses are somebody else’s money.”

Mr. Trump has publicly credited depreciation with lowering his tax bills. “I love depreciation,” he said during a presidential debate in 2016.

In reality, the fact that his businesses were losing money was a major factor in reducing his taxes.

For example, for Mr. Trump’s commercial real estate properties that reported losses between 2010 and 2018, about half of the losses — $54 million — came from depreciation, his tax records show.

Jared Kushner, Mr. Trump’s son-in-law and senior adviser, also has benefited from depreciation. The Times reported in 2018 that he likely didn’t pay federal income taxes for years, largely because he took deductions from depreciation.

In 1986, Congress reined in depreciation benefits and capped the amount of losses that real estate investors could use to offset other income.

The changes were meant to combat a proliferation of tax shelters in which investors put money into real estate partnerships that, thanks to depreciation, generated enormous only-on-paper losses that then canceled out income from other sources.

“The tax shelters were out of control,” said Daniel Shaviro, a tax professor at the New York University School of Law who worked on the Joint Congressional Committee on Taxation and helped draft the 1986 law. “Every lawyer and dentist had one.”

Knowing the real estate industry would mobilize, the congressional tax committee kept the proposed changes under wraps as long as possible. The industry “was caught flat-footed,” Mr. Shaviro said. Even so, “I knew they’d get it back thanks to their raw political power.”

It didn’t take long.

Mr. Trump, who blamed the 1986 law for a subsequent fall in real estate prices and a deep recession, was one of several developers who urged lawmakers to restore the breaks in full.

Image

Credit…Marcy Nighswander/Associated Press

In 1993 Congress restored those breaks. At the same time, it carved out another advantage for the real estate industry. For most businesses, canceled or forgiven debts had to be recognized as income. Real estate investors for the most part got a pass, though they had to relinquish some future deductions. Mr. Trump has benefited from those rules, such as when his lenders canceled about $270 million of debt on his Chicago skyscraper, his tax records show.

Then Mr. Trump ran for president. On the campaign trail, he acknowledged that he had been a big winner from the tax code’s favoritism toward the real estate industry. He said his expertise on the subject would help him close loopholes and make the tax code fairer.

“The unfairness of the tax laws is unbelievable,” Mr. Trump said in 2016. “It’s something I’ve been talking about for a long time, despite, frankly, being a big beneficiary of the laws. But I’m working for you now. I’m not working for Trump.”

But Republicans’ 2017 tax overhaul, which remains Mr. Trump’s signature legislative achievement, expanded and enhanced several lucrative tax breaks for real estate developers. For example, while the law barred people and companies from avoiding capital-gains taxes by selling one property and buying another, one industry was exempted: real estate.

The law was a boon to people, like Mr. Trump, who owned golf courses. It permitted real estate investors to immediately write off the full cost of various expenses, including improvements to golf courses.

In recent years Mr. Trump has also taken advantage of a tax credit that covered 20 percent of developers’ costs of rehabilitating historical structures, which is meant to encourage the preservation of old buildings.

Mr. Trump has said that he spent $200 million transforming the Old Post Office Building in Washington, a designated landmark, into a luxury hotel. That could translate into a tax credit of as much as $40 million, which Mr. Trump could use to offset his taxes for up to 20 years. (The caveat is that such tax credits reduce a developer’s ability to take other tax deductions in the future.)

Mr. Trump’s tax records show that in 2017 he used at least $1.5 million in historical preservation tax credits. That was one of the reasons his federal income tax bill that year was only $750.

The 2017 law made that tax benefit less generous, reducing it to 4 percent from 20 percent of the rehabilitation costs. But properties opened before 2017 were exempted. Mr. Trump’s hotel opened in 2016.

Russ Buettner contributed reporting.

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Coronavirus Exposes Holes in Sweden’s Generous Social Welfare State

In the popular imagination, Sweden does not seem like the sort of country prone to accepting the mass death of grandparents to conserve resources in a pandemic.

Swedes pay some of the highest taxes on earth in exchange for extensive government services, including state-furnished health care and education, plus generous cash assistance for those who lose jobs. When a child is born, the parents receive 480 days of parental leave to use between them.

Yet among the nearly 6,000 people whose deaths have been linked to the coronavirus in Sweden, 2,694, or more than 45 percent, had been among the country’s most vulnerable citizens — those living in nursing homes.

That tragedy is in part the story of how Sweden has, over decades, gradually yet relentlessly downgraded its famously generous social safety net.

Since a financial crisis in the early 1990s, Sweden has slashed taxes and diminished government services. It has handed responsibility for the care of older people — mostly living at home — to strapped municipal governments, while opening up nursing homes to for-profit businesses. They have delivered cost savings by relying on part-time and temporary workers, who typically lack formal training in medicine and elder care.

This is how the nursing staff at the Sabbatsbergsbyn nursing home in the center of Stockholm found itself grappling with an impossible situation.

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Credit…Felix Odell for The New York Times

It was the middle of March, and several of the 106 residents, most of them suffering dementia, were already displaying symptoms of Covid-19. The staff had to be dedicated to individual wards while rigorously avoiding entering others to prevent transmission. But when the team presented this plan to the supervisors, they dismissed it, citing meager staffing, said one nurse, who spoke on the condition on anonymity, citing concerns about potential legal action.

The facility was owned and operated by Sweden’s largest for-profit operator of nursing homes, Attendo, whose stock trades on the Nasdaq Stockholm exchange. Last year, the company tallied revenue in excess of $1.3 billion.

On weekends and during night shifts, the nurse was frequently the only one on duty. The rest of the staff lacked proper protective gear, said the nurse and a care aide, who spoke on condition of anonymity for fear of being fired. Management had given them basic cardboard masks — “the kind house painters wear,” the nurse said — while instructing them to use the same ones for days in a row. Some used plastic file folders and string to make their own visors.

By the time the nurse quit in May, at least 20 residents were dead, she said.

“The way we had to work went against everything we learned in school regarding disease control,” the nurse said. “I felt ashamed, because I knew that we were spreaders.”

The lowest-wage workers — who are paid hourly and lack the protection of contracts — continued showing up for shifts, even after falling ill, because government-furnished sick pay did not cover all of their lost wages, the care aide said.

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Credit…Felix Odell for The New York Times

“This is an undervalued part of the labor market,” said Marta Szebehely, an expert in elder care at Stockholm University. “Some care workers are badly paid, badly trained and have really bad employment conditions. And they were supposed to stop a transmission that nobody knew anything about, and without much support.”

Vulnerability in another area was central to the devastation: Over the last two decades, Sweden has substantially reduced its hospital capacity. During the worst of the initial outbreak, elderly people in nursing homes were denied access to hospitals for fear of overwhelming them.

When nursing home residents displayed Covid symptoms, guidelines in force in Stockholm in the initial phase of the pandemic encouraged physicians to prescribe palliative care — forgoing efforts to save lives in favor of keeping people comfortable in their final days — without examining patients or conducting blood or urine tests, said Dr. Yngve Gustafson, a professor of geriatrics at Umea University. He said that practice amounted to active euthanasia, which is illegal in Sweden.

“As a physician,” Dr. Gustafson said, “I feel ashamed that there are physicians who haven’t done an individual assessment before they decide whether or not the patient should die.”

In the United States, some 40 percent of total coronavirus deaths have been linked to nursing homes, according to a New York Times database. In Britain, Covid has been directly blamed in more than 15,000 nursing home deaths, according to government data.

But these are countries characterized by extreme levels of economic inequality. An estimated 45,000 Americans die every year for lack of health care, according to one report. Britons endured a decade of punishing austerity that battered the national health system.

Sweden is supposed to be immune to such dangers. Yet this country of only 10 million people has been ravaged by the coronavirus, with per capita death rates nearly as high as the United States, Britain and Spain, according to World Health Organization data.

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Credit…Elisabeth Ubbe for The New York Times

One element appears to have substantially increased the risks: Sweden’s decision to avoid the lockdowns imposed in much of the rest of Europe as a means of limiting the virus. Though the government recommended social distancing, and many people worked from home, it kept schools open along with shops, restaurants and nightclubs. It did not require that people wear masks.

“There’s been more society transmission, and it’s been more difficult to hinder it from entering the care homes,” said Joacim Rocklov, an epidemiologist at Umea University. “The most precious time that we lost, our mistake was in the beginning.”

Those who operate private nursing homes in Sweden assert that residents have been the victims of the government’s failure to limit the spread of the virus.

“It’s the total transmission in society, that’s the key,” said Martin Tivéus, chief executive of Attendo, the company that owns the Sabbatsbergsbyn home in Stockholm.

Investigations by Swedish media have concluded that private nursing homes suffered lower death rates than their public counterparts. But experts say private and public homes are governed by the same decisive force: Municipalities handle elderly care, and taxpayers have been inclined to pay less.

For decades aggressive public spending was the rule in Sweden, rendering joblessness a rarity. By the beginning of the 1990s, a sense had taken hold that the state had overdone it. It was subsidizing industries that were not internationally competitive. Wages were rising faster than productivity, yielding inflation.

In 1992, Sweden’s central bank lifted interest rates as high as 75 percent to choke off inflation while preventing a plunge in the national currency, the krona. The next year, amid a tightening of credit, Sweden’s unemployment rate surged above 8 percent. The economy contracted, depleting municipal tax revenues.

This played out just as the policy sphere became infused with the thinking of economists like Milton Friedman, whose neoliberal principles placed faith in shrinking the state and lowering taxes as a source of dynamism.

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Credit…Felix Odell for The New York Times

From the middle of the 1990s through 2013, Sweden dropped its top income tax rate to 57 percent from 84 percent while eliminating levies on property, wealth and inheritance. The net effect was a reduction in government revenue equivalent to 7 percent of national economic output.

Under a 1992 law, Swedish elder care shifted from a reliance on nursing homes to an emphasis on home care. Part of the alteration was philosophical. Policymakers embraced the idea that older people would better enjoy their last years in their own homes, rather than in institutional settings.

But the shift was also driven by budget imperatives.

As a share of its economy, Sweden spends 3.2 percent a year on long-term care for the elderly, according to the Organization for Economic Co-operation and Development, compared with 0.5 percent in the United States and 1.4 percent in Britain. Only the Netherlands and Norway spend more.

But that expenditure is now spread across a population with greater needs. With home care the rule, nursing homes are reserved for older people suffering from complex ailments.

Attendo said it had enough protective gear to satisfy Swedish guidelines, and more than public nursing homes had, but not enough to manage the pandemic. When the company realized it needed more, it confronted a global shortage.

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Credit…Associated Press

“It took five or six weeks to get the volumes outside of China,” said Mr. Tivéus, the Attendo chief executive.

The shortages at Swedish nursing homes underscore the extent to which budget math has taken precedence over social welfare, say those who have watched the refashioning.

“What this pandemic has done is demonstrate a number of system errors that have gone under the radar for years,” said Olle Lundberg, secretary general of Forte, a health research council that is part of the Swedish Ministry of Health and Social Affairs. “We totally rely on the global production chain and just-in-time delivery. The syringes we need today should be delivered in the morning. There is no safety margin. It may be very economically efficient in one way, but it’s very vulnerable.”

Mia Grane was unaware of the systemic issues when she moved her parents into the Sabbatsbergsbyn home in the summer of 2018.

In their younger days, her mother had been an Olympic swimmer. Now, she was descending into Alzheimer’s. Her father used a wheelchair.

The home sat in the center of Stockholm, a 15-minute bike ride from her apartment, with lovely gardens that were used for midsummer parties.

“It was a perfect place,” said Ms. Grane, 51. “They felt at home.”

But her confidence evaporated as the pandemic spread. When she asked the nursing home staff how it planned to manage the danger, it reassured her that everything was fine.

“I thought, ‘If this virus gets into this place,’” she said, “‘a lot of people are going to die.’”

A week later, she read in a local newspaper that a prominent Swedish musician had died. He had lived in the same ward as her parents. She called the home and was told that her father was suffering cold symptoms. A test showed that he had contracted Covid.

Ms. Grane urged the staff to transfer her father to the hospital. It told her that no one was making that journey, she said.

Nursing homes lack advanced medical equipment like ventilators, and hospitals were effectively off limits to nursing home residents.

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“We knew that Sweden had fewer intensive care beds per inhabitants than Italy,” said Dr. Michael Broomé, a physician at an intensive care unit in Stockholm. “We had to think twice about whether to put elderly people with other conditions on ventilators.”

This forced the nursing home to administer comfort care, easing the pain with opioids as death approached.

Ms. Grane’s father died on April 2. “He was all alone,” she said.

She begged the staff to save her mother — “the most important person in my life.” But she wasn’t eating. A week later, her mother died, too.

Ms. Grane struggles to make sense of it — the staff not having proper masks, the hospital deemed off limits, the lack of concern about the nature of the threat.

“For me, it’s clear that they wanted to save costs,” she said. “In the end, it’s the money that talks.”

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Here’s How Moving to Work Remotely Could Affect Your Taxes

If you decided to ride out the pandemic at your out-of-state vacation house or with your parents in the suburbs, you may be in for an unpleasant reality: a hefty tax bill.

Given the complexity of state tax laws, accountants are advising their clients to track the number of days they spend working out of state. Some states impose income tax on people who work there for as little as a single day.

Even before the pandemic, conflicting state tax rules were creating issues for the increasing number of people who were working remotely, said Edward Zelinsky, a tax professor at Yeshiva University’s Cardozo School of Law.

“In the last six months, this has gone from a big problem to a humongous problem,” Mr. Zelinsky said. He knows from personal experience: He lives in Connecticut but works in New York and has paid tax on his New York-based salary to both states.

You might, depending on the state and how long you have been there.

The state where you have your primary residence typically can tax your worldwide income, and any state where you earn income also has the right to tax you on the income you earn in that state, said Kirk Stark, a professor of tax law at the University of California, Los Angeles.

“That immediately creates a possibility of two separate states taxing the same income,” Mr. Stark said.

Many states offer credits for taxes paid to other states, and that may ease the burden. But if the state where you have relocated does not have a reciprocity agreement with the state of your primary residence, you could be subject to double state-income taxation.

You have less to worry about if you have relocated to one of these 13 states, which have agreed not to tax workers who have moved there temporarily because of the pandemic: Alabama, Georgia, Illinois, Indiana, Massachusetts, Maryland, Minnesota, Mississippi, Nebraska, New Jersey, Pennsylvania, Rhode Island and South Carolina, according to the Association of International Certified Professional Accountants.

Unfortunately not, unless you are prepared to move there permanently.

Navneet Garodia, 35, a financial services professional, has an apartment in Jersey City, N.J., but moved in July to his in-laws’ house in Florida so that he and his family could have more space. He plans to reduce his New Jersey tax payments to account for the days he has worked from Florida, a state that does not impose income tax on residents.

“I shouldn’t be paying the amount of taxes I am in New Jersey, and Florida has no taxes,” he said. He has taken steps to show tax authorities that he is, in fact, in Florida, such as forwarding his mail to his address there.

But Mark S. Klein, the chairman of the law firm Hodgson Russ, says it is not that simple, as long as taxpayers still have a primary residence in the state where they had been working and intend to return there. The same applies for people who have moved to the Hamptons for the last few months — they will not be exempt from New York City tax if they return to the city once the pandemic is over.

“The rule with changing your domicile is you have to leave New York City, land in a new location and stick the landing,” Mr. Klein said.

Yes. Mr. Klein said more than 50 of his clients had moved to Florida, Texas, Nevada or Wyoming since March.

“It’s not a coincidence that these are no-tax states,” he said. The other states with no income tax are Alaska, South Dakota and Washington. Many of his clients have kept their residences in California or New York, he said, but will plan to spend the majority of the year in their homes in lower-tax or no-tax states.

Kent and Ruby Santin, who had lived in Long Island City, Queens, said they were looking to buy in New York when the pandemic hit. Instead, seeking better access to the outdoors, they changed course and bought a house on Lake Tahoe in Nevada.

The lack of income tax there was also a big plus. “That was part of the decision, to be totally honest,” Mr. Santin, 30, a management consultant said.

“Federalism,” Mr. Zelinsky said. Under the U.S. Constitution, states are permitted to create their own tax rules.

“What we’ve learned in the last six months are the benefits and the disadvantages of federalism,” he said. The benefits include governors who acted responsibly in managing the pandemic who “can make up for deficiencies of the federal government,” he said.

“The disadvantages are that states are going to have 50 different tax rules.”

Auditors are persistent, especially in New York. They will want to know how many days you have been in a state and will check your phone records, your credit card receipts, your voter registration, your travel records and details indicating how permanent your second residence is, including where your children are enrolled in school.

Even the nurses who came to New York to treat coronavirus patients will be subject to New York income tax if they worked in the state for more than 14 days, Gov. Andrew M. Cuomo said in May.

“We’re not in a position to provide any more subsidies right now because we have a $13 billion deficit,” Mr. Cuomo said at a news conference.

Nishant Mittal, the general manager of Topia Compass, which offers an app to help people keep track of their whereabouts for tax purposes, said he saw a 513 percent rise in subscribers in June, compared with June last year.

He said most of his clients did not envision a situation in which they would be working from the office as much as they did before the pandemic. “At this point, it’s no secret that this is going to be a big headache,” he said.

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California, After Riding a Boom, Braces for Hard Times

OAKLAND, Calif. — When California shut down its economy in March, it became a model for painful but aggressive action to counter the new coronavirus. The implicit trade-off was that a lot of upfront pain would help slow the spread, allowing the state to reopen sooner and more triumphantly than places that failed to act as decisively.

But the virus had other plans, and now the state’s economy is in retrenchment mode again. For the nation, this means that an important center of its output — a magnet of summer tourism and home to the technology and entertainment industries along with the world’s busiest port operation — is unlikely to regain momentum soon when growth is needed most.

For the state, it means a progressive agenda predicated on the continuation of good times will be hampered as governments move from expansion to cuts. Voters had mostly been open to paying for expanding services and priorities like affordable housing, but they seem to be turning wary of new taxes.




CALIFORNIA’S SHARE OF NATIONAL G.D.P.

15

percent

1Q 2020

14.7

14

13

RECESSIONS

1997

12.5

12

’97

’00

’05

’10

’15

’20

CALIFORNIA’S SHARE OF NATIONAL G.D.P.

15

percent

1Q 2020

14.7

14

13

RECESSIONS

1997

12.5

12

’97

’00

’05

’10

’15

’20


By The New York Times | Source: Bureau of Economic Analysis

California has always been a boom-and-bust economy, so while nobody was predicting a global pandemic that would tear through the service sector, the prospect of struggle was not unforeseen. Jerry Brown, the four-term governor, left office in 2018 with a multibillion-dollar state surplus and unemployment headed to a record low. But instead of departing on a triumphant high note, he said after his final budget presentation, “What’s out there is darkness, uncertainty, decline and recession.”

His more upbeat successor, Gov. Gavin Newsom, came in promising to expand health care and tackle the state’s homeless problem. Yet in his inaugural speech, Mr. Newsom warned, “Even in a booming economy, there is a sense that things are not as predictable as they once were.”




WEEKLY UNEMPLOYMENT CLAIMS

6

million

5

U.S. total

4

3

2

1

California

0

Jan.

Feb.

March

April

May

June

2020

WEEKLY UNEMPLOYMENT CLAIMS

6

million

5

U.S. total

4

3

2

1

California

0

Jan.

Feb.

Mar.

April

May

June

2020


Not seasonally adjusted

By The New York Times | Source: Department of Labor

Indeed. Unemployment, which was 3.9 percent in February, the lowest on record, shot up to 16.3 percent by May, compared with 13.3 percent nationwide. Container traffic at the Ports of Los Angeles and Long Beach is down about a third from a year ago, while many beaches and attractions like Disneyland were closed on July Fourth and are delaying their reopening plans. Most dispiriting is the sense that even after politicians made tough calls that Californians largely supported, the economy seems no better off.

Andrew Snow was supposed to be ramping up by now. Mr. Snow, who owns the Golden Squirrel, a restaurant and bar in Oakland’s Rockridge neighborhood, cut his staff of 28 people to two after the pandemic hit. But thanks to takeout orders, a new line of business selling groceries and the resumption of outdoor service, he recently brought two back, and was set to bump that figure to six or eight by the July Fourth weekend.

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Credit…Jason Henry for The New York Times

A few weeks ago, those plans seemed sound. Back then, on the sunny Friday afternoon when outdoor dining in Alameda County was allowed to resume, the Golden Squirrel’s patio tables, about eight feet apart, were full of patrons enjoying their first trip out for a drink since shelter-in-place orders took effect. That weekend the surrounding College Avenue retail strip was busy with masked, distanced, Purell-doused dining that to many felt borderline decadent after months of being cooped up.

Now business is slowing again, as California is averaging about 8,000 new cases a day, about triple the level a month ago. Mr. Snow’s plans to bring back workers over the holiday weekend didn’t come to pass, and he has put further hiring on hold.

“People are scared,” he said in an interview. “The math for having more people doesn’t work out anymore.”

Exactly how and how quickly the state should have reopened, and who is to blame for the backslide, are unlikely to ever be resolved. What the result means for the economy is more time in the dark, more need among the poorest citizens and more drain on the taxes required to support them.

The U.C.L.A. Anderson Forecast, which has been prognosticating California’s economic trajectory since 1952, expects that the state and national economies won’t fully recover until “well past 2022.” In the state as in the nation, the worst declines will be in the leisure and hospitality industries, while higher-wage areas like technology will be better off, a dynamic that will make financial inequality worse.

Even if the country avoids a second wave of infections in the fall, and a vaccine is made and distributed relatively quickly, that won’t keep many businesses from failing. Others will shift from investing in new equipment and employees to paying debt and shoring reserves. State and local budgets could take years to recover their pre-coronavirus levels of spending, even with federal help.

“The impacts will disproportionately affect lower-income Californians, while the more rapid growth will be happening in technology and construction, which are higher income,” said Jerry Nickelsburg, director of the U.C.L.A. Anderson Forecast.

The longer the pandemic’s disruption, the more likely it is that some jobs will never come back. For instance, a number of restaurants had already switched to counter service, even for fairly high-end meals, to avoid the need for servers who have a hard time affording housing in big cities. Now virtually every restaurant in California is operating around counter service or delivery, and some may not change back.

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Credit…Jason Henry for The New York Times
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Credit…Jason Henry for The New York Times

Mr. Snow, for example, envisions a restaurant where people order at the bar, eat far from other patrons, then leave with a bag of groceries. The Golden Squirrel would have fewer employees, compensating for a less-full restaurant with expanded takeout orders.

“Some of the changes will make us a better business in the future,” Mr. Snow said. “The challenge is getting to that future.”

  • Frequently Asked Questions

    Updated July 7, 2020

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • Is it harder to exercise while wearing a mask?

      A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.

    • I’ve heard about a treatment called dexamethasone. Does it work?

      The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.

    • What is pandemic paid leave?

      The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.


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