How the $4 Trillion Flood of Covid Relief Is Funding the Future
From broadband to transportation to high-tech medical manufacturing, benefits from America’s pandemic money infusion will linger.,
The Tech and Design Issue
How the $4 Trillion Flood of Covid Relief Is Funding the Future
From broadband to transportation to high-tech medical manufacturing, benefits from America’s pandemic money infusion will linger.
The Build Your Dreams factory in Lancaster, Calif., manufactures electric busses.Credit…
Covid-19 put American infrastructure to the test — and by most measures, it failed, exposing the unstable, outdated systems that uphold our lives. Students without access to the internet tried to get by on once-a-week printed packets. Nurses wore trash bags as medical equipment. Nobody could buy toilet paper. But these failures, along with so many more, may also have provided the impetus — in the form of unprecedented federal funding — for the United States to modernize itself, filling cracks and bridging gaps in our technological, medical and manufacturing capabilities that have been widening for decades.
To date, the federal government has allocated $4.52 trillion in response to Covid-19 — a staggering figure, one that exceeds the entire federal budget in 2019. Most of that funding comes from just two bills: the Coronavirus Aid, Relief and Economic Security, or CARES, Act, passed in March 2020 ($2.2 trillion), and the American Rescue Plan Act, or A.R.P., from March 2021 ($1.9 trillion). These bills covered a huge range of funding, much of it focused on short-term recovery: Together, they allocated more than $1 trillion in direct aid to Americans in economic need, including $464 billion for additional unemployment benefits and $695 billion for stimulus checks, and also allocated nearly $428 billion for programs to aid small businesses.
But the two bills also made huge investments in the future. In many cases, the small-business aid enabled companies to pivot, by investing in new technologies and retraining workers. And the bills funneled enormous sums into industries for needs that stretch far beyond Covid: $390 billion for health care, $79.3 billion for the transportation sector and $716 billion for states and localities, much of it for modernization efforts. “The pandemic revealed the brittleness of American infrastructure, including automation and broadband,” says Ryan Calo, a founding director of the University of Washington Tech Policy Lab. “It’s a once-in-a-generation idea that the government would invest so massively in infrastructure. You have to address problems not only of today but that you anticipate to be perhaps a decade or so down the line.”
Not surprisingly, a large share of Covid-related federal funding went to health spending: $662 billion in total, including biomedical research, according to the Committee for a Responsible Federal Budget. Much of that extended coverage for Americans: $80 billion to continue Medicaid coverage, $23 billion to fund COBRA coverage through September 2021. Another big swath covered vaccine and therapeutics research and development: $53 billion, including $10 billion to Moderna and $11 billion to Pfizer. It also included substantial funding for biomedical research beyond the pharmaceutical companies: about $6 billion directly for research into Covid-19 and vaccines, administered by federal agencies. “I think this is one of the biggest, fastest biomedical-research efforts that we’ve ever launched,” says Matthew Fenton, who oversees grants for the National Institute of Allergy and Infectious Diseases. N.I.A.I.D.’s operating budget for 2020 was $5.89 billion; the CARES Act, Coronavirus Preparedness and Response Supplemental Appropriations Act and the A.R.P. allocated an additional $4.53 billion, specifically to study and develop treatments, protocols and diagnostics for Covid-19.
Changing research methodologies to develop a vaccine in record time required significant investment — but that investment will pay off beyond this particular virus. As one example, the funding allowed for huge clinical-trial cohorts, leading to much quicker results; scientists were able to make modifications within a trial to get to an F.D.A.-ready treatment faster. The record turnaround from the Covid-19 vaccine will set a new standard for how fast other treatments can be developed with the appropriate funding. “Anything that involves getting an F.D.A.-approved drug or medical device — whether it’s heart disease, rheumatoid arthritis, cancer, lupus — all of these have the potential to benefit from these new approaches to clinical trial,” Fenton says.
The Covid funds are functioning as a one-time injection to compensate for what has been a trend toward disinvestment in recent years. Decades of previous investment — not only in biomedical research but in engineering, physics and chemistry — set up the scientific foundation the Covid-19 vaccine developers built upon. Yet according to the American Association for the Advancement of Science, U.S. government investment in nondefense R.& D. has fallen, slowly but significantly, over time, from 5.8 percent of the federal budget in 1966 to 1.5 percent in 2020. “The message there is, you don’t know what’s coming,” says Neal Lane, a senior fellow in science and technology policy at Rice University’s Baker Institute for Public Policy and the former director of the National Science Foundation. “You need to be making a sustainable, long-term, growing investment in science and engineering so that you’re ready to address these big crises.”
When the pandemic brought the supply chain to a standstill and jolted product demand, small American manufacturers scrambled. “As a young company, not having large cash reserves was the really scary part — not knowing if we’re going to be able to make payroll, not knowing if we’re going to be able to get raw material,” says Terry Hill, the owner of Rapid Application Group in Broken Arrow, Okla. Before the pandemic, Hill and his 10 employees, mostly fellow veterans, 3-D printed specialty aircraft parts. “All of that came to a screeching halt,” Hill says. “It felt like going back into a deployment again, where we knew a little bit of information but not the whole developed picture.” To survive the pandemic, Hill turned to the Oklahoma Manufacturing Alliance, a chapter of the federal Manufacturing Extension Partnership, which provides assistance to manufacturers with fewer than 500 employees. With additional funding from the CARES Act, the alliance gave RAG logistical help, including aid in securing P.P.P. funds and connections to local suppliers when the global supply chain broke down. Thanks to the Oklahoma Manufacturing Alliance, Hill was able to get F.D.A. approval, source new sterilizable materials and purchase other materials to start supplying in the health care space — all without laying off a single employee. “Overnight, we went from printing for private space-travel companies to designing our own masks,” he says. “If it wasn’t for the pandemic, and having those P.P.P. funds, we would have never dove into health care.”
The investments permanently changed RAG’s business model. Today the company receives as many orders from health care as from aerospace, building on relationships established during the pandemic, as with a hospital in Tulsa. Originally, RAG supplied masks to the hospital; now the company is designing parts for robots to sanitize its infectious-disease wards. Without the federal funds, Hill says, “I would be surprised if RAG was still here.”
RAG is one of thousands of manufacturers able to advance technologically thanks to federal funding during the pandemic. The CARES Act and the A.R.P. allocated $892 million in additional funding to the National Institute of Standards and Technology and the National Science Foundation, largely to meet changing demands in industry. “The circumstances changed during the pandemic,” says Rob Ivester, the acting director of the Manufacturing Extension Partnership, which is part of NIST. “You had a much harder time going to that overseas source to get that specialty tooling, you had the sudden availability of labor resources inside your shop because your customers for your traditional products were not buying, and you’re trying to keep your business alive.” Small companies like RAG were forced to update their technology to stay in business. The CARES Act directly funded training for small manufacturers, and M.E.P. centers helped thousands of small manufacturers adopt technologies like cobotics (robots to collaborate with employees on the assembly line) and 3-D printing. “In the near term, they benefit because they’re able to keep their shop busy and start making new products,” Ivester says. “But it’s also a longer-term investment, because now they have that capability to essentially pivot on demand, and that makes them a much more agile and competitive company.”
Infrastructure, conjuring as it does images of potholes and rusted water pipes, often goes overlooked; politicians would rather be associated with cutting ribbons than maintaining systems. Paradoxically, that has meant the great leaps in American infrastructure often come from moments of great lack: the greater the crisis, the larger the possible investment. The Great Depression led to the New Deal, which established the Federal Housing Administration and brought electricity to the rural United States; the Great Recession led to the American Recovery and Reinvestment Act, which directly funded improvements to 2,700 bridges and 42,000 miles of road.
In the 1930s, modernizing the country meant electricity. In the 2020s, it means broadband. “Our economy evolves and changes,” says Todd Schmit, an associate professor of applied economics and management at Cornell University, “and it’s really necessary now to think about broadband in an infrastructure space.” The digital divide is sharp in the United States: Census Bureau data shows that broadband access is concentrated in cities and in the Northeast, Florida and the West Coast. In rural areas and the South, West and Midwest, far fewer Americans have access. In the South, 111 counties have broadband subscription rates at or below 55 percent. The divide is often stark even within a state: In Virginia counties adjacent to Washington and Richmond, 85 percent of households have broadband; counties in the center of the state have less than 65 percent of households with subscriptions. According to research from BroadbandNow, a majority of counties in Alaska have zero access to broadband; in Mississippi and West Virginia, less than 60 percent of households have broadband access. A 2019 Arizona State University study found that nearly one in five tribal reservation residents had no home internet access.
This was all true before the pandemic, but when Americans were suddenly forced to work, learn, socialize and seek medical care online, the disparity in access became glaringly obvious — so obvious that lawmakers had no choice but to address it. The CARES Act opened the tap just a little, appropriating $100 million as grants for broadband in rural areas. In December 2020, the Consolidated Appropriations Act established more than $1.5 billion in broadband grants, including nearly $1 billion for tribes, which face some of the worst internet access in the country. The American Rescue Plan included $20.4 billion exclusively for broadband access, and gave states and localities about $388 billion in flexible funding that can be used for broadband. Across the country, this money is already teeing up projects to address digital disparities: satellite connectivity for remote tribes in Alaska, a grant program in rural Colorado, last-mile broadband deployment programs in Virginia, installing fiber cables in Arizona, improving outdoor connectivity in Georgia.
The $1.2 trillion infrastructure bill, signed into law on Nov. 15, will enable states to build on Covid-related funding. The CARES Act and the A.R.P. kept localities and companies moving forward rather than falling back during the pandemic; the infrastructure bill, which includes $312 billion for transportation, $65 billion for broadband and $108 billion for the electrical grid, takes an additional sizable step in that direction. But neither funding source includes the long-term investment needed for sustained progress.
Take the broadband build out as a key example: Out of the $65 billion allocated to broadband in the recent infrastructure bill, the bulk — $45 billion — is for installing broadband, compared with $17 billion for ongoing access and subsidy grants. “We’re going to give a big shot of investment for infrastructure and capital expenditures to build this system, but then we need to provide some subsidized assistance annually along the way, to keep it in the long-term,” Schmit says. “If you can build it, and then they get things going and everybody gets broadband, and in five years everybody’s bankrupt, then what have we solved?” The billions in federal funding may build access to broadband, but it offers no guarantee to sustain it, which is especially crucial for the rural broadband access that this legislation tries to address. Schmit studies broadband access in areas of upstate New York with fewer than 10 subscribers per mile, where offering service often isn’t cost-effective.
“If we can agree that access to broadband is a public good — for educating our children, for access to health care, for expanding business opportunities — there should be a defensible basis for government assistance in funding the operations of those programs,” he says. “But I think that’s a harder story to tell.”
Charley Locke is a writer, an editor and a story producer who often works on articles for The New York Times for Kids. Christopher Payne is a photographer who specializes in architecture and American industry. He has documented many industrial processes for the magazine, including one of America’s last pencil factories, Martin guitars and The Times’s own printing plant.