Harvard: If Feds Do Not Address Tribal Revenue, All Americans Will Suffer

Pictured: Window Rock on the Navajo Nation. On the Navajo reservation, 838 people have tested positive for coronavirus as of Tuesday evening, and there have been 33 novel coronavirus-related deaths. 

COVID-19 poses an “immediate threat” to Indian Country, according to researchers at Harvard University. Their dire prediction holds that Tribal economies could lose $49.5 billion with the shutdown of non-essential businesses, and that a failure of Tribal economies could imperil whole swaths of the larger American economy.

The group of academics at Harvard’s Ash Center for Democratic Governance and Innovation has sent Treasury Secretary Steve Mnuchin a letter about the allocation of COVID-19 relief funds to American Indian Tribes. The document outlines some key differences between state and local governments on the one hand, and Tribal governments on the other.

Tribal governments are largely self-funded through Tribal businesses, and do not have the tax base that a state or local government does. This means that when Tribal businesses are shuttered, there’s no revenue to permit the Tribe’s government to function.

“The COVID-19 crisis is devastating tribes’ abilities to fund their provision of basic governmental services,” the letter says, “and forcing tribes to make painful decisions to lay off employees, drop workers’ insurance coverage, deplete assets, and/or take on more debt.”

The letter makes another key point: the fate of Tribal economies can determine the fate of the surrounding area: “As tribal enterprise and government operations are choked off, the states and regions in which tribes are embedded face the loss of more than $127 billion in annual spending on goods and services,more than 1,100,000 jobs, and more than $49.5 billion in wages and benefits for workers.”

Historically, Native American crises have been easy for Americans or the federal government to ignore. This is not an Indian problem — it would very soon threaten wider and wider areas that have prospered from the improving Native economy. “The largest share of lost jobs and lost income would be borne by non-Indians,” the researchers assert, a statement that should alarm residents of the many states where Native business is prominent. “Our estimates indicate that approximately 70% of the impact — 915,000jobs, with wages and benefits totaling $40.2 billion — would be suffered by non-Indian workers. These 915,000 jobs are a larger total than the entire civilian labor forces that were employed in 13 of the 50 states immediately prior to the onset of the COVID-19 crisis.”

The summary letter finishes with several points the researchers feel the Treasury Department must take into consideration to manage this still-developing crisis. The key one is that “Tribal enterprises’ revenues are tribes’ effective tax bases.” Native leaders have been sounding the alarm on this since the details of the CARES Act were made public. Without replacement of at least some Tribal revenues, Tribal governments are or will soon be challenged to function. 

Another point Mnuchin and his department need to consider, according to researchers: “Self-determination through self-governance works. Tribes have shown that they can turn self-governance into economic development.” The researchers warn that “[t]ying tight federal strings around COVID-19 federal response funds will be counterproductive.”

It remains to be seen whether the Feds can react and adjust to the looming COVID-caused economic crisis in Indian Country, which is really a crisis on top of a crisis. If the CARES Act cannot be amended to address these concerns, the next COVID-19 stimulus legislation, expected at the end of April, must certainly serve Tribes better.