Joe Kalt on the challenges that COVID-19 poses for Indian Country
The Harvard Project on American Indian Economic Development Co-Director on the financial fallout from the pandemic and how the federal government can work with tribes to support economic recovery efforts
As COVID-19 tears across Indian Country, tribal governments are racing to meet not only the public health challenges caused by the pandemic, but are also grappling with the economic devastation left in its wake. To learn more about the economic crisis unfolding across Indian Country, the Ash Center spoke with Joe Kalt, the Ford Foundation Professor of International Political Economy, Emeritus and co-director of the Harvard Project on American Indian Economic Development, which is housed at the Ash Center. Professor Kalt and his research colleagues at the Harvard Project recently sent a policy memo to Treasury Secretary Steven Mnuchin outlining many of the unique economic challenges many of the nation’s 574 federally recognized tribes are facing during the COVID-19 outbreak.
Professor Kalt. Thank you for finding time to chat with us today. Can you give us an overview of the unique financial challenges that Indian country is facing as a result of the COVID-19 crisis?
Indian country is the legal phrase that describes the 574 federally recognized Indian tribes in the United States. What people need to understand about the impact is that since the mid-1970s we’ve been operating under a federal policy known as self-determination through self-governance. Today, Indian tribes across the United States have the same powers and responsibilities as any state or local government has to meet the needs of its tribal citizens. So tribes do everything from pave roads, run health departments, wildlife management, trash collection — everything you can think of that we expect state and local governments to do. Unlike state and local governments, however, tribes lack the kind of traditional tax bases of property taxes, sales taxes, income taxes.
Tribes instead have depended tremendously upon their business enterprises — often gaming, casino operations. Those casino operations are owned by the tribal government in just the same way, for example, that the state of Massachusetts owns a gaming business called the lottery. Less than half of tribes, however, own casinos. All tribes, however, are dependent on enterprise revenues, business revenues, but they aren’t necessarily casino revenues.
The COVID-19 crisis has caused an abrupt shutdown of most of these tribal enterprises. We’re not aware of a single tribal casino, for example, that is open anywhere in the United States. And most tribes have issued their own ordinances and orders requiring shelter at home, social distancing and so forth. Tribes have seen their revenues cut to zero, abruptly.
Is the economic fallout from the closure of these tribal enterprises limited to just the tribes themselves or is it spilling over into regional economies?
I think people don’t realize with tribal government, tribal enterprises — both gaming and non-gaming, more than half of all the employees of tribes and their enterprises are non-Indian. This reflects a good thing, actually, in that the economic development that’s been taking place in Indian Country means that tribes now have the wherewithal to grow, and in many cases they’re having to reach out to communities beyond their own and hiring people.
Tribal economies also spill over into the regions around them. Based on some preliminary modeling, we estimate that the tribal enterprises plus tribal government operations, in the aggregate, account for the employment of about 1.1 million people, and somewhat over 900,000 of those workers are non-Indians. When the coronavirus choked off these tribal revenues, it choked off wages, benefits, and employment for lots of people both Indian and non-Indian.
What specific actions should the federal government be doing, and how should they be partnering with Indian country to help with what is and what will be a devastating financial impact from COVID-19.
I think that what the federal government needs to be focused on is on supporting tribes in their roles as local governments. In other words, tribes, as I’ve said, have the rights, responsibilities, and powers that are very akin to other state and local governments in the United States.
The current CARES Act sets aside about $8 billion for tribes and tribal governments. It is key that those monies be allocated in a way that reflects the size of tribes and their economic impact, both on their own reservations, but more broadly in their regions. The second thing that the federal government needs to take into account, which reflects decades of research by the Harvard Project, is that this policy of self-determination through self-governance, actually is working.
The reason it’s working is because local decision makers, tribes, have been in charge of how the money is spent, whether they put money into a dental clinic or a new housing project or whatever it might be. Well, with this $8 billion dollars of CARES Act funds, it’ll be important that the federal government not tie tight strings around the decisions tribes make as to how to allocate those funds. By the way, state and local governments are telling federal government the same thing. State and local governments want the freedom to figure out what the priorities are depending on their local conditions. And so tribes are very much like state and local governments and need to be treated in the same way.
This interview has been edited for length and clarity.
About the Harvard Project on American Indian Economic Development
The Harvard Project on American Indian Economic Development is based in the Ash Center for Democratic Governance and Innovation at the John F. Kennedy School of Government, Harvard University. Through applied research and service, the Harvard Project aims to understand and foster the conditions under which sustained social and economic development is achieved among American Indian nations. The Harvard Project’s core activities include research, education, and the administration of the Honoring Nations tribal governance awards program.
Joseph P. Kalt is Ford Foundation Professor (Emeritus) of International Political Economy. His research focuses on exploring the economic implications and political origins of the government regulation of markets. He also heads the Harvard Project on American Indian Economic Development. Kalt has published widely in the area of natural resources economics and policy. He is the author of The Economics and Politics of Oil Price Regulation; Federal Policy in the Post-Embargo Era, Drawing the Line on Natural Gas Regulation (with F.C. Schuller); What Can Tribes Do? Strategies and Institutions in American Indian Economic Development (with Steven Cornell); and a principle author of The State of the Native Nations (with the Harvard Project on American Indian Economic Development) and Rebuilding Native Nations (ed., Miriam Jorgensen). Kalt received his BA from Stanford University and his MA and PhD from the University of California, Los Angeles.
