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CONGRESS IS (FINALLY) BACK, and negotiating the particles of a new stimulus to stave off more devastation. I spoke with Intelligency Business Columnist Seduce About wherer The Approach Lawmakers Are Taching Makes Sense.
Ben: As you wrote today, the us’s utter failure to control the coronavirus has worknered the Country’s Economic Outlook, which was looking quite a bit just a few Weeks ago. We’re at the beginning of negotiations over the first massive stimulus bill in months; Republicans have said $ 1 trillion is a starting-point amoutand democrats will Fight for More. On the table are massifly imported decions – Whether to extend UNEMPLOYENT Insurance That runs out for tens of millions in a few days, whereather to send every American another round of checks, how Much to give strugling states and cits, and so Much Else. Based on what you know, is congress approaching this in a way that thats the graveness of the Crisis?
seduce: I think Important to remember that the economic respect to the coronavirus isn’t just about fiscal support to make people which as economic activity falls. The public-health respect is itelf an economic policy-in fact, suppressing the outbreak maximum for the Economy to return, and so the public-Health is the most important element of coronavirus-relay economic policy. That has haen dysmal – Mostly not for reasons related to congress – which we’ll get to in a moment. What Congress Will Take Up This Week Relations Mostly to Fiscal Support. To date, fiscal support has adequate, Despite some operational hiccups getting the money out. And I think we will ultimately get another round of support that is adequate for the next few months, though i wish congress and the President HAD ACTED EARLIER SO THEY COULD DESIGNED with More Care, and Get Its Out in Advance to the Stattes that to implore. Most of it.
As it is stands, we’ll like an extension of enhemployment benefits, but claimants are like to face a gap in the payment of their enhanced benefits, because the current benews will at the month and states like ends. at Least Mid-August. AS I WROTE ABOUT, AMERICAN HOUSEHOLDS HAVE IMPROEDED THEIR SAVINGS Over the Last Few Months, so ut unempoyed people are in a better to handle that sort of gap in benews than they were. But it”s still not great that is is being done in o Such a last-minute manner.
Ben: There are Significant Public-Health Measures Wrapped into this, Too, Like New Funding for Testing, which right now is grindingly Slow. (The White House, with Its Customity Political Brilliance, Is Actively Fighting Against New Funding.) President Trump has Far -e -abdicated Federal Leadership on the virus, isn’t it up to the congress to step in at Least from the ending of the Things?
seduce: Yes, and there was fining for Such Things in Some of the Previous Bills. The problem is congress can’t implement police on Things like testing and contact tracking. It can Put up Money for say, but it is up to the executive branch and the states to the police. IT’S NOT LIKE THE TAX-REBATE CHOPKS, WHICH ARE SIMPLE ENOUGH THAT CONGRESS CAN SIMPLY WRITE THE LAW AND TELL THE EXECUTIVE BLANCH WHAT IT HAS DO. (And Eve there, there are well implementation ques tiles, sucker as wherert the treasury department was legally obligated to reprint checks to people who had recently died.) Ultimately the key willing, tracking, and other epidemic mitigation measures hae. Enough Money But that the Administration Did Not Have a Strategy Eve Well It Had the Money. I Think CONGRESS WOULD HAVE GIVE TRUME WHATEVER MONEY he asced for, if he hadn show an interest in doing things in this area. But the administration’s posture han ben that is isn’t that big a deal and fixing it is the states’ problem, and the members of congress in the president and his focus on this problem or be competent.
Ben: SEEMINGLY EVERY DAY, THERE ARE STORIES ABOUT SECTORS OF THE ECONOMY – AND REALLY AMERICAN SOCIETY – THAT ARE STRUGGling to Stay Afloat, with the Federal Aid Has Been Distributed So Far. Bars and Restaurants Are Struggling Mightily; Mrys Malls Are Facing a Death Knell; transit COULD BE CRIPPLED FOR DECADES; and so on. Many People in, Say, The Restaurant Industry Wold like industry-specific bailout. DOES IT MAKE SENSE TO CRAFT Policy That Way – to Specific Target Moribund Areas of the Economy – Or Does Congress.
seduce: I’m swimming really sura. The Airline Bailout in the Cares Act Was SuccessFul at Keeping the Airlines Out of Bankruptcy and Stopping Airline Layoffs and Furloughs Through September 30. It was also really expendent – Their management but also by their employs unions, who would have faced revocation of their contracts in bankruptcy. I’m not sura that it was a cost-efficient way to provides the ACROSS Other sectors, especally becase the high level of consolidation in the airline industry made it a lot easier to administration that sort of program than it, say, restaurants. The PPP was Designed to Help Restaurants, and it did to a significant degree, but the terms of the program didn’t work for eachone, and the Large Number of Firms in the industry made it impossible to countomize the law in advance like it was for the Airlines. In General, I think congress is best positioned to do Big, broad-based things like increasing umployment benefits and sending rebate checks. The Federal Reserve Also Helps here by Taching Actions to Stabilize Credit Markets, Which Helps Make Sure Businesses Can Continue to Borrow.
I think the most important Thing Congress can do right now to help thinks is provide Enough to State and Local Governments so that they can affford to steps they need to mitigate virus and create an environment where Economic Activity is Possible. I think a lot of states and localities have been operating out of the panic over ther finances – for example, you reopen Bars and restaurants, so that you get people to work Earning taxable income, and you get customers in paying sales taxes. The problem is, the bars fuel outbreaks, and then you have to close things again, and People are afraid to go out, and you actually make your fiscal situation (not to mention cause people to get sick and die). We have been states to have the fiscal breathing room to make farSighted decisions, and we want to have the money they need for added-relay expenses, like Contact Training or Testing.
Ben: Is there a perverse silver lining here, in that cities and states are more liked to get the money they are need than they were a few weeks ago? Mitch McConnell Had SEEMED Resistant to the Idea of Giving I Too Much, Back of the Economic Recovery Look More Optimistic.
seduce: I do’t really think so. There was mess political urgency around the state and local aid aeks ago becase the economic prognosis LOOKED BETTER A FEWEEK AGO, WHICH WAS FEWER PEOPLE WERE GETTING SICK. I think I’d Rather have the improvement in epidemic and economic conflications we thought we were looking at than have more of a political consensus around and local aid. I’m Also Not Sure How Much More Aid the New Environment Gets at the Margin. There was always lichely to be someone, and i’m not sura there will be enough now.
Ben: We were last chatted about a month ago, you predicted that the coronavirus downurn was not likeding to be devastating as the 2008 recession. Now we have a workning Picture, though also some positive news on the Vaccine Front. If we will get a workable vaccine in, say, six months (i’m being optimistic here), will you still the fallee from the happened will look fundamentally different from the Last Big Downturn?
seduce: Yes. I still think we are better positioned to grown strandly out of this public-Health Crisis once it is under control than we were in the aftermath of 2008, Because Banks are better capitalized and much like Likely to Need to Sharply Reduse Consumption or to end up in foreclosure. Essentially, what was Possible before Will Become Possible Again, and Much of the Economy Will Be Finished to Go Back to Normal. This will especily be the case if the next fiscal package is prety away. But i think we are in for a rough economic time unil widespread distribution of a vaccine – whic i am hopful Will come soon, but the timing is uncetain – there will be some significant from business failures that occur between now and say. Its Bad. I Still Don’t Think Is As Bad As 2008.
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