The Secretary of the Treasury of the United States, Steven Mnuchin, alerted this Tuesday of the “risk of permanent damage” for the American economy if the confinement for the coronavirus pandemic is maintained, while the President of the Federal Reserve (Fed), Jerome Powell , asked for more fiscal stimulus to Congress in an unusual joint appearance.
Amid the biggest crisis in more than 70 years, the two officials virtually responded to the Senate banking committee to assess the economic prospects and effectiveness of the $ 2.2 trillion rescue package approved in April, the largest of the country’s history.
Mnuchin, a member of the Administration of President Donald Trump, opted for cautious optimism, pointing out that financial assistance measures are working, while defending the gradual reopening of the country after weeks of confinement and mobility restrictions.
“There is a risk of permanent damage” if the reopening process is not advanced, the head of the Treasury told the senators.
“We are aware of health issues and we want to do it in a safe way,” he added.
For Mnuchin, the figures for the second quarter will continue to be negative, but he ventured that “economic conditions will improve in the third and fourth quarters of the year.”
HEALTH AGAINST THE ECONOMY
President Trump and his government have been eager to resume economic activity, although experts have warned that caution must be maintained.
More than two thirds of the 50 US states have begun the gradual lifting of restrictions imposed in mid and late March.
The United States is the central focus of the pandemic, with more than 1.5 million infected and 90,000 dead, according to the independent count by Johns Hopkins University.
One of the toughest crossings of the appearance was the one that occurred between Democratic Senator Sherrod Brown of Ohio and Mnuchin.
“How many workers must give their lives to increase the GDP or the Dow Jones Industrials (the main index of the Wall Street Stock Exchange) by a thousand points?” Asked Brown.
“No worker should give their lives for that, senator, and I think his characterization has been unfair,” replied the Treasury secretary.
THE FED ASKS THE CONGRESS TO DO MORE
For his part, Jerome Powell highlighted the seriousness of the crisis facing the country, with more than 36 million new unemployed in recent weeks due to the wave of layoffs caused by the paralysis of economic activity.
“It should be remembered that the measures taken to contain the virus represent an investment in our individual and collective health. As a society, we should do everything possible to give a break to those who are suffering for the public good,” said Powell.
From the monetary side, he assured that the Fed “is committed to using all the tools available in these challenging times”, after cutting interest rates to almost 0% and approving massive injections of liquidity, although he acknowledged that “these actions are only part of a broader public sector response. “
“This is the biggest shock in recent memory, and the question floating in the air is: Has it been enough?”
Powell, who has warned that the unemployment rate could reach 20% at the end of May, welcomed the start of negotiations for a new fiscal stimulus program.
The Democrat-controlled House of Representatives passed a new $ 3 trillion fiscal stimulus plan, which includes a trillion dollars to rescue states and local governments, as well as another round of direct payments, including this one Immigrants without papers.
The White House and Republicans – as well as some Democrats – oppose both turning to the undocumented and rescuing the states, since they warn that in some cases their financial problems are prior to the pandemic.
“(The new fiscal stimulus package) is going to happen. But it is going to be done in a better way for the American people,” Trump said Friday, without offering details about the Republican proposal.