US Congress and Government Debate Additional Stimulus... "Unemployment Could Reach 25%"

Democratic Party Pushes $750 Billion Stimulus Plan
Mnuchin Treasury: "Need to See Effects of Existing Stimulus... Unemployment Could Reach 25%"
Trump Focuses on Payroll Tax Cut
Vice President Pence Faces Home Quarantine Controversy

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The U.S. government and Congress are engaged in heated debates over the implementation of additional economic stimulus measures to prevent an economic downturn caused by the novel coronavirus disease (COVID-19).

The Democratic Party has stated it will push for legislation on the stimulus package, but the White House and Republicans are taking a cautious stance, saying "let's first observe the trend of lifting lockdowns," making a final agreement unlikely in the near term. Economic officials, including those from the U.S. Treasury Department, have expressed pessimistic forecasts that the unemployment rate will soar well above 20% in May and June.

On the 10th (local time), U.S. Treasury Secretary Steven Mnuchin said in an interview with Fox News, "We have poured in a lot of money, but this money has not yet flowed into the economy," adding, "We need to be cautious before injecting trillions of taxpayer dollars." Although the unemployment rate in April hit 14.7%, the worst since the Great Depression in the 1930s, he expressed a negative view on additional economic support measures.

This statement is related to the Democrats' push for additional stimulus legislation. The Wall Street Journal (WSJ) reported that House Speaker Nancy Pelosi plans to assemble a $750 billion stimulus budget early this week. The Democrats hope this bill will provide financial support not only to individuals and businesses affected by COVID-19 but also to local governments.

Because of this, there has been speculation that the White House and federal government are not interested in additional stimulus. Larry Kudlow, director of the White House National Economic Council (NEC), appeared on ABC News that day and said, "I think many want to observe the economic effects of the massive stimulus program," and clarified, "Some media reports claim there is no communication between the Democrats and the White House, but that is not true."

He explained, "Although there are no official negotiations, steady behind-the-scenes discussions are ongoing," adding, "Tomorrow (the 11th), a conference call with Senate Democrats and Republicans is scheduled. We are in the stage of gathering opinions for the next steps." Kevin Hassett, senior economic advisor to the White House, also said, "President Donald Trump does not want bailout support for state governments but has signaled a willingness to cover some unexpected COVID-19 costs," while noting, "It is premature to make a decision right now."

The reluctance of the government and Republicans toward additional stimulus is largely interpreted as due to their dissatisfaction with supporting local governments. The National Governors Association is requesting $500 billion in aid, but since most governors of severely affected states like New York belong to the Democratic Party, the federal government is hesitant to provide active support.

Officials also recognize that the economic situation will continue to worsen. Advisor Hassett revealed that the U.S. unemployment rate will exceed 20% in May and June, and Secretary Mnuchin specifically mentioned that "the U.S. unemployment rate could reach 25%." This indicates that the economic downturn will continue to deepen by as much as 10 percentage points compared to last month.

Instead, the federal government is actively supporting the payroll tax cut advocated by President Trump. Although it has stepped back somewhat due to opposition from both Republicans and Democrats, the possibility of actively pursuing it remains high. Secretary Mnuchin hinted that discussions on additional fiscal support, including payroll tax cuts, are ongoing.

In this situation, reports emerged that Vice President Mike Pence has entered self-quarantine. Since Pence's spokesperson Katie Miller tested positive for COVID-19 on the 8th, the vice president is also in a situation where he cannot be assured of safety.

The White House responded to the reports by stating that "Vice President Pence will not enter self-quarantine, is undergoing daily testing, and has scheduled White House engagements tomorrow." Already, Steve Hahn, director of the Food and Drug Administration (FDA), Robert Redfield, director of the Centers for Disease Control and Prevention (CDC), have entered two weeks of self-quarantine, and Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, has also started a low-level self-quarantine.

Advisor Hassett stirred controversy by saying in a broadcast interview, "I am afraid to go to work at the White House." The New York Times criticized the White House for not preparing emergency plans such as limiting contact between President Trump and Vice President Pence.