Treasury Secretary Steven Mnuchin on Sunday dodged questions about whether the coronavirus pandemic could plunge the U.S. into a recession, insisting that the reeling stock market would eventually get back on track and that the Trump administration is more focused on targeting short-term relief to those most impacted by the fast-spreading disease.
In an interview on “Fox News Sunday,” the secretary repeatedly sought to avoid getting pinned down on a number of issues relating to the surge of coronavirus cases in the U.S. after he spent the last week negotiating with House Speaker Nancy Pelosi on the details of an economic aid package that he referred to as just the “second inning” of relief.
“I wouldn't focus on the technical issue of whether we are going to be in a recession or not,” Mnuchin told host Chris Wallace, arguing that the administration is more concerned about what it can immediately do to blunt the impact of the outbreak. The virus has prompted the shuttering of schools, the cancellation of sporting and entertainment events and outright travel bans, while fears over the novel coronavirus have contributed to a turbulent month on Wall Street.
The stock market over the last few weeks has shattered records for its greatest one-day gains but also for point drops, posting numbers not seen since the 1987 crash and ending an 11-year bull market run. The Federal Reserve has already stepped in to try and calm investors' fears, but those moves have gotten bowled over by new developments in the outbreak.
But “if the medical professionals are correct and we are doing all the things, I expect we’ll have a big rebound later in the year,” Mnuchin continued, arguing that the current market rout has very different origins than the Great Depression and other past declines — and thus wasn’t comparable. “This will have an end to it as we confront the virus,” he argued.
Mnuchin said his primary focus at the moment was the passage of the congressional aid package, which passed the House after midnight on Friday and which President Donald Trump has pledged to sign if it passes the Senate. That legislation would act as a complement to an $8.3 billion emergency aid bill that Congress approved earlier this month, and would precede a stimulus package aimed at propping up the hard-hit travel industry on which he said negotiations would begin this week.
“We need to get economic relief to the people that are impacted by this, and as I have described this, we are in the second inning. The first inning was the $8 billion, the second inning we passed bipartisan legislation to make sure that workers that need to be home and small and medium-size businesses will get paid,” he said. “We are now going back to Congress and focusing this week on the airlines industry, the hotel industry, the cruise ship -- there's no question that the travel industry has been impacted like we've never seen before.”
He declined to put a price tag on the latest aid package, pointing to the unknown extent of the virus’ spread and how many workers would need the paid sick leave included in the latest stimulus bill. The cost would be “significant,” he said, “but not huge.”
The secretary also would not predict how much of a hit the economy would take, instead reiterating that investors “need to focus on the long term” and pushed back on the idea that the relief measures currently under consideration should be classified as a bailout, a term the Trump administration has sought to avoid.
Unlike the 2009 recession, which was underpinned by the burst of the housing bubble and other structural weaknesses in the financial sector, Mnuchin argued that there were no such issues contributing to the current market tumble.
“If you are providing liquidity to good businesses that just need liquidity for three to six months where you’re taking collateral and you have security, that's not a bailout,” Mnuchin reasoned. “To the extent that we need to support different businesses that are impacted, again — our focus is going to be on stimulus for the workers and getting money to the workers that impacted it.”
While he stressed that there will be businesses “that will be severely impacted” by the collapse of consumer spending while Americans are urged to exercise social distancing, “we are focused on helping those businesses that need liquidity.”
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March 15, 2020 at 11:06PM
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Mnuchin dodges on specifics of coronavirus' economic impact - POLITICO
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