The bleakest one-time jobs data in American history – 3.28 million people filed for unemployment last week – shows why even a $2 trillion rescue bill can’t save the economy and explains the fear in Washington is already provoking calls for a new plan.
The staggering new Labor Department figures are a devastating indication of the impact of the deliberate shutting down of the economy to stem the coronavirus pandemic. They also show that the huge scale of the rescue plan that cleared the Senate late Wednesday is not only justified – it is likely far too small.
It helps explain the mood of fear that cloaked the US Capitol in recent days as lawmakers frantically worked to put a floor under the economy – the basic foundation of American life. It may also fuel President Donald Trump’s impatience to get business moving again, even if the coronavirus is not fully under control, to avoid further crippling economic damage.
The human tragedy of the pandemic is being played out in growing lists of lost family members and the courage of medical professionals saving lives behind closed hospital doors. But the jobs number shows that millions of Americans who have not yet got sick are also reeling from the devastating impact of the worst domestic crisis since World War II.
The rescue bill’s staggering size is the most public expression of the historic scale of the coronavirus disaster and the fragility of the systems that sustain American life. After all, in a matter of days, an economy powering ahead at historic rates suddenly needed a bill to plug a hole equal to 10% of US gross domestic product after the crisis swept away the complacency of a decade of economic expansion and perpetually rising stock markets.
The breakneck speed at which the bill came together in a capital fractured by vicious divides is an example of rare compromise in the bitter aftermath of impeachment. But it also reflects the motivating power inherent in the threat of economic implosion.
Thirdly, and perhaps most concerning, are signs that the biggest economic rescue measure in history won’t be nearly sufficient to nurse the economy through the dark months to come.
Leaders on all sides are clear that the package is a stopgap to get through the next few months – and will not revive the economy without another huge cash injection.
“If we have to go back, we have to go back,” President Donald Trump told reporters on Wednesday, but he said he was hopeful the package would support the economy for “a long time.”
The question of how much more will be needed cannot be answered until the virus reaches its peak nationwide and public health authorities give the green light to slowly reopen America’s shuttered businesses.
A multi-front crisis
Trump – after seeing the robust economy on which his reelection may depend dissolve – says strong fundamentals guarantee a strong rebound.
“This is a medical crisis; this isn’t a financial crisis. But it’s a thing that nobody has seen for many, many decades,” the President said in a coronavirus task force briefing Tuesday.
Trump had it partly right. As the bill, and the staggering government intervention in the economy, shows in recent days, this is a medical crisis – but it’s so much more. It’s a financial, small business, airline, unemployment, stock market, industrial, gig economy, supply chain and service sector crisis. If not arrested, it could spark a credit and banking crisis.
“This is a wartime level of investment into our nation,” said Senate Majority Leader Mitch McConnell, R-Kentucky.
The stunning top-line price of $2 trillion is not just important in suggesting the scope of the bill’s impact. At more than twice the size of the 2008 crisis recovery act, it makes a robust statement of the willingness of Washington’s political institutions to put a floor under the US economy at a time of extreme stress.
Though it’s being called a stimulus bill, the package is more designed to keep the economy in suspended animation in a bid to check the pandemic and to help firms and laid-off workers to survive until the storm passes.
White House economic adviser Larry Kudlow said this week that the package, together with $4 trillion in Federal Reserve lending power, would amount to “the single largest Main Street assistance program in the history of the United States.”
But Senate Minority Leader Chuck Schumer, who battled Republicans in a bid to secure new protections for workers, said he did not know if the bill would be enough.
“We don’t know. We don’t know,” the New York Democrat said on CNN’s “New Day” on Wednesday morning.
“The two awful things about this crisis is one, that we don’t know how long it’s going to last. Who’s affected. We still don’t exactly know. We should be willing, able to come back in a bipartisan way and do more if we need it.”
‘A drop in the bucket’
It already seems certain that even the billions of dollars in the bill for states and hospitals are going to be far short of what is needed to keep them running.
Treasury Secretary Steven Mnuchin said the bill should be sufficient to keep the economy afloat for three months.
But House Speaker Nancy Pelosi told CNN’s Wolf Blitzer on Wednesday that the bill probably wouldn’t work for that long.
“I do think that the consequences of this will prevail for a while,” the California Democrat said. “So we have to be ready to not only finish in the job but do it in a way that takes us in a very positive way for our economy.”
Democratic New York Gov. Andrew Cuomo warned Wednesday that the extra funds weren’t even enough to fill his state’s fiscal gap now, let alone for months to come.
“We’re looking at a revenue shortfall of $9 billion, $10 billion, $15 billion. New York City only gets $1.3 billion from this package. That is a drop in the bucket,” he said.
Even Schumer’s alarming tone was not enough to secure the bill smooth passage on Wednesday, as leaders on both sides of the aisle embarked on frantic sales jobs with their members.
Three Republican senators warned that language in the bill related to unemployment benefits needed to be fixed as it could deter people from returning to work.
Democratic presidential candidate Sen. Bernie Sanders of Vermont threatened to put a Senate hold on the bill if he judged it insufficient to workers. His liberal ally in the House, Rep. Alexandria Ocasio-Cortez of New York, threatened to block passage by unanimous consent for the same reason. And House Minority Leader Kevin McCarthy, R-California, said a bill of such magnitude should not just be waved through – even though many lawmakers want to avoid returning to Washington amid fears of infection.
When the bill does eventually pass, the clock will already be ticking on the next package. There is already talk of a “phase four” plan on Capitol Hill.
Much depends on how quickly the economy can be rebound. Trump says he wants it “raring to go” by Easter, in less than three weeks. On Wednesday, he predicted that the economy would ascend like a “rocket ship” once the crisis passes.
But some business leaders are not so sure.
After all,there are no guarantees that Americans will be ready to jump onto planes and pack into restaurants and bars for months – even if the peak risk of infections has diminished.
Raj Subramaniam, president and co-CEO of Fedex, said it was difficult to say what kind of shape the economy would be in when the pandemic fades.
“Our expectation and hope is that as we get past the suppression stage of the virus, the economy comes back and we have a strong recovery. It’s very hard to prognosticate what comes next,” Subramaniam said on “Quest Means Business” on CNN International.
And while welcoming the economic rescue package, Roger Dow, president and CEO of the US Travel Association, said his industry would have to return for more help from political leaders.
“The true scale of this crisis, and the economic damage created by this public health disaster, will extend beyond the scope of this historic bill,” Dow said in a statement. “It’s sad, but it’s true, more help will be needed soon.”
This story has been updated with additional reporting.