The Secretary of the Treasury of the United States, Steven Mnuchin, has alerted this Tuesday in an appearance before the Senate that there is a risk of “permanent damage” in the economy if the States do not begin to reopen after the stoppage that has led to the coronavirus pandemic. For his part, Federal Reserve Chairman Jerome H. Powell has also addressed the Upper House Banking Committee and warned that the recovery could be delayed if state and local governments begin to fire public employees because of problems. budgets, hinting that Congress may have to inject more money into administrations. So far, Congress has approved a two-trillion-dollar aid package, supported by both parties, an unprecedented amount.
“There is clear evidence that when people are unemployed for long periods of time it can permanently affect their careers and their ability to return to work,” Powell said. “The same is true for small and medium-sized companies, which are the jobs machine of our great economy,” he added. At the hearing, he said that the Fed’s loan programs for medium-sized companies and state and local governments will begin to function. at the end of this month.
The US economy fell 1.2% in the first quarter – equivalent to a 4.8% fall in the annualized quarterly rate -, ending the longest period of growth in its history.
Powell elaborated on the importance that state and local governments, which, according to his estimate, represent 13% of the country’s workforce, do not fire their workers. “The first thing, of course, is for people to believe that it’s safe to return to work, and it’s about having a sensible and thoughtful reopening of the economy, something we all want. Now we are at the beginning of that stage, ”said the Fed president.
“It is very important to start getting people to work safely,” Mnuchin urged. “I think employment numbers will get worse before they start to improve,” he added, referring to the 36.5 million people who have asked for unemployment benefits during the global crisis, figures that have not been seen since they began to have records in the forties.
Mnuchin defended the states that have begun to reopen by decision of their governors. Many have been criticized by the mayors of the territories they encompass for not complying with the guidelines of the White House health experts, who recommend moving forward when the rates of contagion and deaths from the virus are down for two weeks. “We are aware of health problems and we will do it safely,” said the Treasury secretary on the revival of the economy in the country.
Two of the main architects of the world’s leading global economic response to the pandemic were clear on the concerns for the future at the supervisory hearing on the $ 2 trillion rescue package approved in late March. The appearance takes place when Congress and the White House debate a second great economic lifeguard.
The largely Democratic House of Representatives last week approved a new rescue package worth $ 3 trillion, targeting all sectors hit by the coronavirus. But Republicans, who control the Senate, have already advanced that they will reject the bill that provides for up to a trillion dollars for state and local administrations, another round of direct checks to citizens, this time including undocumented immigrants.
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