Mnuchin defends United States fiscal response to coronavirus

Daniel Fowler
May 20, 2020

"We are committed to using our full range of tools to support the economy in this challenging time even as we recognize that these actions are only a part of a broader public-sector response", Powell said Tuesday in remarks to the Senate Banking Committee.

Federal Reserve Chairman Jerome Powell sought to maintain neutrality in the debate over whether Congress should build on record stimulus, to further cushion an economy facing increasingly dire pressure from the coronavirus pandemic. Powell stressed additional measures may be necessary to prevent lasting economic damage.

Mnuchin said he wanted to thank "all the essential workers", but Brown interrupted him, adding, "Thanking is great, but is it fair our economy pays the essential workers so little in such work conditions?". Democratic senator Sherrod Brown of OH accused the Trump administration of prioritizing stock market performance over public health. "How many workers should give their lives to increase our [gross domestic product] by half a percent?" The Treasury secretary agreed.

As more states reopen businesses, the government is closing in on the end of an eight-week program to funnel money to small businesses to avoid layoffs, prompting calls to extend the $660 billion Paycheck Protection Program.

Senator Elizabeth Warren, a Democrat, also pressed Mnuchin on why participants in the "half-a-trillion-dollar slush fund" supporting the "Main Street" lending programme and Fed credit facilities aimed at larger borrowers have no specific requirements to retain employees. The prospect of any quick rebound in employment is becoming increasingly dim with tens of millions jobless and no strong treatment or vaccine immediately available to support Americans' confidence in returning to work, school and shopping.

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The CARES Act has provided trillions of dollars in liquidity to financial markets, loans to businesses and direct payments to individual Americans.

Mnuchin disputed Warren's characterization and said the conditions attached to the Fed programs were negotiated "on a bipartisan basis" with Congress.

"In other words, if somebody fires, if a corporation fires a bunch of people then gets federal taxpayer money, you're fine with that, or if they take a bunch of federal taxpayer money and then say well it didn't work out commercially for us, then they can fire people", she continued.

Powell reiterated his view that Congress may have to authorize additional relief spending to keep families, businesses and cash-strapped state and local governments afloat until the virus is under control. "I do think we need to take a step back and ask, over time, is it enough?" Mark Warner (D-Va.) that "there are scenarios within [the business lending programs] where we could lose all of our capital, and we're prepared to do that".

Treasury and the Fed have set up roughly a dozen programs created to keep American families and businesses afloat during the outbreak of COVID-19, the disease caused by the Chinese Communist Party (CCP) virus, commonly known as the novel coronavirus.

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