latest news about Corona virus In US Stimulus

White House GOP be considered on employment coronavirus Stimulus

Former Obama Council Of economic Advisor Chairman And Chicago's BooTh School Of business 

Today I want to kick off the show talking about republicans continuing their conversations in Washington DC to align on what they're looking to push for. In the next round of stimulus as additional unemployment benefits here are set to expire for millions of Americans in just the next couple of days. Interestingly, Bloomberg reported moments ago the Trump administration officials and Senate Republicans might be eyeing a short term extension of those unemployment benefits until a larger stimulus deal can be reached, so we'll be tracking that here in the next hour for updates and bring those to you but for more on that want to bring on the other half of the Guzman and goolsby show here the better half. I should say just a little bit longer resumes what he's bringing to thet older half Austin goes via Chicago's Booth School of Business professor of economics and a former Council of Economic Advisers Chairman under President Barack Obama, Professor Goolsbee I always love having you on just first, as we're getting these updates here I want to ask you about what might be needed because we've heard from Senate Majority Leader Mitch McConnell talking about how he wants to keep this round of a closer to about 1 trillion keep in mind the cares act was more than $2 trillion. And the heroes act Democrats were pushing for in the house, $3 trillion. So what's the number you think we need so far to keep this recovery intact.

Well, I mean, all of that hinges on rule one a virus economics that there can be no improvement to the economics unless you get control of the virus. So, the part that's coming from the administration that evidently the President does not want money for testing, and doesn't want to expand the public health component. If we don't do those things. Then, let's say that they agree on the response to the virus. I think the rate at which you come up with money is directly proportional to how long this thing is going to last. So, if this, if we could get on the path that they've been on in Europe, in Korea in Japan, Australia, New Zealand and places where they got control the spread of the disease. You could be looking at smaller numbers, because the economy can kind of ignite on its own behalf. If we're going to have raging epidemics, that now spread at 2030 more states, and you start getting many of the states where the police have passed. Act like New York is and Coast are quarantining people that are coming from the other states. I think you, you could easily hit one of the two big speed bumps that that a lot of us have been warning about for months now. So you bought one is the PPP money and the relief money runs out and millions of businesses shut down and so you have a massive second wave of unemployment and speed bump to is that the state's fiscal position, and their balanced budget requirements force them to raise taxes and layoff millions of workers in the face of the downturn, or both of those speed bumps if we crash into them. I think we could be talking about a much more extended downturn than than what we've been having in mind so far.

 

Well let's talk a little bit more about that too because I know you watch all the incoming data that we get and I know that the household poll survey from the census caught your eye there in terms of how bad this could be because obviously all this data lags a bit, but as you're talking about we did see cases start to rise in a lot of other states in Florida, Texas, California and Arizona. So we did see a economies there California going in the opposite direction shutting down again. And the job say that we're getting not necessarily a positive really speaking to your concern.

Yet Look, it's not a secret I have research and other people have researched that documents that the main thing that drove the economy into the ground was not locked down orders coming from Governor's or mayor's or the president. It was people's fear of catching the disease, and so they stopped going out. And if we get a resurgence of the virus. You are going to see another wave of people stop going out stop engaging in economic activity and sadly you've kind of have seen that starting to happen in these states where it's flaring up again. And I hope that it's not a general trend. But, as you say this household poll survey shows a drop in jobs not just a leveling off of job creation actual reduction in the number of people employed. That would be pretty scary.

Yeah. So when we think about that obviously it makes this next round of aid, really important we think about how much it's done to help Americans weather all of this and when you heard. Senate Majority Leader Mitch McConnell laughing in the face of a hill reporter when he was asked if it was possible to meet Secretary minuchin his deadline of getting this bill passed by the end of the month. It's not exactly delivering optimism that we're anywhere near compromise here but what's the worst case scenario if you think about it, if you don't get an extension of those unemployment benefits and extension of the moratorium on evictions. I mean, what are we looking at in terms of what could happen in the interim, just as the economy was kind of starting to move in the right direction.

Well, I mean you know what will happen millions of people are going to get thrown out of their houses and they're going to be a dramatic reduction in incomes for 20 30 million Americans who are also by the way, going to be losing their health insurance because they lost their jobs. I don't think though. I think this is a bunch of negotiation, but it seems pretty obvious to me that they're going to have some kind of extension, because the position that the republicans and the president are taking now which seems to be no we won't extend relief, even though the unemployment rate is as high as it's been in the last 75 years. That's not tenable, I mean I think when millions of people start feeling the pinch and have the money cut off. At the same time, the President's arguing that we should give more corporate tax cuts and the Fed is ramping up $5 trillion of lending for big business. I just don't see that that's going to be politically sustainable they are going to provide relief. It's just a question of how long is it going to last.

Yeah and politically I guess it is kind of the democrats right here having already gotten through their $3 trillion heroes act that does seem to be kind of applying pressure here and Republicans on the defensive but when you think about what is on the table, it sounds like most republicans are at least in agreement for another round of stimulus checks those up to 1200 dollar stimulus checks we saw gets sent out in the last in the cares act that roughly came out to about $300 billion in total though so it kind of leaves some wiggle room for more if you're trying to stay near 1 trillion but what are those levers, do you see as most important and non negotiable in your eyes to really keep things going along here Is it, is it the stimulus checks is it more PPP funding is it state aid SOMETHING WE'VE HEARD Ben Bernanke as well as you and Jason Furman your counterpart kind of warn against it because you don't want states pulling back like we saw back in the Great Recession. So what do you think is most important.

Yeah, look, I think those three categories that you mentioned checks to people, and the PPP and thinking about small business trying to prevent the business closures and the money to states I think those three are critical probably the top three economic priorities. I no want to lose sight though, of that number one priorities got to be stopped the slowing of the virus, and the crazy part about that is, scores of countries have done that, there's no vaccine. In Korea, there's no vaccine in New Zealand and Germany in places where they got control of the virus and their economies have been able to start turning around. They've reopened schools, if we can't get the schools reopened in a safe manner. We're going to have millions more people can't go back to work. Now that doesn't mean that we should just open the schools in a way that's not safe. It means we've got to spend the money to get control of that virus. So, in addition to those three priorities on the economic side, I think, an all out effort to ramp up testing and get more medical equipment out has to be considered a massive form of economic stimulus,and it does seem like some Republicans there have been pressuring the president to come out more in favor of testing since we did see them take that stance before, it seems like there's a bit of shifting going on there too. But I'd like to shift gears here and ask you a little bit more about what we're seeing on the US, China tensions front too because a lot of people overlook the fact that that was before all this hit kind of a driving factor in where the market was going. And today we got the update there that the US has ordered China to close one of its consulates in Houston, by Friday, citing a nationwide pattern of espionage and attempts to steal scientific research here in this country by the Chinese military so what's your take on on what that might signal, what potential clap backs we could see here from China navigating all this, what do you make of it.

Well, you know, it kind of reminds you of the old gun fighters credo you know don't don't pick seven fights if you're carrying a six shooter, and that if we want to get in a trade war with China. Don't get in a simultaneous trade war with Canada with Mexico with Germany with the EU threatened it to Japan threatened Korea and threatened the WTO, we learned that lesson in 2017 and 2018, going into 2019. Now, it's clear that there are a lot of tensions around the US, China relationship, partly from the trade war and partly from the, the actions of the Chinese government in Hong Kong. So, that's fine if we're going to confront China. Let's just do this in a way that we got our allies with us right now all we have is no allies. We're going to start another front war against the Chinese when we're trying to deal with getting out of the coronavirus economic crisis and did the timing just seems deeply messed up to me on this coming in an election year as well so there's that to worry about gonna dig into a lot of the fears investors have out there with this being an election year too, but Professor Austin Goolsbee Chicago's Booth School of Business professor of economics at former Council of Economic Advisers Chairman under President Barack Obama always love having you on appreciated debt.

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