The US economy is facing a pandemic-induced fiscal cliff, and Republican bickering about to handle it is likely to push it over. In a few weeks the extra boost the federal government was giving to unemployment checks will run out, and state and local governments will have to balance their budgets. But the coronavirus pandemic is still raging, with an average of 20,000 cases nationwide per day. Federal Reserve Chair Jerome Powell says that means economic activity is likely to stay muted. So Republicans should stop being delusional and join Democrats in passing another rescue bill, fast. This is an opinion column. The thoughts expressed are those of the author. Visit Business Insider's homepage for more stories.
Dithering and bickering from President Trump and Senate Republicans could push the US economy off a cliff. Instead of joining with Democrats in the House to pass another economic rescue bill, they're fighting about what kind of aid to give and when, about whether the pandemic is over or not. No one has time for this. In seven weeks, the extra $600 dollars a week in unemployment benefits that millions of Americans are relying on to help them through the coronavirus will expire. At the end of the month states and local governments will need to somehow balance budgets with the incomes decimated by a lack of tax revenue and economic activity. And sooner rather than later the money the government was handing out to small businesses in the form of Paycheck Protection Program loans will run dry. All of this will happen long before the coronavirus pandemic has finished ravaging our nation, and our economy with it. This week 1.5 million more Americans applied for unemployment benefits. It's better than the week before, but still a stunning number. Meanwhile, states like Arizona, Florida and Texas are seeing COVID-19 cases explode like never before. This is not a second wave. Their first wave has just begun. So one would think that, seeing that the crisis is not yet over, President Trump, Senate Leader Mitch McConnell and their fellow Republicans would be rushing to extend the programs that have been keeping our economy on life support. But they're not. They're slow walking any proposals that would continue aid, or pushing back against additional aid altogether, threatening to pull the cord before the EKG machine is showing any real signs of life. Numbers that matter, and numbers that flatter On Wednesday Federal Reserve Chairman Jerome Powell testified before the Congressional House Banking Committee. It was just a day after retail sales numbers showed a 17% increase in activity from April to May, and it gave Republicans at the hearing hope that the economy was on the mend. To think that is complete and utter folly. While month-to-month retail sales numbers show improvement, a year-over-year comparison shows retail sales down 6% from May 2020 to May 2019. Retail sales from March 2020 to May 2020 were down 10.5% compared to the same period the year before. That's the comparison that really matters — the comparison between what are economy was doing before the coronavirus and what it can do while we're still trying to fight it off. Of course, Republicans don't see it that way, and they did not want Chairman Powell to see it any other way either. Throughout the hearing Powell tried to say in a bunch of different, delicate ways, that the economy still desperately needs fiscal help in the form another bill from Congress reupping rescue programs for individuals, small businesses, and state and local governments. He tried to explain that until the coronavirus pandemic is over the country will not return to full economic output. He said that the pandemic remained "acute" risk to small businesses that often represent the work of generations. He reminded Republicans that state and local governments employ 13 million Americans and that layoffs would be catastrophic for communities nationwide. Powell said that the CARES Act, which provided the assistance America continues to need was making a "critical difference...in limiting long lasting damage to our economy." To all that North Carolina Rep. Patrick McHenry, the Ranking Republican on the Banking Committee, simply told Powell to "stick to monetary policy." The pandemic decides when the pandemic is over Despite surging cases in states across the country President Trump told the Wall Street Journal this week that the coronavirus pandemic is basically over. He wants to move on, and it's clear his party of zombies is willing to move on with him. Unfortunately, they don't get to decide that. Only the pandemic decides when the pandemic is over — at least, until there's a vaccine. Until there's a vaccine there will be muted demand as people consume and travel less. Paying people to go back to work, as some in the White House has proposed, will not change that demand picture. Again, this country is still losing over 1 million jobs a week. Trump and his party's magical thinking is not only belied by the dismal year over year comparisons in our economic data, but also by what's happening in China — the country with the most experience with this pandemic. There, fears of a second wave are just beginning. Last week Beijing went from an emergency response level three to level two after an outbreak of coronavirus at a local market. Cases related to that outbreak have already been reported in other provinces. This after the city had reported zero domestically-transmitted cases in 57 days. Now Beijing schools have been closed, ride sharing cars and taxis have been ordered not to leave the city. Chen Bei, deputy secretary-general of the Beijing municipal government described the situation as "grim." Even after the draconian action China took forcing the entire country into their homes for months, China is still at the pandemic's mercy. This is what makes it all the more surreal and absurd that the President of the United States considers the pandemic basically over. It's not, and legislating like it is will only lead to economic ruin. Cases are still averaging at about 20,000 per day nationwide, and it seems like the coronavirus is taking its time. Our economy does not have the same luxury.SEE ALSO: Millions of Americans could get left behind unless Congress passes a new economic stimulus package. Here's what should be in it. Join the conversation about this story » NOW WATCH: How waste is dealt with on the world's largest cruise ship
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President Trump said he was calling off the talks just hours after Jerome H. Powell, the...President Trump said he was calling off the talks just hours after Jerome H. Powell, the Federal Reserve chair, argued that it was better to overdo the pandemic policy response to avert “tragic” fallout.
Summary List Placement President Donald Trump just kicked the US economy in the teeth. On Tuesday...Summary List Placement President Donald Trump just kicked the US economy in the teeth. On Tuesday afternoon he tweeted that he had ordered the White House to cease negotiations with Democrats for another coronavirus economic aid package until after the November election. The stock market which — after a miserable September — had been rising on the hope that there would be stimulus, quickly took a nose dive. The economy has been recovering from the initial hit of the coronavirus pandemic, but that recovery is getting slower by the week. There are still 11 million fewer Americans employed compared to before the pandemic hit in February and the pace of job growth is slowing. Trump's declaration came the same day that Federal Reserve Chairman Jerome Powell reiterated his call for more economic aid, saying that the recovery will be painstakingly slow without it. Economists have warned that we need a stimulus to ward off the threat of a double-dip recession. And you would think that nothing would delight President Trump more than sending out another round of checks to voters before the election. According to a New York Times/Siena poll, a whopping 72% of Americans want to see Congress pass another stimulus package. But no, the politics Trump and the GOP are playing here are bigger and nastier than all of that. As a result state and local governments — crippled with lost tax revenue and still using their first responders and other resources to control the virus — will continue to twist in the wind. In a recent survey, 40% of restaurant respondents said they were on the verge of closing — a stimulus bill would have helped them. Airlines, which have been warning that they were on the financial brink, will likely begin furloughing or laying off employees. People receiving weekly unemployment benefits will not receive a boost to their checks as Democrats, and Treasury Secretary Steven Mnuchin, had proposed. Don't hold your breath Trump is denial about COVID. He refuses to acknowledge both its physical and economic impacts. And if you think the GOP is going to pass a stimulus just-like-that after the election I have a bridge to sell you that goes all the way to Candy Land. Promise. The House has had a stimulus bill written since June, and has been ready to negotiate with Senate Republicans since then. Unfortunately, Senator Majority Leader Mitch McConnell has never given any indication that he wanted to get serious about making a deal — instead trying to pass piecemeal bills or bills with handouts to corporations. Plus, according to reports, his members seemed to hate the idea of passing any real stimulus at all. The New York Times reported that a closed-door meeting discussing the passage another bill back in August turned into a shouting match. McConnell's real goal is clear. He wants to confirm Judge Amy Coney Barrett to the Supreme Court. He knows he's running out of time to do that before the election. Plus two of his members are opposed to her nomination, and three more are infected with the coronavirus, adding difficulty to his task. With respect to passing another stimulus the malleable one in the GOP has always been Donald Trump, but he simply does not have the final say here. And given the outlook for his reelection, his power over the party will continue to wane while McConnell will still hold all the cards until a new government is put in place. In the meantime the lack of stimulus will suck the wind out of the stock market and corporate earnings estimates going forward. The recovery will grind on even more slowly. First responders, teachers, small businesses, and local restaurants will suffer leaving only big players to survive. The gap between rich and poor will continue to widen. And the economy will look more and more like a lobbyists dream. Maybe that what's Mitch McConnell wants.Join the conversation about this story » NOW WATCH: Why some Hong Kong skyscrapers have gaping holes
President Trump urged Republicans to ‘go for the much higher numbers’ in stalled negotiations over another...President Trump urged Republicans to ‘go for the much higher numbers’ in stalled negotiations over another economic recovery package, undercutting his party’s push for a bare-bones plan.