Trump administration: U.S. Economy 2019 Chapter IV

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Trump administration: U.S. Economy 2019 Chapter III

Pentagon watchdog tapped to lead committee overseeing $2 trillion coronavirus package
Glenn Fine will join nine other inspectors general on the new committee.
Fine will lead a panel of fellow inspectors general, dubbed the Pandemic Response Accountability Committee, and command an $80 million budget meant to “promote transparency and support oversight” of the massive disaster response legislation. His appointment was made by a fellow committee of inspectors general, assigned by the new law to pick a chairman of the committee.
The Pandemic Response Accountability Committee is one of three major prongs in the new law meant to provide oversight of the enormous sums to be doled out by the Trump administration. The others include a new “special inspector general” to oversee the Treasury Department’s disbursal of $500 billion in funds to support distressed industries and shore up the collapsing economy. Trump is slated to nominate that inspector general, who will then face Senate confirmation.

29 March
Trump Extends Social Distancing Guidelines Through End of April
The president, facing grim figures from his health advisers, starkly reversed an earlier upbeat assessment that the country could relax the guidelines by Easter.
The grim recommendation, which the president made in the White House Rose Garden, came just a day before the end of a two-week period in which the world’s largest economy has largely shut down with staggering consequences: businesses shuttered, schools and colleges emptied, and social life all but suspended.
Mr. Trump said repeatedly last week that he wanted to reverse such drastic measures soon, perhaps by Easter, on April 12, in the hopes of restarting the economy. But public health experts — including the president’s own advisers — had warned that trying to return to normal life too quickly risked allowing the virus to rage, increasing the likelihood of more infections and raising the number of deaths.

28 March
The coronavirus recession is exposing how the economy was not strong as it seemed
A record-long expansion and years of ultra-low interest rates could make it harder to recover from a recession, economists said.
(WaPo) The coronavirus has left businesses from giant corporations to the corner bar struggling for survival. But along with dealing millions of Americans an unexpected blow, the pandemic exposed vulnerabilities that had accumulated during a record-long expansion and years of ultra-low interest rates — and which now could make it harder to recover from a recession, economists said.
… The record-high stock prices the president routinely touted became disconnected from companies’ underlying value, obscuring warning signs such as excessive borrowing, according to economist Michalis Nikiforos of the Levy Economics Institute of Bard College. Total corporate debt surged past $10 trillion, equal to nearly one-half the nation’s annual output.
On the eve of the crisis, one-quarter of the country’s largest companies had more cash going out than coming in, according to Goldman Sachs. The economic shutdown will quickly cause the share of American companies that are cash-flow negative to nearly double, meaning they could be in danger of starving for funds.
The unappreciated frailties did not cause the downturn. The pandemic is responsible for that. And no business can stockpile enough cash to ride out an indefinite shutdown.
But the financial weaknesses surfacing may determine how the United States weathers its worst economic calamity in a century — and which companies survive.

27 March

Trump signs $2 trillion coronavirus bill into law as companies and households brace for more economic pain

The new law amounts to the largest emergency spending measure in U.S. history.
President Trump on Friday signed a massive $2 trillion emergency spending bill into law, promising to deliver a tidal wave of cash to individual Americans, businesses and health care facilities all reeling from the coronavirus pandemic.
His signature came just hours after the House of Representatives passed the massive package by an overwhelming voice vote, and less than 48 hours after it received unanimous approval from the Senate.

26 March
How the Fed’s Magic Money Machine Will Turn $454 Billion Into $4 Trillion
The central bank takes Treasury Department loan guarantees and uses them to stand up huge programs. Here’s how that works.
(NYT) The Treasury and the Fed will work together to decide how the $454 billion should be deployed. The central bank designs and runs the programs, but Treasury consults on the broad-brush outline and must sign off on any plan.
The Fed has already announced a number of emergency lending programs in recent weeks, including one that supports corporate debt issuers and another meant to keep money flowing in the market for short-term business loans. It has said it will establish a “Main Street” lending facility for small businesses, though details on what that will look like are scant.

25 March
Frank Rich: What a Plague Reveals
Though coronavirus cases continue to climb in the U.S., a number of businesspeople and commentators have begun to talk about “restarting” the economy, even at the cost of American lives. If even non-Trumpists are in part echoing Trump’s views on this, should we take them seriously?
when someone like Lloyd Blankfein proposes that we “let those with a lower risk to the disease return to work” in “a very few weeks,” it’s another story. They are revealing their arrogance, of course — masters of the universe know more than, say, a mere civil servant like Anthony Fauci — but also their own economic isolation from the masses they are purporting to help. It’s behavior reminiscent of the titans who tried to rally Wall Street after the 1929 crash by making a big show of buying large blocks of stock. And let’s face it: Most, if not all, of these public notables who are preaching get-back-to-work-soon schemes have a cushion most Americans don’t — the means and the clout to cut the line for a coronavirus test and to secure immediate and attentive medical care away from an overflowing public hospital.
POLITICO Playbook: We have a deal
By JAKE SHERMAN and ANNA PALMER
Here are the items Schumer’s team says they’ve secured in the last few days:
an extra month of unemployment insurance; $55 billion more for hospitals; $150 billion for states, localities and tribes; $10 billion in SBA grants of up to $10,000 for small business costs; $17 billion for SBA to cover six months of payments for businesses with current SBA loans …
… $30 billion in emergency education funding; $25 billion in transit funding; $30 billion for the Disaster Relief fund; the ban of stock buybacks for companies that received government assistance; real-time reporting of Treasury loans, investments and assistance; an IG for the $500 billion to lend to corporations; a tax credit that would encourage employers to keep workers on the payroll; a tax exclusion for people who are receiving student loan repayment from their employer.
Senate Democratic Leader Chuck Schumer has secured a provision in the agreement that will prohibit businesses controlled by the President, Vice President, Members of Congress, and heads of Executive Departments from receiving loans or investments from Treasury programs. The children, spouses and in-laws of the aforementioned principals are also included in this prohibition.
White House and Congress Reach $2 Trillion Stimulus Deal

23 – 24 March
Republicans are angry that Democrats want to do too much for the economy
(WaPo) …there’s one critical thing to understand about how this all played out: In almost every case and on every question, Democrats wanted to spend more and do more than Republicans did

  • Democrats wanted $150 billion for hospitals and health centers to deal with the virus; Republicans wanted $75 billion.
  • Democrats wanted to give families checks for at least $1,500 per person; Republicans wanted $1,200.
  • Democrats wanted $500 billion in aid to small businesses; Republicans wanted $350 billion.
  • Democrats wanted a requirement that large companies given assistance keep their workers on the payroll; Republicans would have left open a loophole companies could have used to take the money and lay off workers anyway.
  • Democrats wanted to require companies that got aid to pay a $15 minimum wage and agree to strict requirements limiting executive compensation and stock buybacks.
  • Democrats wanted more money for states to help them deal with sudden costs and avoid a budget spiral that would lead to severe cutbacks in state services.
  • Democrats wanted four months of extended unemployment benefits; Republicans wanted three months.
  • Democrats wanted help for people to pay their utility bills and would bar utilities from cutting off people’s service during the crisis.
  • Democrats demanded oversight of the “slush fund” that in the Republican plan would have let the Treasury Secretary distribute half a trillion dollars to corporations at his own discretion, with no oversight. When asked about it on Monday, President Trump said, “I’ll be the oversight.”

On that last point, as on many others, the Republicans eventually gave in.
Politico Nightly Newsletter:  Hopes that the economy will make a swift recovery after the worst of the crisis passes are quickly fading. On Thursday, economists are expecting the largest U.S. jobless claim number ever reported, smashing previous unemployment records. The word “depression” has been seeping into more long-term forecasts as fears grow that the virus could continue its spread — and that’s even factoring in the multi-trillion dollar response from Congress and the Fed.

21 March
The Economic Devastation Is Going to Be Worse Than You Think
The coronavirus’s overwhelming toll on jobs and businesses has only just begun.
NOTE: The Atlantic is making vital coverage of the coronavirus available to all readers. You can follow the link from this article.
“This is a tsunami, with a number of big waves dead ahead.”
Mark Zandi … is the chief economist at Moody’s, an analyst highly regarded by both political parties, and generally not prone to hyperbole. Yet when I spoke with him on the phone yesterday, he immediately reached for the metaphor of a devastating natural disaster to describe the toll that the pandemic will take on American commerce—the businesses it will destroy, the jobs it will wipe out, the retirement nest eggs it will crack and shatter.

15 – 16 March
America’s Economy Begins to Shut Down as Pandemic Measures Take Hold
The fast-spreading virus has put an end to movies, date nights and other economic activity, prompting some economists to call a U.S. recession.
(NYT) In some places, public officials and private business owners moved with stunning speed. In others, paralyzing hesitancy, defiant bravado or blithe disregard dominated. But by Monday, it was clear everywhere that most of the American economy was grinding to an unparalleled halt and would remain that way for months.
Fed slashes interest rates to zero in massive intervention
(WaPo) The Federal Reserve announced on Sunday it would drop interest rates to zero and buy at least $700 billion in government and mortgage-related bonds as part of a wide-ranging emergency action to protect the economy from the impact of the coronavirus outbreak.
The moves, the most dramatic by the U.S. central bank since the 2008 financial crisis, are aimed at keeping financial markets stable and making borrowing costs as low as possible as businesses around the country close and the U.S. economy hurtles toward recession.
The Fed, led by Chair Jerome H. Powell, effectively cut its benchmark by a full percentage point to zero. The benchmark U.S. interest rate is now in a range of 0 to 0.25 percent, down from a range of 1 to 1.25 percent.
In addition to rate cuts, the Fed announced it is restarting the crisis-era program of bond purchases known as “quantitative easing,” in which the central bank buys hundreds of billions of dollars in bonds to further push down rates and keep markets flowing freely. the Fed is also giving more generous loans to banks around the country so they can turn around and offer loans to small businesses and families in need of a lifeline.

9 March
The markets are sending a message about coronavirus: The recession risk is real
(WaPo) The stock market drop is ugly. But one big threat to the economy is a slew of defaults — both personal and business.
There’s still a chance the coronavirus runs its nasty course and the world returns mostly to normal by the summer, which could trigger a global financial rebound. But experts widely expect the U.S. economy will stall to zero — or even turn briefly negative — in coming weeks. When that happens, it would not take much to fully knock it into a recession. That’s why there’s so much panic in the markets.
White House advisers to give President Trump policy options for coronavirus response, including paid sick leave
Congressional Democrats are also pushing for a new legislative package to address fallout.

28 February
Stocks Suffer Worst Week Since Financial Crisis Amid Coronavirus Fears
The S&P 500 tumbled for a seventh day, and other economic indicators are flashing warning signs.

10 February
Trump offers $4.8 trillion budget plan that seeks big cuts to domestic programs
Democrats widely panned the proposal, which they said would hurt low-income families
(WaPo) The White House on Monday proposed a $4.8 trillion election-year budget that would slash major domestic and safety-net programs, setting up a stark contrast with President Trump’s rivals as voting gets underway in the Democratic presidential primary.
The budget would pursue hundreds of billions of dollars in cuts to Medicaid and also seek reductions in the Children’s Health Insurance Program, while wringing some savings from Medicare despite Trump’s repeated promises to safeguard the program for older Americans.
The budget is a proposal to Congress, and lawmakers have mostly rejected the White House’s proposed cuts in the past. Still, the budget plan sets up the Trump administration’s policy priorities heading into the November election and is likely to draw scrutiny in Washington and on the campaign trail. Trump has in the past not shown much interest in pursuing the budget cuts his aides have offered, and he didn’t make any public comments about the plan Monday.

4 February
Though he’ll never admit it, Trump is riding economic trends he inherited
Jared Bernstein
(WaPo) In many cases, including Trump’s, presidents ride trends they inherited. If those trends change for the better, as with Barack Obama and Bill Clinton, they get credit (sometimes deservedly, as per their anti-recessionary interventions). If they worsen, as with George H.W. Bush, they get blamed. What makes Trump unusual is not that he’s riding favorable trends that predated him, nor that he’s claiming credit for them. It’s that he lies about them, claiming that the economy was awful until he saved it.
A typical Trumpian refrain maintains, totally against the facts, that when he took office, “America was stuck in a failed recovery and saddled with a bleak economic future.” In Davos, Switzerland, last month, Trump falsely claimed that the economy he inherited was “in a rather dismal state.” He claims to have “accomplished an economic turnaround of historic proportions.” … The analysis shows a (truly impressive) 15 percent annualized growth rate for real net worth over the first three years of Trump’s term. The key omitted fact is that this was precisely the growth rate when Trump took office. If we back this indicator up over the final three years of Obama’s presidency, the growth rate is exactly the same: 15 percent, annualized. That’s solid evidence of trend-riding.
If we do the same exercise for the decline in unemployment and the growth in jobs — compare the past three years with the previous three years — we see that unemployment fell less quickly under Trump than it did under Obama (down one point under Trump and two points under Obama). Job growth under these comparable periods was faster under Obama than Trump (up 6 vs. 5 percent).

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