Massive Measure Unveiled To Fight Coronavirus Economic Slump
DAVID GREENE, HOST:
This is just becoming all too familiar - the stock market opens and then quickly begins to fall. This is despite several efforts announced by the Trump administration aimed at bolstering the U.S. economy amid the coronavirus pandemic.
I want to bring in NPR chief economics correspondent Scott Horsley to help us understand what is happening on Wall Street. Scott, why is this - why are we seeing this slide continue this morning?
SCOTT HORSLEY, BYLINE: David, investors are still worried about the big hit that the economy is taking as tens of millions of Americans hunker down in an effort to slow the spread of the coronavirus. at the opening bell this morning, the Dow dropped more than 1,300 points. Both the Dow and the S&P were off more than 5%, essentially erasing most of the gains they made yesterday. Since then, they have pared their losses a little bit.
Right now, the Dow is down about 800 points or a little under 4%. But we are beginning to see some data that actually tells us what we know just from walking around, that large-scale layoffs are starting to show up. The claims for unemployment insurance have actually crashed computer systems temporarily in a number of states.
GREENE: I want to talk through a few other developments with you if I can, Scott - the Trump administration announcing today that it is closing the border between the United States and Canada, which is certainly significant. Does that apply to trade, which could be a really big deal?
HORSLEY: No, it doesn't. The president tweeted about this closing this morning. He said that the border with Canada had been closed to nonessential traffic by mutual consent. But he was careful to say that trade would not be affected. You might remember that there was some confusion about a week ago when the president announced the travel ban from visitors on - visitors from Europe.
HORSLEY: He garbled his text a little bit, and there - at first people thought that cargo might be affected too, and the White House later had to clarify that. So he went out of his way in his tweet this morning to say that cargo would not be affected. But this does - illuminates sort of the hazards of setting policy by tweet. We don't really know the details, what nonessential traffic means. The president said we might get some details later, perhaps at the 11:30 Eastern Time briefing this morning.
GREENE: Also waiting details on what the White House is proposing in terms of helping people, as you mentioned, who are laid off, businesses who are suffering in this pandemic. The White House asking Congress to approve a trillion dollars. And we heard a little bit from Treasury Secretary Steven Mnuchin yesterday, saying that Americans just need money in their hands as quickly as they can get it.
(SOUNDBITE OF PRESS CONFERENCE)
STEVEN MNUCHIN: We're looking at sending checks to Americans immediately. And what we've heard from hardworking Americans, many companies have now shut down, whether it's bars or restaurants. Americans need cash now. And the president wants to get cash now. And I mean now in the next two weeks.
GREENE: That was yesterday. And as you said, we might hear more from the White House later this morning. But do you know at this point what this trillion dollars would cover?
HORSLEY: We don't know what the details are. It's still more of an outline than an actual plan at this point. But this is an acknowledgement from the administration that the very aggressive moves that they've made on the public health side to try to slow the spread of the pandemic are going to blow a big hole in the economy. And that's going to require an equally aggressive rescue on the economic side. The White House is asking Congress for tens of billions of dollars to help struggling industries like the airlines, also some form of help for small businesses which have been hard hit. And then the centerpiece of this is that direct aid to virtually all Americans.
GREENE: And that's the getting cash into the hands of people, as Mnuchin said. What exactly would that look like? Like, how much would these payments be worth that are going directly to people? And would everyone be eligible or just some people?
HORSLEY: We don't know exactly what the payments would be. You know, the numbers that have been floated by folks like Utah Senator Mitt Romney are a thousand dollars. We also heard suggestions that maybe there'd be more than one check depending on how long the crisis goes on.
Steven Mnuchin also hinted yesterday that there might be some income cutoff, so people making more than a certain amount of money might not get a check. He said, for example, that millionaires properly don't need this kind of help. But it would certainly be widespread, so many Americans would be getting these direct payments. We're also seeing the Federal Reserve tapping their emergency powers last used during the financial crisis to try to keep the credit markets functioning, so struggling businesses can get the credit they need.
GREENE: Well, you talk about something like a trillion dollars. How does the nation come up with that kind of money? How do we afford this?
HORSLEY: We're going to put it on the credit card. And, you know, there are economists who will say that, look, this is exactly when the government should be growing the deficit. It's too bad that we already had a trillion-dollar deficit during what were good times until a few weeks ago, but with the private sector collapsing, this is a time when the public sector needs to step up. Even deficit hawks are saying this is probably not the time to worry about rising debt-to-GDP ratios.
GREENE: NPR chief economics correspondent Scott Horsley. Scott, thanks.
HORSLEY: You're welcome.
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