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The single greatest threat to the global economy couldn’t be more clear right now, and Congress is headed straight for it


Senate Leader Mitch McConnell

The US share of global GDP is nearly 15%. If our economy can’t stabilize and then recover from the coronavirus pandemic, it will be harder for the world to do so.
And so it’s imperative that Congress write fair, generous legislation to get us through the economic shutdown required to fight the virus.
But that isn’t what’s happening. Republicans accuse Democrats of not moving fast enough. Democrats accuse Republicans of short changing American workers and favoring big corporations.
That matters. Under funding this stimulus will drag the entire global economy down. And any appearance that corporations are getting a more fair deal than individuals will make people not want to comply. A lack of compliance will drag on the crisis.
This is an opinion column. The thoughts expressed are those of the author.
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The US economy contributes more than any other country to global GDP,about 15% of the total. When it falls into ruin, the entire global economy drags. We saw that happen during the financial crisis of 2008.

So it is imperative for the world that the US economy stay stable during the coronavirus pandemic, and that it can swing back to growth as soon as possible when it’s over.

Right now there is one clear obstacle to that: the potential that Congress could under fund the US coronavirus stimulus package. If they do, they put not only the economy, but the effort to fight the virus at risk.

This is a case where the consequences (and possibility) of overspending are basically negligible, while the consequences of underspending could push the entire global economy into a longer, deeper recession.

And yet, this weekend the Senate was unable to pass aid legislation. Senate Leader Mitch McConnell raged and blamed Democrats, while Democrats fumed over the legislation’s $500 billion, opaque Treasury slush fund to be handed out to corporations at Treasury Secretary Steve Mnuchin’s discretion. Treasury wouldn’t have to report which corporations got that money for half a year, whereas during the financial crisis companies that received funds were made public within 60 days.

Democrats also rejected the bill over a lack of labor protections that would only mandate corporations keep employees “to the extent possible.” They want more limits on executive compensation and share buybacks, and they want more money for healthcare workers. They accuse Republicans of being cheap, and writing a deal that favors corporations over average Americans.

You can’t be cheap, and you can’t be corrupt

St. Louis Federal Reserve President James Bullard on Sunday scared the pants off a lot of people by saying unemployment could hit 30% during the coronavirus. He also said the economy would take a $2.5 trillion hit. But he asked people to look at government efforts to get us through this not as an effort to stave off recession, but as an investment in public health. He’s right.

“You want capital to just sit in place. Switch off the factory… Then switch it back on,” he said.

That means treating individuals and businesses …read more

Source:: Business Insider

      

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