Trump Wants ‘At Least $2 Trillion’ More in Coronavirus Relief

By Yuval Rosenberg

Another $2 Trillion for Coronavirus Relief?

Treasury Secretary Steven Mnuchin
said late last week that it was premature to
speculate about the size of the next coronavirus relief package.
“Before we rush back and spend more money, whether that’s a
trillion dollars or whether that’s more, we want to make sure we’re
careful in knowing how much more we need to spend,” he said.

So maybe White House trade adviser Peter Navarro was being
premature, but twice in recent days he has said that President
Trump is looking for the next stimulus to be at least $2 trillion
and wants the package to be focused on boosting U.S.
manufacturing.

“The president is very interested in something on the order of
at least $2 trillion, with the bulk of that focused on bringing
home our manufacturing base, starting with pharmaceuticals and
medical supplies and equipment,” he told
Fox Business on Friday.

He made similar comments
on CNN on Saturday, saying that Trump wants to see
"at least $2 trillion that is strategically focused around the
president's two simple rules—buy American, hire American—along with
incentives for American companies to bring offshored jobs back
home."

The $2 trillion figure floated by Navarro falls between
the $3 trillion that House Democrats provided in a bill they passed
a month ago and the $1 trillion that Senate Majority Leader Mitch
McConnell reportedly set as a
ceiling for the next package.

Kudlow Says $600 Unemployment Benefit Boost Will End

Larry Kudlow, director of President Trump’s National
Economic Council, said on Sunday that the $600 in extra weekly
unemployment benefits provided by the federal government as part of
coronavirus response efforts are creating a “disincentive” for some
workers to return to their jobs and will end in late July.

"Unemployment benefits will not stop in August," Kudlow
said, clarifying that regular state benefits will continue. "The
$600 plus up, that's above the state unemployment benefits that
they will continue to receive, is in effect a disincentive, or I
mean we're paying people not to work. ... That might have worked
for the first couple of months. It will end in late
July.”

Kudlow added that Trump and the administration are
“looking at a reform measure that will still provide some kind of
bonus for returning to work, but it will not be as large and it
will create an incentive to work."

Lawmakers are debating whether to continue the $600
payments, which Democrats want to extend through January
2021.

The Congressional Budget Office
projected this month that if the payments were
extended for six months, about five out of six workers on
unemployment would earn more in jobless benefits than their
potential earnings through work. The likely result, CBO said, would
be that employment levels would be lower over the second half of
this year and in 2021.

At the same time, CBO said that extending the benefits would
help the economy by increasing demand for goods and services. “The
additional $600 per week in unemployment benefits under current law
allows people to continue to consume goods and services that they
might otherwise be unable to afford and to save for future
contingencies,” the budget scorekeeper said.

The Labor Department said earlier this month that 21
million Americans were unemployed in May.

House Dems Press for Details of Small Biz Bailout Loans

House Democrats overseeing the coronavirus response are
demanding details from eight big banks about the implementation of
the Paycheck Protection Program of coronavirus relief loans to
small businesses.

In letters to Bank of America, Citibank, JPMorgan Chase, PNC
Bank, Santander, Truist Bank, U.S. Bank and Wells Fargo, House
Majority Whip James Clyburn (D-SC) and six colleagues said the
House Select Subcommittee on the Coronavirus Crisis “is
investigating whether implementation of the Paycheck Protection
Program (PPP) has favored large, well-funded companies over
struggling small businesses in underserved communities—contrary to
Congress’ clear intent.”

The Paycheck Protection Program has approved more than $512
billion in loans, but the program has also been plagued by reports
that large companies with access to other funds received loans
while some smaller businesses had difficulty in getting
approved.

“We have significant concerns that the two-tiered system that
some banks reportedly developed for wealthy clients may have
diverted PPP funds intended for vulnerable small business owners in
underserved and rural markets, including small businesses owned by
veterans, members of the military, socially and economically
disadvantaged individuals, women, and businesses in operation for
under two years,” the Democrats wrote in their letters.

Treasury Secretary Steven Mnuchin also set off a storm of
criticism last week when he reversed course on a pledge to provide
“full transparency” regarding recipients of more than $500 billion
in Paycheck Protection Program funds. Mnuchin told Congress last
week that the names of loan recipients and amounts they received
are “proprietary” and “confidential.”

Watchdog groups and lawmakers, including some Republicans, have
objected to the administration’s refusal to disclose details of PPP
loans. Clyburn and his colleagues on Monday also wrote to Mnuchin
and Small Business Administration chief Jovita Carranza asking for
their communication with the banks and financial industry
associations as well as details, including names and loan amounts,
for PPP borrowers and applicants.

“Contrary to Secretary Mnuchin’s recent testimony, there is
nothing ‘proprietary’ or ‘confidential’ about a business receiving
millions of dollars appropriated by Congress, and taxpayers deserve
to know how their money is being spent,” the lawmakers wrote in
their letter.

Mnuchin on Monday
tweeted that he “will be having discussions with the
Senate [Small Business Committee] and others on a bipartisan basis
to strike the appropriate balance for proper oversight of #ppploans
and appropriate protection of small business
information."

The Fed Fires Up $600 Billion Main Street Lending Program

The Federal Reserve Bank has finally opened its highly
anticipated lending program for small and medium-sized
businesses.

Using $75 billion provided by Congress through the Coronavirus
Aid, Relief, and Economic Security (CARES) Act in March, the Fed
announced in April that it would lend up to $600 billion through
the Main Street Lending Program to provide relief to businesses
struggling during the coronavirus crisis. On Monday, the Federal
Reserve Bank of Boston opened for banks to register as lenders
within the program.

“The Main Street Lending Program is designed to help credit flow
to small and medium-sized businesses that were in sound financial
condition prior to the COVID-19 pandemic but now face cash flow
interruptions,” the Federal Reserve Bank of Boston said in a

statement.

Eligible businesses can have as many as 15,000 employees or up
to $5 billion in annual revenues. Loans will range from $250,000 to
$300 million, with five-year terms and floating interest rates. No
interest is due in the first year, and no principal is due for two
years.

The Federal Reserve will purchase 95% of the loans, with
the goal of reducing risk to enable lenders to make more
loans.

New York Could Lose 40% of Its Tax Revenue Due to Pandemic:
Report

States can expect to see a 20% drop in tax revenues on
average due to the coronavirus slowdown, and the 10 hardest-hit
states could experience losses of more than 30%, according to a

new analysis from a pair of economists published over
the weekend. New York, the epicenter of the crisis, will likely see
the biggest losses, with revenues falling by about 40%.

Examining 25 years of economic data, the researchers found
that states record a 1.56 percentage point increase in tax receipts
for every 1 percentage point rise in employment, with the revenues
flowing primarily from higher sales, corporate and individual
income taxes. Extrapolating from the results, the economists
estimate that states will lose about $63.7 billion in revenues in
the coronavirus recession, with the average state seeing a $1.25
billion drop, or 20%. (Both revenue figures are in 2012
prices.)

On Monday, New York State Comptroller Thomas DiNapoli
provided some anecdotal evidence that jibes with the analysis,

announcing that sales tax revenues for local
governments in the state had fallen 32% in May compared to the year
before.

Why it matters: Economists worry about
the negative effects of fiscal belt-tightening at the state level.
“Budget shortfalls are forcing state and municipal authorities to
cut jobs and spending, as they did after the 2008 financial crisis
when local austerity held back the economy’s recovery,” Bloomberg’s
Alexandre Tanzi
said Monday, adding that “Congress is deadlocked
over sending more cash to the states to plug the gap.”

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