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Treasury Secretary Steven Mnuchin told CNBC that a second shutdown of the economy because of the coronavirus isn’t a realistic option.
“We can’t shut down the economy again. I think we’ve learned that if you shut down the economy, you’re going to create more damage,” Mnuchin said.
Wall Street is getting nervous about a “second wave” of infections and illnesses. A combination of more testing being done and opening the economy is leading to the predicted spike in positive tests.
But so far, these “spikes” have been localized and have not spread over large areas. It’s really hard to say how much of the increasing numbers are due to a lot more testing being performed and how much may be due to reopening economy.
“And not just economic damage, but there are other areas and we’ve talked about this: medical problems and everything else that get put on hold,” he added. “I think it was very prudent what the president did, but I think we’ve learned a lot.”
The rise cases amid U.S. reopening efforts has made investors nervous that states may have to reimpose business closures to again try to slow the spread of the coronavirus. That pessimism contributed to the Dow Jones Industrial Average’s 800 point slide Thursday morning and the S&P 500′s 2.6% loss.
One way or another, we’re going to have to learn to live with this disease — at least until an effective vaccine can be brought to market in large quantities. Even then, many people will not get vaccinated, which will probably lead to outbreaks of COVID-19 in clusters.
As far as another stimulus measure, Mnuchin appears to think one is inevitable.
Mnuchin also said he’s prepared to return to Congress to request additional fiscal spending to help juice the economy if needed.
“We have the Fed program, we have Main Street [lending program], which is going to be now up and running, and we’re prepared to go back to Congress for more money to support the American worker,” he said. “So we’re going to get everybody back to work. That’s my No. 1 job working with the president and we’re going to do that.”
Democrats want to keep the gravy train going, but the reality is that it may not even be necessary. They want to spend $3 trillion in the next stimulus bill which is 5 or 6 times more than Trump and Mnuchin believe is necessary. The president wants to see how the first two trillion-dollar stim bills affect the economy as they work their way through the system. This is wise and prudent and shows that Democrats are not serious about economic recovery.
But if Biden wins, they’re going to spend $3 trillion anyway. We’ve never had a $5 trillion budget deficit before. It’s already at $2 trillion for the fiscal year, which ends September 30.
And no one knows what that is going to do to the economy.