The Donald Trump administration proposed a monumental package of $1 trillion in fiscal stimulus to prevent the collapse of the economy from the impact of the coronavirus pandemic, including checks of $1,000 or more for workers, that the White House wants to start distributing “immediately”.
The colossal offensive, which must go through Congress, aims to stop the economic meltdown and prevent the first global power from falling into a deep recession.
If successful, Trump’s plan will exceed the package that the Barack Obama government implemented in 2009, which managed to get the country out of the Great Recession, by injecting more than 750,000 million dollars into the economy.
“We are going to go big,” the US president promised yesterday, speaking at a press conference at the White House and presenting the latest developments in the fight against the pandemic, which is raging worldwide.
The plan’s proposals and the urgency the White House showed to implement them revealed the renewed urgency of the Trump administration to save the economy.
Until a few days ago, the White House only contemplated a tax cut to help workers, in addition to some specific bailouts for some sectors hit by the pandemic. But that cut, Mnuchin said, would take several months to take effect.
“The Americans want cash now, and the president wants to deliver cash now. And when I mean now, in the next two weeks,” Mnuchin said.
“We want to send the money, and send it quickly,” insisted the Republican president.
A few hours later, in Congress, Mnuchin said that the package presented by the White House would inject a trillion dollars into the economy, to which would be added a postponement of the payment of taxes by another 300,000 million dollars.
“This is a situation in which the government has asked many people to stay home so that the disease does not spread. It is not a normal economic situation. The government asked that part of the economy be shut down. The president it’s decided. You can think of it as money for business interruption,” Mnuchin told reporters at the US Capitol, justifying checks to workers.
The government had disclosed in the press a smaller package, for 850,000 million dollars. But with the passing hours, the rescue grew to a trillion dollars.
In addition to payments to workers, which could exceed $1,000, the plan will include loans to small and medium-sized companies, and some 50,000 million for airlines, which drastically reduced their domestic and international flights due to the closure of borders and closures imposed by various governments in Europe, the United States and some Latin American countries to stop the spread of the new coronavirus.
Trump noted that the federal government will also assist Boeing, whose business is tied to that of the airlines, and which was already experiencing a crisis from the two plane crashes due to flaws in the Boeing 737-Max’s navigation software.
The US government was urged to present a fiscal stimulus plan to send a signal to the markets and contain an unprecedented economic crisis, which, for some, has already placed the United States in a new recession.
The question, now, is how long will the plan last, and how deep will it be.
The urgency was born from the dramatic collapse that financial markets showed in the last month, since the pandemic began to spread in Europe and the country: never before in history have stock market indices traced a slide as pronounced or as rapid as in the past. last weeks.
The main Wall Street indicators erased in just under a month almost all the gains they had made during the Trump presidency, and the fall was much steeper than in the global financial crisis, or in the crisis of 1929.
After the White House announcement, Wall Street, which was already on the rise after the previous day’s collapse, the worst since “Black Monday” in 1987, accelerated its rebound and closed with a strong profit.
The Dow Jones Index climbed 5.2%, the S&P 500 rebounded 6%, and the tech Nasdaq advanced 6.2%.
In addition to fiscal measures, the New York Federal Reserve, tasked with seeing that markets have enough liquidity to function properly, announced a massive new injection of $ 500 billion.
Meanwhile, the Federal Reserve (Fed) announced that it will resurrect a line of commercial loans that it had first implemented in 2008, during the global financial crisis.
The announcements of the United States Central Bank ended up configuring a full and unguarded monetary offensive to contain the economy. In just a handful of days, the Fed activated all mechanisms in its power to shield activity.
That swift reaction had also raised pressure on the White House, as investors, far from showing renewed calm, had continued to sell shares en masse to flee risk.
Voters in Florida, Illinois and Arizona were voting yesterday in the Democratic primaries in the context of a rapidly spreading coronavirus pandemic in the United States and affected the race for the party’s presidential nomination between former Vice President Joe Biden and Senator Bernie Sanders.