Pressing “pause” for more help on coronaviruses won’t kill economy, say Republican economists

House Democrats passed another coronavirus bill last week, which is expected to cost more than $ 3 billion. Senate Republicans are ready to take Memorial Day week without taking action on the House bill or a new one.

Related:The next coronavirus help package will come true “as early as June” when House adopts its bill.

Keith Hall, former head of the Congressional Budget Office and chief economist on the White House Council of Economic Advisers under George W. Bush, compared the situation to meeting a bear while walking.

“The first thing you do is run. You run very fast and you shouldn’t look back. You should try to escape the bear,” said Hall. “You can run blind for a while, but at some point you have to start paying attention to where you are when you get rid of the bear. “

Democrats are much less convinced that the bear is safe behind them. House Speaker Nancy Pelosi, a Democrat from California, berated the Republicans for saying it was time for a break.

Well, we don’t agree with that. We do not stop because, again, hunger does not stop, the payment of rent does not stop. The list is long, “he told reporters on Wednesday at his weekly press conference.

The two factors most likely to prompt lawmakers to act soon would be the expiration of an additional $ 600 per week that unemployment benefit recipients will receive until the end of July or the exhaustion of funds for Payment . The jobless bonus is one of the favorites of Democrats, who have offered to extend it until the end of January, while the PPP has strong support from Republicans, who were upset. The Democrats authorized its suspension for a few days in April.

On Tuesday, the PPP had spent nearly $ 513 billion on the approximately $ 670 billion credit authority it has. The program was created in March to help small businesses affected by the coronavirus crisis.

Overall, the bipartisan Committee on a Responsible Federal Budget estimated on Thursday that only about $ 1.5 trillion out of $ 3.6 trillion had been spent on legislative assistance from four coronavirus bills.

Doug Holtz-Eakin, another former CBO chief who now heads the conservative American Action Forum think tank, said there were still bullets in the room for fiscal policy in the form of unused Fed loans .

“I think one of the most important facts on the ground is that Congress went fast enough and daringly enough that the treasury still has half a trillion dollars that spent practically nothing and that’s it the credit of the Fed, “he said.

“There is no difficult economic reason to do CARES 2,” said Holtz-Eakin, referring to the next aid package, which would come after the CARES $ 2.2 trillion law. He said it was designed to convince companies to avoid layoffs and to close temporarily.

“So that means the next piece of legislation should be incentives to do something: hire, grow. You can no longer do what you did. You have to agree on what it looks like, ”he said.

Related:Washington likely won’t provide another coronavirus aid package, Republican senator said

Hall, who headed the Bureau of Labor Statistics during the 2008-2009 financial crisis, said he saw reasons for optimism in the Labor Department data. The build-up of labor, where companies keep workers on the payroll even when demand decreases, was more pronounced in this recession than in 2008, he said.

Employers want to keep workers if they believe a recession will be short and manageable, Hall said, knowing that they can gain market share by being one of the first to reopen.

“We did not have a lot of labor accumulation during the Great Recession. What seems to me is that right now we have a lot of work. Businesses are really trying to stay, “said Hall.

“What we don’t want to see is more of a disconnect between employers and employees.”

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Holtz-Eakin said the recession is now fundamentally different from 2008 and 2009.

“There was an external shock in the economy. It was not something generated internally, just like the financial crisis. The nature of the response should therefore not be the same, “he said.