Sunday School 5/10/20

In today's Sunday School, I've got a couple of the president's men - economic advisor Larry Kudlow, who talked with George Stephanopoulos on This Week, and Treasury Secretary Steven Mnuchin, who spent time with Chris Wallace on Fox News Sunday. Let's take them in that order.

George sasked Kudlow about the two positive cases in the White House and the self-quarantining of Drs. Fauci, Redfield (CDC), and Hahn (FDA). He wondered if Kudlow would be following their lead. Kudlow said he'd take the advice of the White House medical folks, but was not ruling anything in - or out. Anyone who has contact with the president or vice president is tested daily, he said, and the goal is to keep everyone safe. 

George wondered "if the White House is not fully safe" with all that they're doing, "how can average Americans feel safe with the idea of going back to work?" Kudlow said there are probably 500 or more people working there, with only a small fraction of positives. And, he added, "... we have established guidelines from our health task force..."

And I ask your indulgence for a sec here, as we look at what WH Press Secretary Kayleigh McEnany said at last Friday's press briefing,

We have put in place the guidelines that our experts have put forward to keep this building safe, which means contact tracing. All of the recommended guidelines we have for businesses that have essential workers, we are now putting them in place here in the White House. So as America reopens safely, the White House is continuing to operate safely. (emphasis added)

I have to chuckle at that. I mean, we've had the WH Task Force wave guidelines in our faces for two months now, before the new reopening guidelines came out - and they're just now putting them into effect?

Anyway - back to Kudlow. There are all kinds of guidelines, for the WH, for states, for businesses, and so on, he said.

So, my point is, why don't we rely heavily on what the businesses, the free enterprise system can produce? Companies are very innovative. They know the job that has to be done. They know, on the one hand, folks have to be safe, must be safe. They know, on the other hand, we have to have some reopening as much as possible to deal with the economic problem, the pandemic contraction, as I call it. So, I think, between public and private health systems, we can do this.

It's not an either/or thing, he said; safety and reopening the economy go hand in hand. Other things that go hand in hand? The president and crazy comments on the economy. George noted that Trump said last week that all the jobs that have been lost will be back, and he wondered if Kudlow thought that was a keepable promise.

In a nutshell, April's numbers were bad, and May's are going to very difficult too, and so "it's going to take a while for the reopening to have an impact," Kudlow said, but "there's a glimmer of hope."

We had -- about 80% of it was furloughs and temporary layoffs. That, by the way, doesn't assure that you will go back to a job, but it's suggest strongly that the cord between the worker and the business is still intact. I think, hopefully, that has something to do with the $3 trillion of assistance, including the payroll protection plan.

Doing the math, he said it's around $9T worth of assistance for 175 million people. That gave George the chance to ask about another phase of stimulus, perhaps "another $2T," with aid to states and municipalities, testing, and direct assistance that the Dems are talking about, but that the White House and the Rs don't seem very interested. Kudlow said that

I think that many people would like to just pause for a moment and take a look at the economic impact of this massive assistance program, which is the greatest in United States history. That's all that is being said.

He also said that reports saying the WH and the Dems aren't talking are not true, but Kudlow and Kevin Hassett just had a conference call with around 50 Representatives, from both parties. There's another one planned for the Senate on Monday, so things are moving along.

Wallace asked about President Obama's comments about how the Trump administration has handled the crisis, Kudlow was surprised, saying "...I don't know what he's talking about." And he pointed to all the work they did with the governors and mayors and Congress and testing, and PPE, and ventilators,

you know, this President Trump, one thing shouldn't be lost here, he has -- and it's unusual in these emergency situations -- he's made great use of the private sector, talking about that earlier in terms of reopening in a safe manner. You know, we have relied very heavily on the smartest people in this country who run retail operations, pharmaceutical companies, biotech companies. You got automobile companies producing ventilators at a rapid rate. We’ve ramped up the testing. We have the world’s largest testing percentages so far. So, I just -- I don't understand what President Obama is saying. It just sounds so darn political to me.

He said that what they've done "may not be 100% perfect" but in the overall scheme of things, they've "created a massive health and safety infrastructure to deal with the pandemic" and the results show that what they've done is working. And when they reopen the economy?

I think, according to Congressional Budget Office and a bunch of private surveys, we’re going to see a very strong second half of the year, probably 20 percent economic growth.

And, "2021 could be a tremendous snapback in the US economy." And that's where they left it.

So, turning to Mnuchin, the first question was what the real unemployment rate is, given that the 14.7% we heard on Friday doesn't include 7 million jobs lost since mid-April, the millions not looking for work, and the underemployed. (Notably, the latter two are the same things that the Rs used to complain were not included in the Obama administration's unemployment figures.)

Did you know Mnuchin was a tap dancer in a previous life?

Chris, the real issue, and the president and I understand this, is the economic issues that American workers and American business are facing as a result of this virus and the decision to close the economy. And that's the reason why the president wants to work with the states to safely reopen the economy so we can safely get people back to work. So these are very, very large numbers. These are not large numbers because of the economy wasn't doing well. These are large numbers because we've shut down the economy. And I would just highlight the biggest component of this was in travel and retail and leisure and not a surprise we've closed down major parts of the economy.

Wallace pushed back, saying that "it's important that we face what the real numbers are." And according to the Bureau of Labor Statistics, that number for April is 22.8%, not including the 7M who lost jobs in the second half of the month. "So, aren't we talking close to 25 percent at this point, which is Great Depression neighborhood?"

Chris, we could be. But let me just emphasize, unlike the Great Depression where you had economic issues that led to this, we closed down the economy so it's -- it wouldn't be a surprise if you closed down the economy that ... half of the workforce is -- half the people didn't work. And that's why we're very focused on rebuilding this economy and getting it back to where it was... So you are correct. The reported numbers are probably going to get worse before they get better, but that's why we're focused on rebuilding this economy. We'll have a better third quarter. We'll have a better fourth quarter. And next year is going to be a great year.

Wallace continued to press on the numbers, pointing to widespread losses in multiple sectors, including white collar and government jobs, retail bankruptcies, and a report from the Congressional Budget Office saying even at the end of 2021, the unemployment rate "will still be 9.5%." And then he dropped the question: "Are your rosy predictions based on economic reality or the November election?"

Mnuchin pointed out that all these numbers "impact real people," and that his numbers "aren't rosy." We're going to have "a very, very bad second quarter" but then, we'll see a bounce back, and he said his predictions are based on his personal views and that

I've personally heard from many of the doctors that have vaccines and virals in trials and their expectations of being able to get a vaccine by the end of this year and having real viral treatments, the advent of testing. All these things are going to help give American business and American workers the confidence to reopen in a careful and a deliberate way.

And when Wallace questioned the food supply chain, and folks saying it's broken "because they can't get their meat and they can't get their produce from the field to market," Mnuchin basically said he's a glass half full kind of guy, not the other kind.

If you had told the American public we would virtually shut down the entire supply chains and still be able to feed America and get drugs to America and continue to do critical work, I couldn't be more pleased how Americans are pulling together to get through this.

And, the task force is focusing on issues like then when they see them.

The conversation moved on to reopening. Wallace quoted Trump, who said "will some people be affected? Yes. Will some people be affected badly? Yes. But we have to get our country open and we have to get it open soon." He also quoted Patrick Harker, head of the Philly Federal Reserve, who says reopening too soon and having the virus spike, "not only would this be a health catastrophe, but it would reverse the recovery as well."  And Harker predicts "a painful economic contraction of GDP in 2021 as shutdowns are reintroduced," Wallace said. 

And he asked if Mnuchin agrees there's "a considerable risk" to reopening, economically and from a public health standpoint.

Chris, if we do this carefully working with the governors I don't think there's a considerable risk. Matter of fact, I think there's a considerable risk of not reopening. You're talking about what would be permanent economic damage to the American public and we're going to reopen in a very thoughtful way that gets people back to work safely, that has them social distanced.

He talked about teleworking, and maybe there being appointments to shop at retail stores, but  "businesses will be able to reopen." Mnuchin also said that certain areas, like New York, had "very devastating impacts" but others didn't, and all of that stuff is being monitored.

And, moving on to a potential new phase of stimulus, Wallace referred to comments Kudlow made about waiting until late May or even later to make a decision, and to Trump's comments that "we were in a rush to get the money out to people. We have gotten the money out." His question this time? "With 33 million people unemployed, with the Paycheck Protection Program money running out by the end of this month, with state budgets cratering, this administration is in no rush?" 

Well, Chris, the president and I have been very clear on this and we're in 100%  agreement....What the president and I are now saying is, we spent a lot of money, a lot of this money is not even into the economy yet, let's take the next few weeks -- I'm having discussions with both the Republicans and the Democrats to understand these issues. The president and I are having conversations with outside people with business. We just want to make sure that before we jump back in and spend another few trillion of taxpayers' money that we do it carefully. 

We had an emergency process, it went quickly. We're there to help the American people. We're going to be considerate and if we need to help the American people -- in every aspect of this, as I've said before, we're willing to spend whatever it takes. But whatever it takes needs to be done carefully.

Finally, Wallace wondered about the next phase. The president says there won't be one without a payroll tax cute. The Dems (and even some Reps) say that won't help people who aren't working. And Mitch McConnell says there won't be one without protecting businesses from liability in case someone claims they got the coronavirus from their company. So, how will there be another phase with so much opposition from all sides?

Well we're absolutely pushing for the payroll tax cut. It's an incentive to get people back to work. It's delivering money to the American public and to business in a very effective way. And that will be one of the components. 

You've heard Mitch McConnell talk about liability. We agree with that completely. The Democrats have been asking for more money for states. We've been very clear that we're not going to do things just to bail out states that were poorly managed, but we're going to look at all these issues.

Before wrapping things up, Mnuchin said no matter what they do, it'll be bipartisan and they'll "make sure we get all these things included."

Got all of that? Tippity tappity, we're going to do everything including stuff we're not going to do, but tippity tappity things will be great before you know it, as he dances off the stage.

See you around the virtual campus, from a safe, clean-hands, cutely-masked distance. And be sure to check back tomorrow for some Extra Credit.