Powell, Mnuchin split on benefits of easing COVID-19 restrictions

By Sylvan Lane |  The Hill

Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin warned Tuesday that the economy could suffer long-term damage without further congressional action on the coronavirus pandemic, but differed over how the country and its leaders should tackle that challenge.

During a joint virtual appearance before the Senate Banking Committee, Powell and Mnuchin revealed one of the few differences in their approaches to guiding the world’s largest economy out of the worst downturn since the Great Depression. Their input comes amid an escalating partisan battle over easing restrictions imposed to slow the spread of COVID-19.

  • Mnuchin argued that with unemployment at 14.7 percent, the U.S. must find ways to swiftly reopen businesses and bring workers back with adequate protections before the economy slips into a spiral of job losses and contraction.
  • “It is important to realize that the large number represents real people,” Mnuchin told the committee. “This is why it is so important to begin bringing people back to work in a safe way.”
  • While Powell did not directly dispute Mnuchin’s call to reopen the economy, he said doing so may mean little if Americans aren’t ready for it.
  • “You can change the formal social distancing measures, but ultimately people are going to decide what they should and shouldn’t do with themselves and with their families. And I think that that will boil down to having pretty good confidence that it’s safe to go out,” Powell continued.

I have more on their divide and what it means for the path toward recovery here.

A rare split: Mnuchin and Powell, both Republicans with a moderate tilt and Wall Street résumés, have shown little daylight in their approaches to the pandemic-driven economic collapse. Both have worked in tandem to support the Fed’s emergency lending efforts to stabilize financial markets and have advocated for spending freely while interest rates are at decade lows.

But the difference in their assessments of how soon the U.S. can begin inching toward normal economic activity highlighted one of the many difficult balancing acts facing the country and its leaders as states move toward reopening.

  • More than 30 states have begun allowing some businesses to reopen after months of lockdowns. Some have begun easing social distancing restrictions despite no long-term decline in cases, a recommendation laid out in guidelines from the White House and the Centers for Disease Control and Prevention.
  • President Trump and other GOP leaders have applauded the reopening efforts and warned against the potential harm of waiting too long to make strides toward normalcy.
  • Democrats have argued that Republicans are risking a surge in new cases with what they see as a premature push to ease restrictions and should instead come back to the table to negotiate more stimulus to support the economy through the pandemic.

“How many workers should give their lives to increase the [gross domestic product] or the Dow Jones by 1,000 points?” asked Sen. Sherrod Brown (Ohio), the panel’s ranking Democrat.

“I couldn’t be more proud of the medical advice that we’re getting in the way the economy is opening up in a safe way,” Mnuchin responded. “We have provided enormous amounts of equipment. We’ve worked with the governors. We’ve done a terrific job.”

More from Powell and Mnuchin’s hearing: 

Warren, Mnuchin spar over Treasury’s $500 billion bailout fund

%d bloggers like this: