The U.S. government has added over $3 trillion in debt in the last month or so due to the Wuhan virus pandemic. Additionally, over 30 million or Americans are unemployed and countless businesses on the ropes.
On May 13, 2020, Federal Reserve Chair Jerome Powell was blunt in his recommendation that U.S. elected officials spend as much as possible to confront the Wuhan virus.
“There’s a degree of concern at the Fed that the bipartisan energy behind fiscal support seems to be flagging,” stated Krishna Guha, vice chairman of Evercore ISI and a former New York Fed official.
Congress has started debating even more spending measures, with House Democrats pushing for another $3 trillion to combat the virus and Republicans balking at issues such as how much aid should be given to local and state governments.
“Now, when we are facing the biggest shock that the economy has had in modern times, is for me not the time to prioritize considerations like that,” Powell commented after being questioned on May 13 during an interview with the Peterson Institute for International Economics if he was concerned the United States might borrow too much to go on big spending projects.
“The separation between monetary and fiscal policy has become a lot less clear … The current situation has forced this drift and it is understandable,” Hoagland stated. “He is right that it is necessary to have an economy that is performing.”
The Wuhan virus does require a minimal response from the government, but prudence should dictate how far it should go.
This is not a time when special interest groups should gorge themselves at the public trough while millions of Americans suffer.