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While parts of the U.S. economy have recovered from the pandemic better and more quickly than expected, there are signs that millions of Americans could be without a job for six months or longer. That prospect -- along with the expiration of certain federal benefits -- has some economists worried. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, joins Judy Woodruff to discuss.
And, as Yamiche and Lisa have just laid out, negotiators do appear to be a long way from a comprehensive aid deal.
While parts of the American economy have recovered better and more quickly than expected, there are signs that millions of people may be without a job for six months or longer. That prospect, along with the end of some benefits to individuals and aid to businesses, has some people worried about where all this is heading.
You can count Neel Kashkari among them. He is the president of the Federal Reserve Bank of Minneapolis. And he joins me now.
Neel Kashkari, welcome back to the "NewsHour."
I want to cite what we heard yesterday from Fed Chair Jay Powell. He warned of tragic results for the economy if there isn't some sort of robust aid package coming out of Congress in the wake of the pandemic.
Today, you used the term enormous consequences if there isn't a significant aid package.
What do you mean by that?
Well, Judy, good to see you.
There are roughly 11 million Americans who are still out of work today, who have still lost their jobs, and they haven't come back. And that is roughly equal to the worst part of the job market during the great financial crisis.
So we are a long way from recovering to where the economy was in January or February. And if you have 11 million Americans who don't have money to pay their bills, to pay their credit card bills, their car payments, their rent, that will then ripple throughout the economy.
So, if somebody doesn't pay their rent, their landlord then can't pay his or her mortgage, and then the bank is facing losses.
And so, if this goes on, and there's no more assistance provided, it will ripple through the economy. It'll hurt those families directly, but it will hurt the entire U.S. economy and make the recovery much more sluggish.
So, in the middle of all this, yesterday, as you know, President Trump abruptly announced that he was — wanted to put an end to these talks, trying to reach some sort of an agreement on economic aid.
What does that say to you about the president's role in all this?
Well, I think it's vital that the White House and the Congress, both parties come together.
One of the pieces of good news throughout this pandemic is how aggressively the fiscal policy-makers came together in the spring to support the American people and to support small businesses. They did exactly the right thing in the spring. And I think all of us are encouraging them to continue that bipartisanship, to do more.
The Federal Reserve, we're playing our part, but there are limits to what we can do. We absolutely need the fiscal policy-makers to continue to support workers and businesses.
And so your message to them is what?
Because, as you mentioned, they did come to an agreement of the spring. But, for months now, they have not been able to come to an agreement. For months, Republicans, the White House, Leader McConnell have said, they have already spent a lot of money, they don't want to spend more money, they're worried about the debt, whereas the Democrats have argued, we need a robust package in order to help people.
We need a robust package.
Back in the spring, I think we were all maybe naively optimistic that this would be a short duration of an economic crisis, and get the pandemic behind us. That obviously has not happened. It's likely going to be with us for six months, nine months, a year or more, until we get to a vaccine that's widely available.
And thousands of businesses have already shuttered. If we allow thousands of more businesses to shutter, that's going to slow down our economic recovery. And that's going to diminish our economic potential.
So, if you could speak right now, both to Speaker Pelosi, to Leader McConnell, to the president, is that what you would say to them?
I would say that we are only halfway through this pandemic.
The Congress has — is uniquely empowered, the Congress and the executive branch, to provide this kind of fiscal support that workers and businesses need.
Look, if the Federal Reserve does a little more quantitative easing, that's not going to do anything for the person who can't put food on the table or for the small business that is shuttering. But we can provide support to the general economy. But we do not have the ability to provide this support to workers and small businesses that have been affected.
Only the White House in Congress can do it. And we would encourage them to come together to do that.
And yet, at the risk of repeating myself, it's been months, and they haven't been able to come to an agreement.
Why not? I mean, you know Washington. You have worked in Washington. You know the way things work here. What's not getting through?
Well, I don't know.
I think there's a lot of uncertainty about where the virus is going, how long this pandemic would last. Again, I think many people were hopeful that, back in March, hey, maybe this will be over by June, and we can go back to normal.
Obviously, that's not the case. The virus is still raging throughout much of the country, and climbing in many places, including here in Minnesota.
So, I think we need to just accept that reality that we are in still in the middle of this pandemic. And we still need more assistance for workers and for businesses to get to the other side.
And to — I mean, specifically, I'm thinking of Leader McConnell's arguments that we have already spent a lot of money. There — his argument that there's money that's been sitting on the sidelines hasn't truly gone where it's supposed to go.
He was making that argument a few months ago, and also saying we have to worry about the debt.
You know, this is like a natural disaster that's hit the entire U.S. economy all at once. Imagine a hurricane hitting the whole U.S. economy.
The U.S. government has the financial resources to support the American economy and the American people to get through this. This is the time to use that — those financial resources to get through it.
We all agree. I think, long term, we absolutely have to get our fiscal house in order, we're going to have to make tough choices. But when you're in the middle of the pandemic, you're in the middle of the hurricane, I believe the right thing to do is to support the economy and to support the American people.
So, if these early — just quickly, if these early reports of smaller, isolated forms of aid is what they agree to, is that going to be enough, whether to the airlines and to other specific sectors of the economy?
To me, I think putting money in the hands of the 11 million people who've lost their jobs is of paramount importance, helping small businesses. We have got thousands that have already failed. Thousands more will fail.
And also supporting state and local governments. They employ a lot of people. They employ a lot of essential workers, like school teachers, and making sure that they are able to continue to do their jobs, to support all of us, to support our kids, to support to support our economic futures. Those are all important.
But I hear you, Neel Kashkari, coming back throughout this to say, it all hinges on COVID and when that is behind us.
It would be great if there was a widely available vaccine that we all had confidence in. Then that would be great. We could get vaccinated and we could go back to normal.
But the experts have said it's likely going to be late next year before such a vaccine is widely available. And so we have to prepare for that.
I mean, I hope it comes sooner, but we need to be realistic and prepare for the fact that we're probably at about the midway point of this pandemic.
Sobering words from the president of the Minneapolis Federal Reserve.
Neel Kashkari, we thank you.
Thank you, Judy.
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