Trump economist supports Biden’s $ 1.9 billion bailout plan

Trump economist supports Biden’s $ 1.9 billion bailout plan

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“They threw a lot of stimulus at it,” Hassett told CNN Business on Thursday, “but I think we need to be risk averse.”

The former Trump administration official fears that the worsening pandemic, with no more help from Washington, will cause the US economy to repeat itself in the first quarter of last year, when GDP shrank by 5%.

“There are so many businesses that are treading water and barely sticking to it. Now they are being hit by another shock,” said Hassett, who served as Trump’s top economic adviser from 2017 to 2019 before joining a volunteer in March last year. role has returned. “You could end up in a negative spiral for the economy.”

“The disease is spreading at a remarkable and narrow rate,” says Hassett, now a respected visiting fellow at Stanford University’s Hoover Institution.

Bid them $ 1.9 billion plan

With his American rescue plan, Biden takes a big or ‘home approach’. The package calls for $ 1,400 stimulus checks for most anyone earning less than $ 75,000, increased unemployment benefits, $ 350 billion in aid to state and local governments and $ 400 billion to address the pandemic itself.
And this is in addition to the $ 900 billion relief package that Congress just enacted last month to prevent benefits from expiring for millions of Americans. Some Republicans, hawks, and economists are so frightened shortly after the last of the size of the Biden plan.

Lindsey Piegza, chief economist at Stifel, is concerned that the federal government is rushing too fast to throw more money at the problem.

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“I would like to see a smaller, more purposeful approach if we see the economy evolving and adapting, rather than relying on extra helicopter money,” Piezga said.

In turn, Hassett said there may be elements of the Biden package that he likes more than others, but in general he is ‘absolutely’ in favor of the plan.

“We came through last year without a total, total collapse of GDP due to extremely aggressive stimulus,” said Hassett, who served as CNN commentator last year.
The former Trump economist is an outlier in his pessimistic view of the power of recovery. While Hassett warns that the U.S. economy is likely to shrink in the first quarter, the New York Fed’s Nowcast model predicts rapid growth of 6.2%. After Biden announced its plan, Goldman Sachs improved its GDP outlook for 2021 to 6.6%, although the forecast assumes that Biden will receive a $ 1.1 billion fiscal stimulus.

How the vaccines and the pandemic affect the economy

The pandemic is clearly damaging the economy, especially in virus-sensitive industries such as restaurants, movie theaters, hotels and cruises.

The United States lost jobs in December for the first time since the spring. Another 900,000 Americans submitted unemployment benefits for the first full week of the Trump presidency alone.

The slow deployment of the vaccine could not only exacerbate the health crisis but also the economic one.

Accelerating the distribution of vaccines is hampered by logistical problems and the disastrous transition between the Biden and Trump governments.

Biden and his advisers are taking control without a national distribution plan for coronavirus vaccines being introduced by the Trump administration, sources told CNN.
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Somewhat counter-intuitively, Hassett worries that the U.S. economy will take another hit if vaccine distribution accelerates. He explained that people who are next in line for a vaccine, or who have already received a single dose, will be extremely careful not to get infected.

“If you hide in your basement for three weeks, you know you’ll be fine,” Hassett said. “There will be a huge increase in risk aversion. We have to expect the economy to be really very slow, even if the government does not ask for more shutdowns.”

Hassett predicted that Congress would pass an important stimulus package again next month after a discussion. He noted that Congress and the Trump administration were close to a nearly $ 2 trillion deal last fall.

“Now that the election is over,” he said, “people can only focus on what is good for the country.”

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