Yahoo Finance Former Obama official on coronavirus: 'Both the president and Congress are utterly failing'
The U.S. response to COVID-19 has garnered heavy criticism, ranging from the lack of preparedness to contradictory statements made by government officials.
The coronavirus has killed over 4,000 people across over 100 countries, infected more than 120,000 more, and ravaged global markets. In response, paid sick leave has been suggested as a way to ease the burden on some of America’s workforce. However, this would need to be passed through Congress.
And the likelihood of Congress agreeing on legislation regarding coronavirus is “not high,” according to Austan Goolsbee, former chairman of the Council of Economic Advisers in the Obama administration.
“In the spirit of anything that slows the spread of the virus is the best stimulus, paid sick leave is one of the best forms of stimulus,” Goolsbee said on Yahoo Finance’s On the Move. “That Congress cannot even agree on that, and you’ve got people saying: ‘Wait a second, we should have to cut other things in order to that,’ I’m flabbergasted. But at this moment of total crisis, both the president and Congress are utterly failing in their responsibilities.”
On Wednesday, Senate Democrats tried to pass emergency legislation that would require employers to provide their employees with 14 days of paid sick leave during a public health emergency amid the ongoing spread of coronavirus. However, it was stalled after Sen. Lamar Alexander (R-TN) opposed it on the grounds that businesses would be required to pay for the leave, not the federal government.
Meanwhile, Trump has proposed suspending all Social Security and Medicare taxes throughout the end of the year. Democrats have indicated they would not support the cut.
“Things as simple as ‘Should we have paid sick leave for everyone temporarily?’ — to me, it’s obvious that we should because before there ever was a coronavirus, when we were just looking at flu infections, paid sick leave is one of the most effective ways to keep sick people from going to the workplace and infecting everyone else,” Goolsbee said.
‘The only true asset you have is your credibility’
President Trump has directly contradicted public health officials on several occasions. While touring the CDC headquarters in Atlanta, he said: “Anybody that needs a test can have a test.” However, access to coronavirus tests is still extremely limited, an issue that’s borne heavy criticism.
Trump also asserted that the completion of the border “wall” along the U.S.-Mexico border would help protect Americans against coronavirus, despite the fact that the CDC director said a wall would not be effective.
Goolsbee said that Trump’s statements have undermined the credibility of the U.S., and that “it’s worse than just missing” presidential leadership.
“Paul Volcker was a dear friend,” Goolsbee said. “In the Financial Crisis of 2008, he would always say to me again and again that in a crisis, the only true asset you have is your credibility. And that is true for this every bit as much as a financial crisis.”
He continued: “And when I say it’s worse than just a lack of leadership, the president of the United States himself has actively gone out and … presented false and damaging information to people, saying we only have 14 cases and pretty soon it’s going to go down to zero, and a lot of people are finding that this isn’t so bad and they can just go to work anyway.”
WHO currently has the coronavirus mortality rate at 3.4%. But during an interview with Sean Hannity on Fox News, Trump expressed skepticism at those numbers on a “hunch.” Goolsbee stressed that the the stock market plunge is very much connected to President Trump’s words and actions.
“I don’t think it’s a coincidence that the stock market had the day it had yesterday and the experience it had overnight after hearing the president talk, because in a way, they are passing judgment on the one asset we have, which is our credibility,” Goolsbee said. “And so far, we’re failing that. We’re not getting a bad grade — we’re absolutely failing.”
Between January 18 and March 10, there have been 11,079 tests for COVID-19 in the U.S. In comparison, South Korea has conducted over 100,000 tests, and the U.K. has tested nearly 25,000 people.
“If you look at Korea, if you look at Japan, the rate of spread of the virus there is half the rate that it has been in places like the United States, in Italy, and in others,” Goolsbee said. “So I think, No. 1, we’ve got to start establishing credibility, getting out testing, so that not everybody feels like ‘Maybe I have it and I don’t know. I don’t want to go see my grandma. I don’t want to go to the NBA game. My kids can’t go to school.’”
‘We are going to experience a significant hit to GDP’
Lax coronavirus policies in the U.S. contributed to the stock market's worst week since the 2008 Financial Crisis, ending the historic bull market and bringing intense volatility. The Federal Reserve announced an over $1 trillion liquidity operation to help support markets, but according to Goolsbee, the best thing to do for the economy is simple.
“Virus economics is different from regular business cycle economics in that the most important thing you can do for the economy has nothing to do with the economy, and that is slow the rate of spread of that virus,” Goolsbee said. “The thing is, we are going to experience a significant hit to GDP, to our standard of living.”
“We have already had a huge hit on our standard of living by all the restrictions and the equivalent of a giant tax on our normal way of life,” he added. “Anything that slows the rate of the virus will reduce the fear factor and that’s the predicate. That is necessary for us to recover.”
Adriana is a reporter and editor for Yahoo Finance. She can be reached at adriana@yahoofinance.com. Follow her on Twitter @adrianambells.
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