Economist Trump backs Biden’s $ 1.9 trillion bailout



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“They’ve launched a lot of stimulants,” Hassett told CNN Business Thursday, “but I think we have to be risk averse.”

The former Trump administration official fears that without additional help from Washington, the worsening pandemic could hurt the US economy in a repeat of the first quarter of last year, when GDP fell by 5 %.

“There are so many companies on the water, barely hooked. Now they are hit with another shock,” said Hassett, who served as Trump’s chief economic adviser from 2017 to 2019 before returning to one. volunteer role in March of last year. “You could find yourself on a downward spiral for the economy.”

“The disease is spreading at a frightening and remarkable rate,” said Hassett, now a distinguished researcher at the Hoover Institution at Stanford University.

Biden’s $ 1.9 trillion plan

With his US bailout, Biden is taking a wide-ranging or homecoming approach. The package calls for $ 1,400 stimulus checks for almost anyone earning less than $ 75,000, improved unemployment benefits, $ 350 billion in aid to state and local governments and $ 400 billion to fight the pandemic itself.
And that would be on top of the $ 900 billion relief plan that Congress just enacted last month to prevent benefits from lapsing millions of Americans. Some Republicans, loss-making hawks and economists balk at the size of the Biden plan so soon after the last one.

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

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“I would like to see a smaller, more focused approach as we see the economy evolve and adapt, rather than layering extra money on helicopters,” Piezga said.

For his part, Hassett said there might be some elements of the Biden package that he likes more than others, but basically he is “absolutely” in favor of the plan.

“We survived last year without a total and total collapse in GDP due to an extremely aggressive stimulus,” said Hassett, who was a commentator for CNN last year.
The former Trump economist is a special case in his pessimistic view of the strength of the recovery. While Hassett warns that the US economy is expected to decline in the first quarter, the New York Fed’s Nowcast model predicts rapid growth of 6.2%. After Biden unveiled his plan, Goldman Sachs raised its GDP outlook for 2021 to 6.6%, although that forecast assumes Biden will get $ 1.1 trillion in fiscal stimulus.

How vaccines and the pandemic are impacting the economy

The pandemic is clearly hurting the economy, especially in virus-prone industries such as restaurants, cinemas, hotels and cruise lines.

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

The slow deployment of the vaccine risks prolonging not only the health crisis, but also the economic crisis.

Accelerating vaccine distribution is complicated by logistical challenges and the disastrous transition between the Biden and Trump administrations.

Biden and his advisers are taking the lead without a nationwide coronavirus vaccine distribution plan in place by the Trump administration, sources told CNN.
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A bit counterintuitive, Hassett fears that the US economy will take another blow when vaccine distribution accelerates. He explained that people who are next for a vaccine, or who have already received a single dose, will be extremely careful to avoid getting infected.

“If you hide in your basement for three weeks then you know you’ll be fine,” Hassett said. “There will be a massive increase in risk aversion. We should expect the economy to really, really slow down – even if the government doesn’t call for more closures.”

Hassett predicted that after some haggling, Congress will pass another major stimulus package next month. He noted that Congress and the Trump administration were close to a nearly $ 2 trillion stimulus deal last fall.

“Now that the elections are behind us,” he said, “people can only focus on what is good for the country”.

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