Treasury Secretary: U.S. Unemployment Could Hit 20%; Bailout Could Cost $1 Trillion

Treasury Secretary Steven Mnuchin reportedly told senators that unemployment in the U.S. could hit 20% — a rate not seen since 1935, the height of the Depression — as the coronavirus COVID-19 takes its toll on the economy.

A stimulus package to shore up the economy is expected to top $1 trillion, Mnuchin said.

According to Bloomberg News, Mnuchin said he the economic fallout from COVID-19 could be worse than the 2008 financial crisis, which plunged the nation into a recession.

But Treasury Department spokeswoman Monica Crowley denied the report of 20% unemployment. “During the meeting with Senate Republicans today, Secretary Mnuchin used several mathematical examples for illustrative purposes, but he never implied this would be the case,” she said.

Still, a new Marist poll conducted for NPR/PBS News earlier this week found that 18% of adults in the U.S. said that they had already lost their job or had their hours reduced due to the pandemic.

The White House and Congress have moved quickly to craft two coronavirus spending packages, and President Trump on Tuesday began pushing another $850 billion stimulus, mostly in the form of tax relief measures. About $500 billion would be tied to a payroll tax cut, with $250 billion in the form of Small Business Administration loans and another $58 billion directed to the airline industry.

Trump also wants the federal government to send checks to Americans within the next two weeks to stem the effects of the coronavirus on the economy, Mnuchin said Tuesday. “The president has instructed me we have to do this now,” he said at a White House briefing attending by the president. “Americans need cash now — and I mean now, in the next two weeks.”

Trump said there were four “and possibly five” ways “to get the money out and get it out quickly.” One way, a payroll tax cut, would not work quickly enough, the president said.

“In a memorandum issued Wednesday, Treasury is calling for two $250 billion cash infusions to individuals: A first set of checks issued starting April 6, with a second wave in mid-May. The amounts would depend on income and family size,” the Associated Press reported.

The Senate on Wednesday is also set to take up a House-passed coronavirus bill. “Wednesday’s legislation would speed the delivery of testing for the virus and provide paid sick leave to workers, but the focus in Washington has already moved to development of a far, far larger response bill that would inject hundreds of billions of dollars into the faltering economy, provide relief to shuttered businesses, and help keep airlines from going under,” the AP reported.

“I think we’re going to do something that gets money to them as quickly as possible. That may not be an accurate way of doing it. Some people obviously shouldn’t be getting a check for $1,000 but we’ll have an idea at the end of the day what we will be doing,” he said.

There were few details about the payments, but Trump said he expected to make a decision late Tuesday. “We’re going big,” Trump said. “We want to go big, go solid.”

In addition, Mnuchin said “This is a very unique situation for this economy. We’ve put a proposal on the table that would inject a trillion dollars into the economy that is on top of the $300 billion from the IRS deferrals.”