fiscal Worry

‘Now is not the time to worry’ about the fiscal deficit or the Fed’s balance sheet, Mnuchin says – CNBC

Treasury Secretary Steven Mnuchin told CNBC on Monday that lawmakers should not allow fears over the size of the nation’s deficit or the Federal Reserve’s balance sheet to delay additional Covid-19 relief.

Mnuchin, who with White House chief of staff Mark Meadows has led the administration’s Covid-19 relief negotiations, said the economic crisis warrants extraordinary stimulus from Congress and the Fed.

“Now is not the time to worry about shrinking the deficit or shrinking the Fed balance sheet,” Mnuchin told CNBC’s “Squawk Box” from the White House. “There was a time when the Fed was shrinking the balance sheet and coming back to normal. The good news is that gave them a lot of room to increase the balance sheet, which they did.”

“And I think both the monetary policy working with fiscal policy and what we were able to get done in an unprecedented way with Congress is the reason the economy is doing better,” he added.

Mnuchin’s comments critiqued his fellow Republicans who argue that improving jobs data and strong housing figures relax the need for additional spending to combat the impact of the coronavirus.

Sen. Rand Paul, R-Ky., for example, voted against a GOP “skinny” stimulus plan last week and has repeatedly attacked his own party for what he views as prodigal spending.

“The majority of Republicans are now no different than socialist Democrats when it comes to debt,” Paul wrote on Twitter in July. “They simply don’t care about debt and are preparing to add at least another trillion dollars in debt this month, combined with the trillions from earlier this summer.”

The cumulative federal budget deficit for the first 11 months of fiscal year 2020 was $3 trillion, according to the Congressional Budget Office, a byproduct of intensified government spending to get the economy through the pandemic-associated shutdown.

Mnuchin, who argues that more stimulus is needed to help the U.S. economy, said Monday that “we are rebounding in a very, very significant way.”

Paul’s vote helped sink the Senate Majority Leader Mitch McConnell’s plan, which fell short of the 60 votes needed on a procedural step to move toward passage.

All Democrats present and Paul voted against the bill in a 52-47 vote. That legislation would have reimposed enhanced federal unemployment insurance at a rate of $300 per week, half of the $600 weekly payment that expired at the end of July. The Democrats said it didn’t go far enough.

Mnuchin struck a more compromising tone Monday and said he’s still willing to work with House Speaker Nancy Pelosi on a new deal.

“I think there’s many areas of this where is an agreement between the Democrats and the Republicans, and some of the areas we do have differences on the amounts,” he said. “But I will continue to work on this: I’ve told the speaker I’m available any time to negotiate.”

The Treasury Secretary said he expects the Problem Solvers Caucus to produce a stimulus proposal later Monday.

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Mingle Worry

Hope and Worry Mingle as Countries Relax Coronavirus Lockdowns – The New York Times

At least a dozen countries pulled back on restrictions put in place to combat the virus. But leaders warned that an uptick in infections could shut life down again.

Credit…Alessandro Grassani for The New York Times

Jason Horowitz

ROME — Wearing a Plexiglas visor, large white mask and blue rubber gloves, Catia Gabrielli looked ready for whatever could come her way on Monday as Italy tentatively loosened some of its strictest lockdown provisions against the coronavirus.

“I see a lot more movement,” Ms. Gabrielli, a bookstore owner, said in the historic center of Rome as she worried about the people around her, out taking walks without masks. “It’s a lot of people.”

That same wariness mixed with hope was expressed throughout Europe and beyond on Monday as at least a dozen countries — including Germany, Spain, Greece, Belgium, Lithuania, France, Nigeria and Lebanon — began to ease weeks of restrictions aimed at stemming the spread of the contagion.

But in many places, the much-anticipated relaxation of restrictions looked a lot like a real-time experiment in figuring out how to live with the virus. And while the easing varied country to country, many leaders made clear that things could be shut down again — if citizens grew suddenly too incautious.

In most countries, not all stores and industry were allowed to resume business. School openings were selective, carried out in reconfigured classrooms, or put off till the fall. Social distancing rules were still in force. Masks were often required. Bars, cafes and restaurants largely remained shuttered.

Italian authorities warned that any loosening of restrictions could be short lived if citizens didn’t adhere to social distancing measures. And if infections shot up again and overwhelmed health systems just coming up for air, they would lock society back down.

“We will intervene and close the tap,” Prime Minister Giuseppe Conte of Italy has said, warning Italians of the dangers of bringing up the curve of infections that the country had worked so hard to suppress. In Italy, the virus has claimed more than 28,000 lives.

The problem with relaxing restrictions is that officials will not have a reliable sign of the consequences for at least two weeks — the incubation period of the virus. So there remains the risk that in the blind gap, the virus stealthily surges, setting off another wave of infections, as bad or worse than the first.

Public health experts, while recognizing the need to strike a balance between saving lives and livelihoods, have long warned that opening up shops and releasing citizens from their homes could be more difficult and dangerous than shutting them in.

Even so, India allowed businesses, local transportation and activities like weddings to resume in areas with few or no known infections. Lebanon reopened bars and restaurants.

Nigeria relaxed lockdowns in its capital, Abuja, and its biggest city, Lagos, with markets, stores, malls and construction companies opening.

In Germany, which has reported 163,100 infections and 6,692 deaths, according to the Robert Koch Institute, zoos, museums, hairdressers and barbershops opened on Monday for the first time since mid-March.

On Sunday, 122 pre-screened worshipers convened in Cologne Cathedral, wearing masks and sitting apart in pews, to celebrate Mass. Other churches will begin services, under similar restrictions, later this week.

Some playgrounds opened over the weekend.

“It is a huge relief,” said Katherin Bravo, who guided her nearly 2-year-old daughter down a Berlin slide. “You can’t explain to little children why they can’t play here. We would walk by every day and she would say, ‘slide, slide,’ but we had to keep going.”

In Spain, where more than 25,000 people have died, small businesses reopened on Monday.

The government hopes to return the country to a “new normalcy” by late June, letting some areas with less contagion and hospital saturation open up earlier than more infected parts.

Cristina Cros, who owns a small salon in Barcelona, said she was happy to return to work after seven weeks of lockdown, but was also finding the new rules “pretty chaotic.”

For example, all clients must stay at least two meters, or roughly six feet, apart while in the salon. The hairdresser must thoroughly clean the premises after each client, and also mop the floor two or three times a day, Ms. Cros explained.

“I have been doing as much cleaning as cutting so far,” Ms. Cros said, wearing a mask and gloves, just like her customer.

After 42 days of confinement, Greeks on Monday were free to leave their homes without an authorized reason, and hair salons, book stores, clothes shops and other small retailers reopened. Transportation authorities cordoned off every other seat in buses and metro cars.

But even though the country had limited infections to about 2,626 cases of infection and around 150 deaths, restaurants and bars were expected to remain closed until June.

“What I really miss is a coffee in the sun, but that will have to wait,” said Anthoula Paraskeva, 48, as she waited her turn outside an Athens hair salon, wearing a mask and latex gloves.

“This is a priority though,” she said, laughing and pointing to an inch of brown roots to her blonde hair.

But in Greece, too, the opening came with admonishments from the government. “If we are to continue to see this virus in a downward trajectory, we must all be doubly cautious,” Prime Minister Kyriakos Mitsotakis said.

Poland, which began its lockdown on March 14, reopened its hotels, shopping malls and sports areas as well as some museums and art galleries.

The country’s kindergartens and nurseries could also open later this week, though strict new sanitary guidelines and isolation spaces for suspected cases will probably lead many reopenings to be delayed.

Estonia and Lithuania began lifting restrictions, as did Belgium, where construction started up again, and companies from nonessential sectors — including shops selling fabric — were allowed to resume activity.

President Emmanuel Macron of France on Monday called for “calm” and “pragmatism” as the country prepared to slowly lift lockdown restrictions starting on May 11, but he warned that “this isn’t a return to normal, it is a new step.”

“It is necessary to live with the virus,” Mr. Macron said, arguing confinement could not continue forever because it would cause vast economic and social harm. Still, he said, “the ice is very thin.”

In Italy, the success of the opening seemed to depend on how relative the meaning of the word “relative” is.

In preparing Italians for the easing of restrictions last month, Mr. Conte, not known for his plain speaking, said Italians could visit their congiunti, a word that could be translated as relatives, but also relations.

The government defined accessible relatives as those “within the sixth grade” of kinship, a definition that bewildered many Italians. Things got muddier when Mr. Conte said congiunti also included a person of “stable affection.”

A national semantics debate ensued and this weekend, hours before the lockdown lifted, the government tried to settle the issue.

Friends just didn’t cut it. Spouses, partners in civil unions and people who had moved in together — but found themselves separated by the lockdown — could see one another again. But so could people with a “stable affectionate connection.”

But Italian privacy laws meant that police could not force anyone to reveal the identity of the object, or destination, of their affection as the congiunti traveled for conjugal visits and family reunions.

The long anguished-over reopening of Italy suddenly seemed to play out between the definition of “like” and “like like.”

“We have only been together for two months, and we don’t live together,” Danilo Ferrera, 25, said Monday morning as he held hands with his girlfriend in front of Milan’s trademark Cathedral. “I don’t think it’s considered a stable affection.”

He confided he had used the excuse of a medical checkup to visit her.

The police instead fined him for not wearing a mask, as his hard-hit Lombardy region required people to wear masks even outside. He said he didn’t know masks were obligatory, because there had been so many confusing official decrees that “I didn’t understand anything.”

It Italy, about 4.5 million people were expected to return to factories and construction sites on Monday. Joggers and cyclists can now legally go further than 200 meters from their homes. And travel for work or essential shopping or health needs can take place more broadly within each region, though travel between regions is still tightly restricted.

Masks are required on public transportation and in stores, and in other closed spaces open to the public.

Already, there were signs that some Italians were slipping back into their pre-virus habits.

In Rome’s Villa Doria Pamphili park on Monday, teenagers in groups of six and 12 wore no masks as they squeezed together on benches or caught up, closely, with their sweethearts. Families rode by on bikes. And Giulia Quadri, a professional dog walker, took some dogs out on a “test run.”

She said she had lost most of her business during the lockdown, when dog walking was an acceptable reason for people to leave their apartments.

“I need to understand if I can go pick up my clients’ dogs with the car and bring them here,” she said, unclear whether that was legal or not.

As Italians tried to figure out what was allowed and what was not, the big worry was that they would push the limits too far.

Walter Ricciardi, a top consultant to Italy’s health ministry, warned that if the infection rate showed an increase in two weeks, “We will have to shut down once again.”

Reporting was contributed by Emma Bubola in Milan; Elisabetta Povoledo in Rome; Monika Pronczuk in Brussels; Aurelien Breeden in Paris; Melissa Eddy in Berlin; Niki Kitsantoni in Athens; Joanna Berendt in Warsaw; Raphael Minder in Barcelona, Spain; and Ruth Maclean in Dakar, Senegal.

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