Sen. Elizabeth WarrenElizabeth WarrenWarren calls on big banks to follow Capital One in ditching overdraft fees Crypto firm top executives to testify before Congress Massachusetts Gov. Charlie Baker won't seek reelection MORE (D-Mass.), a 2020 presidential candidate, on Monday said that Congress should pass a $400 billion stimulus bill with paid emergency sick leave to counteract the economic damage caused by the coronavirus outbreak.
Warren urged lawmakers to immediately pass a bill to fend off potential job losses, business failures, and consumer financial threats driven by the spreading coronavirus and the efforts to contain it.
“Companies across America are already struggling with supply chain disruptions, and we don’t want these temporary struggles to lead to widespread layoffs or for otherwise solid companies to go under,” Warren wrote in a Monday proposal.
Warren’s proposal comes amid growing anxiety among economists and investors about the potential effect of the coronavirus outbreak on global growth.
Economists have warned that prolonged supply disruptions, a steep drop in nonessential consumer spending and work absences could severely restrict U.S. economic growth through the first half of 2020. Potential outcomes range from a quickly reversed first-quarter slowdown to several months of economic retraction.
Wall Street has boosted pressure on the Federal Reserve to ease interest rates and prop up financial markets after the worst week of stock losses since 2008. Congressional leaders are also racing to finalize a deal on an emergency spending package meant to boost the federal government's efforts to fight and contain the virus.
President TrumpDonald TrumpGOP grapples with chaotic Senate primary in Pennsylvania Trump social media startup receives commitment of billion from unidentified 'diverse group' of investors Iran thinks it has the upper hand in Vienna — here's why it doesn't MORE and his top economic adviser, Larry KudlowLarry KudlowMORE, have argued that the U.S. economy will quickly rebound from a coronavirus slowdown despite the steadily rising confirmed cases of the illness within the U.S.
“The virus is not going to sink the American economy," Kudlow said Friday.
Even so, many economists insist that fiscal spending is crucial to fending off a protracted downturn caused by supply disruption and a retreat from nonessential economic activity.
Warren’s proposed stimulus plan would include billions of dollars in federal spending targeted at the economic channels that pose the greatest direct risk to the U.S. population. Warren said her plan could counteract up to a 3-percent decline in U.S. gross domestic product, 0.7 percentage points more than the economy grew in 2019.
Warren called on Congress to provide no- or low-cost loans to small and mid-sized businesses facing supply shortages or a lack of business due to coronavirus fears. The outbreak has already caused sharp declines in tourism, travel and the availability of essential industrial parts.
Such loans would be restricted to businesses that will “use the funds to avoid layoffs and hours reductions, not for additional executive compensation, dividends, or share buybacks,” Warren wrote.
Warren also proposed expanding unemployment insurance and household subsidies for affected individuals and families, paid sick leave for coronavirus patients and their close relatives, aid to state and local governments hindered by the disease, investments in U.S. factories to make active pharmaceutical ingredients, and environmentally friendly infrastructure.
Warren said her plan would give Americans “the financial peace of mind to take time off to stay home and recover or care for a loved one” and “will help stabilize businesses, who will be relieved of the burden of potentially paying large shares of their workforce for long absences.”
Warren also called on the Fed to announce "as soon as possible" that it will use its emergency lending authority to prop up "real economy companies whose supply chains have been disrupted because of the coronavirus and who will use the money to do right by their workforce."