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Kudlow says administration 'looking at' offering coronavirus bonds

Kudlow says administration 'looking at' offering coronavirus bonds
© Aaron Schwartz

The White House is considering offering a coronavirus-related Treasury bond equivalent to a war bond to spur investment in the economy, National Economic Council Director Larry KudlowLarry KudlowMORE said Monday.

"We've kicked this around before. [Treasury Secretary Steven MnuchinSteven Terner MnuchinOn The Money: Democrats accuse Mnuchin of sabotaging economy in dispute with Fed | Trump administration proposal takes aim at bank pledges to avoid fossil fuel financing | JPMorgan: Economy will shrink in first quarter due to COVID-19 spike Democrats accuse Mnuchin of sabotaging economy in dispute with Fed The Hill's Morning Report - Presented by the UAE Embassy in Washington, DC - Pence, Biden wage tug of war over pandemic plans MORE] and I and the president and others talked about selling long-term paper," Kudlow told reporters at the White House.

Asked if a coronavirus bond was a serious proposal, Kudlow cautioned that the administration was "just looking at it" and hoped to first see the effects of the recently passed $2.2 trillion economic relief package.

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The concept of a coronavirus bond was raised in a separate CNBC interview by Jim Cramer. Kudlow called it "a great idea."

"This is a time, it seems to me, to sell bonds in order to raise money for the war effort. In this case, the pandemic effort. In this case, the effort to keep families and individuals in businesses afloat," Kudlow told the cable news network. "I am all for it. This would be a long-term investment into the future of American health, safety and the economy."

Former Federal Reserve Chairwoman Janet YellenJanet Louise YellenThe Hill's Morning Report - Presented by the UAE Embassy in Washington, DC - Trump OKs transition; Biden taps Treasury, State experience The Memo: Trump election loss roils right On The Money: Biden to nominate Yellen for Treasury secretary | 'COVID cliff' looms | Democrats face pressure to back smaller stimulus MORE also voiced support for exploring COVID-19 bonds on Monday.

"The federal government is going to have enormous deficits," Yellen said in a CNBC interview.

"Thinking about how to finance those is something very worthwhile. Maybe a war bond is an appropriate approach," she added.

Yellen also noted that the government is already operating in a low-interest environment, which could help keep the debt burden manageable.

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The administration is mulling a number of potential remedies to boost the economy, which has cratered in a matter of weeks as the coronavirus pandemic forces the closure of businesses deemed nonessential. A record 6.6 million Americans filed for unemployment benefits two weeks ago, according to Labor Department data.

Business owners have started flooding the Small Business Administration with requests for loans, prompting discussion that lawmakers may need to hammer out another legislative package that provides an infusion of money to workers and companies.

—Updated at 1:41 p.m.