The U.S. economy would be best served if the nation were to be locked down for up to six weeks, Minneapolis Federal Reserve Bank President Neel Kashkari advised.
In a CBS interview on “Face the Nation” Sunday (Aug. 2), Kashkari said the country can rebound, but only if the virus is controlled.
“If we were to lock down really hard, I know I hate to even suggest it, people will be frustrated by it,” he told the network. “But if we were to lock down hard for a month or six weeks, we could get the case count down so that our testing and our contact tracing was actually enough to control it the way that it's happening in the Northeast right now.”
Without such bold action, Kashkari said, the virus is likely to spread with flare ups and geographic lockdowns for the next year or two.
“We're going to see many, many more business bankruptcies, small businesses, big businesses, and that's going to take a lot of time to recover from to rebuild those businesses and then to bring workers back in and re-engage them in the workforce,” he said. “That's going to be a much slower recovery for all of us.”
Kashkari took issue with Republican claims that extending the $600 weekly federal unemployment benefit, which expired last week, is discouraging laid off workers to find a job.
“When we get the unemployment rate eventually back down to 5 percent, and we want to get it back down to 4 percent or 3.5 percent where it was before, yes, that disincentive to work becomes material,” he said. “But right now, it's simply not a factor in the macro economy that we have in the U.S. because we have so many millions of Americans out of work.”
On whether the country can afford going into debt to help Americans financially, Kashkari said he’s not concerned.
"Right now, the U.S. can fund itself at very, very low rates,” he said. “Congress should use this opportunity to support the American people and the American economy. I'm not worried about it. If we get the economy growing, we will be able to pay off the debt.”
For now, Democrats and Republicans are at an impasse over the next relief package.
In May, House Democrats passed the $3 trillion Health and Economic Recovery Omnibus Emergency Solutions or HEROES Act, which Speaker Nancy Pelosi called an unprecedented response to what’s needed to help Americans deal with the pandemic and its economic fallout.
Last week, Senate Republicans unveiled the $1 trillion Health, Economic Assistance, Liability protection and Schools or HEALS Act, their fresh round of pandemic relief.