In a joint appearance before the Senate Banking Committee, Federal Reserve Board Chairman Jerome Powell and Treasury Secretary Steven Mnuchin praised the $2 trillion CARES Act Tuesday (May 19) saying the swift, bipartisan measure is providing much-needed credit to taxpayers, businesses, states and municipalities.
The 25-member panel, chaired by Sen. Michael Crapo (R-Idaho), is taking its first look at spending under the massive bailout Congress approved in March. It was crafted to provide assistance to taxpayers, businesses and local governments affected by COVID-19.
“This disease is impacting families and communities across the nation,” Mnuchin said remotely. “Through no fault of their own, the American people are also enduring economic challenges … We appreciate Congress working with us to enact this statute, which is the single largest economic relief effort in the history of our country.”
Mnuchin said his department, in cooperation with the Small Business Administration (SBA), has processed more than 4.2 million loans for $530 billion in the Paycheck Protection Program (PPP) to keep tens of millions of Americans on the payroll.
They have issued more than 140 million Economic Impact Payments totaling $240 billion to provide direct relief to millions of Americans. The typical family of four received $3,400, he said.
In addition, they have distributed nearly $150 billion to states, local and tribal governments to keep firefighters, police officers and other municipal workers providing essential services on the job. They have also approved nearly $25 billion in payroll support to the airline industry to protect that sector of the economy.
“The forceful measures that we, as a country, are taking to control the spread of the virus have substantially limited many kinds of economic activity,” said Powell.
He noted the economic data for the second quarter that started in April show a sharp drop in output and an equally sharp rise in unemployment.
Since the pandemic arrived, more than 30 million people have lost their jobs, reversing nearly 10 years of job gains.
In addition to the economic disruptions, the virus has created tremendous strains in some essential financial markets and impaired the flow of credit in the economy, Powell said.
The Fed pledged a range of tools to support the economy. In March, the central bank lowered the interest rate to near zero, and expects to maintain interest rates at this level until it is confident that the economy has weathered recent events and is on track to achieve our maximum-employment and price-stability goals.