Economic Responses To Coronavirus Pandemic Vary Worldwide
NOEL KING, HOST:
Economic policy leaders are trying to find ways to pull this country out of a deep hole. We don't know yet what's going to happen. Will a strong bounce come after this downturn? Trump administration officials say it will. Or will it take longer because people need to get their confidence back before they go out?
This same thing is playing out in many countries. And we're going to look at two. And we have two NPR correspondents to help us. Chief economics correspondent Scott Horsley is in Washington, D.C. And central Europe correspondent Rob Schmitz is in Berlin. Good morning, guys.
SCOTT HORSLEY, BYLINE: Good morning.
ROB SCHMITZ, BYLINE: Good morning.
KING: Scott, the U.S. government has authorized trillions of dollars in aid. The Fed is printing trillions more. And yet, Federal Reserve Chairman Jerome Powell has continued to say Congress might need to do, still, more.
HORSLEY: That's right. Powell is warning the economic downturn triggered by this pandemic could stretch well into next year. But the relief measures that have been authorized so far are set to run out well before that. Those $1,200 relief payments have already been spent in many cases. The loan to small businesses are only expected to cover a couple months' worth of expenses. And the $600 a week in extra unemployment benefits are due to expire at the end of July. So Powell told a Senate Banking Committee yesterday, additional federal help may be needed to avoid lasting damage to the economy.
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JEROME POWELL: What Congress has done to date has been remarkably timely and forceful. I think we - you could say the same about what we've done. I do think we need to take a step back and ask, over time, is it enough? And we need to be prepared to act further. And I would say we are if the need is there.
HORSLEY: You know, compared to Germany, the relief efforts in this country have a kind of Rube Goldberg quality to them. And Powell worries, if the downturn drags on, workers will drop out. Businesses will fold. And that would make the eventual recovery that much slower and more difficult.
KING: And the question he's asking is, has Congress - he says Congress has done a lot. But has Congress done enough? Will it be enough? How are lawmakers in Congress responding?
HORSLEY: You know, House Democrats passed a big relief bill last week. But it's been dismissed by both the White House and Senate Republicans. Senate Republican Leader Mitch McConnell told reporters just yesterday he's in no hurry here to approve additional spending.
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MITCH MCCONNELL: We still believe, with regard to the coronavirus, we need to assess what we've already done, take a look at what worked and what didn't. And we'll discuss the way forward in the next couple of weeks.
HORSLEY: So no real urgency there. President Trump paid a visit to Capitol Hill yesterday to meet with GOP lawmakers. And afterwards, he told reporters he's hoping for a much more rapid economic rebound.
KING: Rob, let's talk about Europe, where countries fates are tied together in ways that the U.S. doesn't have to think about. So German Chancellor Angela Merkel and French President Emmanuel Macron reached a deal on a relief package. But it was a long time coming. It didn't happen quickly.
SCHMITZ: No. You know, it took a while because European leaders have disagreed on how to fund this relief plan. Up to now, Europe's southern states have wanted it to be funded by the entire EU, a sort of collective approach where member states would share the debt. But a handful of countries known in some circles as the frugal five - Austria, Germany, the Netherlands, Denmark and Sweden - they wanted a more individual approach, that each member state would take out a loan for its own needs. Now, the proposal that Macron and Merkel agreed on this week shows that southern states got their way.
Under this plan, the EU would borrow half a trillion dollars and share the debt among all member states even though the aid would primarily benefit southern states like Italy and Spain. It's important to remember here that this package is only a proposal. And all 27 EU members, including their national parliaments, will need to approve it. So this is far from a done deal. But the fact that Angela Merkel has agreed to this shows an interesting change of heart for her.
KING: What's behind that? Why did she agree to this big relief package if it's not going to benefit Germany that much?
SCHMITZ: Yeah. One reason is this pandemic was not the fault of Italy or Spain. It's a natural disaster. And unlike the eurozone crisis a decade ago, this is not rooted in the fiscal policies of southern EU member states. Secondly, Angela Merkel is at the end of her tenure as chancellor. And her management of this crisis has restored her popularity. Her approval ratings are skyrocketing in Germany. So she now has the political capital to solidify her legacy by supporting a recovery package that aims to unify the EU, not further separate it.
KING: What an interesting trajectory for her. Scott, we don't exactly know when recovery will happen. Everyone kind of admits that at this point. Do we know what it will look like, though, what will the signs be?
HORSLEY: You know, it depends on the path of the virus and also on public attitudes. How quickly do people feel comfortable going back to the shopping mall? How quickly do they feel comfortable going to restaurants or getting on an airplane again? There are some small signs of improvement if you squint hard to look at them. But on the other hand, there are also huge holes in state and local government budgets, which could trigger another round of layoffs. And of course, all bets are off if we see another spike in infections.
KING: OK. So a lot we don't know here in the U.S. Rob, in Germany, the country is starting to slowly reopen. Is the picture a little brighter where you are?
SCHMITZ: Yeah, a little. You know, Germany just announced it's officially in a recession. And its economy has shrunk by more than 2% the first quarter of this year. But, you know, thanks to German - Germany's government and its tradition of keeping a balanced budget, the country is better positioned than others. You know, Germany ended last year with a surplus. And it's spending that and more on an $800 billion relief package. Germany's been able to keep workers employed thanks to its Kurzarbeit program.
Instead of the U.S. approach of unemployment checks, in Germany, companies are subsidized to keep workers on the payroll. So workers won't lose their jobs. And companies don't have to rehire after the crisis. Nearly a million German companies have applied for this program. And much of the country's recovery package is going directly into that, to keep Germans employed. But a big question going forward is, how long can Germany afford to pay into these programs before the money starts to dry up?
KING: It'll be interesting to see what each country learns from others when this is all over. NPR's Rob Schmitz in Berlin and Scott Horsley in D.C. Thanks, you guys.
HORSLEY: You're welcome.
SCHMITZ: Thank you. Transcript provided by NPR, Copyright NPR.