Glenn Hubbard, David Westin, Boeing discussed on Balance of Power
Power. Bloomberg television and radio. I'm David Westin, some more breaking Boing news Early report. The FAA is probing possible inappropriate pressure being put on. So that's investigators in the meantime, which now said that Boeing the Boeing 777 X May miss. It's 2021 debut target. Top buyer, Emirates says that's the Emirates Airline says that they may miss their delivery target at Boeing. So that's the bowling news so far today. Meantime, we also a jobless claims numbers out this morning, and they were a little better. That is fewer claims that was expected, but nevertheless, they remain pretty elevated. The economy still steams the struggle. We welcome now Glenn Hubbard, now with the Columbia Business School Course. He was the director of the council Economic Advisers under President George W. Bush. Glen. Thank you so much for being with us. We've got the jobless numbers. On the other hand, the equity markets really, Although door off a bit today, they've really been pressing up. Overall, the direction has been upward. Is there a disconnect between the equity markets and the underlying economic data? At this point, we back risking what Alan Greenspan at one point called irrational exuberance. Well, maybe David, but it's It's not clear. The jobless claims numbers are good news, but there's still 32.9 million people on some sort of unemployment benefit. That's 20% of the creek over labor Force. That's not good. So why's the stock market? Hi. I expect there's a few factors. One value stocks, of course, is the whole future earnings and serve your relatively optimistic about a recovery. Most of the future is still fine. Second, the feds, interventions have pushed down the discount raper stopped in risk spreads. And third. Sometimes we forget the stock market's not the economy. It's dominated by some very large firms, some of which have market power, so the stock market may have irrational exuberance. But it's it's not obvious. Even if the stock market's high doesn't mean the economy spy Is it possible? We'll have a second wave here on the unemployment. I don't I don't wish that toe happen. But we had United Airlines say they're after left 36,000 people just today we have boots say 4000 people. We've got Wells Fargo, saying they're gonna have to lay off 1000 people. Is it possible is getting the second half of the year cos you're saying, how can we have this be sustainable In the long term, we have to win O r staffs. It is dated for two reasons. Economic supplying to dance on the supply side. It may be that there's just not enough activity, in other words, that people have decided not to return the traditional activities that slows hiring and re hiring. The others on the demand side, we could have business failures as a result in credit market problems, so policy really is to provide insurance against this kind of outcome was the virus itself May rear its ugly head again, which puts a lot of focus on vaccines and on there. And Glenn, One of the subject that you've raised time and again is the demand issue. There might even be demand destruction. Is there anything that we could do in a further round the stimulus or otherwise? What's the best plan to try to make sure we shore up the demand side? It was the supply side of the economy. Let's break question these two things insurance and interconnected by insurance and providing insurance that we don't fall out of bed in the economy by interconnectedness, realizing how businesses are interconnected, so on insurance, I would continue support for unemployment insurance, but not with the $600 additional benefit, which I think may have discouraged people, some people going backto work. But there are ways to use triggers of state level unemployment and replacement race provide some extra benefit, but just not quite $600. We also need to give funds to states helped make up lost revenue to help support community colleges that are going to be critical in rebuilding and retraining people. Will need to continue support for small and midsized businesses. Things like the reserves Main Street lending facility, and we need finally more support for work. What I and others have called epidemic earned incomes. Expert Take us through that, because where I think we're basically familiar with an earned income tax credit. How is a pandemic earned in town tax credit? Different What you want to support low wage work and give people reasons to go back to work. From my way of thinking. The urn. Income tax credit is already a strong mechanism for encouraging what wage work to make it or generous. Through the pandemic, we could increase its size significantly proposed in a recent piece, doubling it. But also making it available. The childless workers that is something that would really provide a boost so low wage work when we need it, and probably a bridge to future policy, but definitely in the pandemic. Member unlike in the care sack were now on a face for the economy's reopen. Our goal is to help connect people back to work and not out of your minds. You also mentioned the unemployment insurance support that we had this flat $600 payment. Some people are saying that that might have actually encouraged. Ironically, some people not to go back to work because they could make more money by being unemployed. You have come up with a proposal with Jason Furman, another former director of the Council Economic Advisors on a different administration, where you would sort of feather that down and tired state by state into unemployment. Yes. In two ways, David, one would be to make it as a replacement rate of wages. You're not going to get figures as high as $600 but you'd still get extra unemployment insurance. Second he had off the unemployment rate in states would be triggers. If an individual state had a very high employment unemployment rate. These additional funds would be there, they would phase out as the unemployment rate goes down. That does a couple of things that enables you to have a program. It's robust. Whatever the shape of the recovery we don't know, sitting here today with its of each day. Or some other shape recovery but also avoids having to bring the Congress back that take action. Every time we learned something about the crisis, it puts the unemployment insurance expansion Morano trigger program went to the economy and not politics. Glenn, How do you go about putting together an economic policy in this world? There's so much uncertainty, particularly driven by the biology. If I could put it that way of the Corona virus itself, we have Vice President Biden now running for president. He's coming out with a plan that includes things like by America.