The Economic Fallout / Hillary Clinton Endorses
I'm jack how hosted the new Barron Streetwise podcast. I'm business and investing each week. We hear from company chiefs and analysts about profound changes facing investors. We've heard from Disney's Bob Eiger about the future of movies and theme parks. Cvs Is Larry Merino about stores providing more health services. And Ford's Jim Hackett about how the pandemic might change the car business. Subscribe to Baron Streetwise on Apple podcasts. Spotify or wherever you listen to podcasts. From the opinion pages of the Wall Street Journal this is Potomac Watch us. Economy shrank nearly five percent. Annualized in the first quarter the debate over the face four relief bill in Congress begins to tape take shape and Hillary Clinton endorses. Her old friend. Joe Biden Welcome. I'm Kyle Peterson with the Wall Street Journal sitting in today for Paul Zhigo. We are joined as always by my colleagues Kim Strassel Low Kim. Hi Tile and Bill mcgurn High Bill. Hey Kyle so to start today. With two pretty ugly numbers there have now been more than a million cumulative confirmed cases of Corona virus in the United States and the Commerce Department said Wednesday that GDP gross domestic product dropped at an annualized rate of four point. Eight percent in the first quarter and Kim the expertise expectation is that those numbers are going to get much worse sense. The economic damage that has taken place didn't really start until the middle of March right so the first quarter only comprises January through March. That's pretty alarming. Figure by some estimates that are coming out. There's a suggestion that economic output could fall by forty percent in the second quarter which is remarkable that would be A A measure that as far times were far worse than anything. Since we've had recorded records of such things which began in one thousand nine forty seven now. The only thing to bear in mind that that the quarter does go through the end June. We're starting to see some reopenings and the hope is that maybe the economy you know does does show some resilience at least through that last month and maybe the damage won't be as bad but yeah I mean. The numbers are a little bit hard to believe. And the re-opening may help bill but particularly given some of the restrictions. You know restaurants that have after leave every other seat empty or captain their capacity. I mean I'm wondering how much How much difference that's GonNa make in terms of when you're talking about an overall number of dropping GDP maybe thirty or forty percent? I mean that's just enormous while I think you're right. Look the the message is the worst is yet to come on the other hand the the openings are the reopenings even on a limited scale are encouraging. Because it's the only real stimulus it's GONNA matter getting economies back up and I think that As we go forward and different states try different approaches. We'RE GONNA learn. We're GONNA have a better idea what works what we can do. And I'm hoping that it means that we opened a little bit today but two weeks for now. We might open a little more and go gradually into full steam. So I think that's gotta be hope because I don't think I think it's becoming clear that we can't sit in our homes forever and hope to defeat the virus and maintain Our standard of living maintain the economy. Meanwhile there's more chatter about what Congress might do in a phase four relief or aid bill. a couple of notable comments from Mitch McConnell. The Senate Majority Leader I. He needed drew a hard line on infrastructure saying that quote it's unrelated to Corona Virus Pandemic. Which is good in my view since that's something that president trump in particular has a soft spot for some of these big building projects and to he is saying that there will probably be some state and local funding in a another bill But backing away a little bit from his earlier suggestion. Kim about you know putting states in bankruptcy what he's saying now is quote the fundamental point. I was trying to make his. We're not interested in borrowing money from future generations to help states solve problems that they created themselves on quote so leaving a little bit room for some aid To these states that have been hit hard by the corona virus but not for the pension programs. He clarified salmon. He also made it clear that what he was attempting to say was that state should have the option of pursuing bankruptcy which is not something they necessarily have now cities do but he was saying that there ought to be some discussion about whether or not states could use that route to shed some of their liabilities. If that's the case and that's where they got to On the funding part. I think he's trying to reorient this debate. And just slow things down and say look we have now passed a four spending bills An in the Senate they have done them on largely by unanimous consent meaning. There has been no debate So the money's going out the door but nobody has much of a sense of where it's going to how it's being used. What is the need? Is there further need? And so he's saying look if we're going to do this again We are going to have a discussion about exactly how it can be used in the states and for what purpose and I think that you know look that's just should be a baseline for all Members of Congress that if you're going to spend money you need to know what the purpose of it is I thought the other thing that was interesting was he drew a red line and said that any future bill. Republicans were going to demand that there'd be liability protections four healthcare providers employers etc. So that the money that is going out does not just end up in the pockets of the trial bar which is already gearing up for massive lawsuits over this yet to that point. I'll read a quote from McConnell. He says quote the next pandemic coming will be the lawsuit pandemic in the wake of this one so we need to prevent that now when we have the opportunity to do it unquote Bill do we have a sense of what that kind of liability shield from Congress might look like Or what the what the real need for it is. We think that the need is clearly there. I mean the pattern of government. Relief is like this you You offer it. You try to get it to people fast Then government bureaucracy steps in and then the trial bar steps in and they could end up getting not only stymying a lot of the The intent of the program but Getting a lot of money themselves. That was not intended. Almost all kind of relief efforts after big things. Follow that pattern. So I think the senators right. I think I think his larger messages. We we need to look more closely at what we're doing we've done. A lot of things spent a lot money and see what we're getting for it and we have to help the people that are victims and protect the innocent from Really having the cure be worse for the disease you know by facing lawsuits and so forth but do we know how how congressmen would write that into legislation. Can I mean what does that look like? Essentially some provisions in a bill saying that if you are a restaurant for instance and you Take a good faith measures and follow the protocols of your public health officials than you have. Some sort of limited liability for corona virus lawsuits. Is that essentially what that might look? Like yeah I think the term that you would see used in a legislation like that is something that said outside of examples or proof of gross negligence. Right where you had to prove in court that Somebody operated in a reckless fashion even though they knew the guidance etcetera. I think that that probably be it but everyone else would have sort of safe harbor in that you know. This is an unknown virus known as really understood What's been happening even as we've gone along but it's going to be necessary. I mean you already see a trial bar complaints being ginned up against cruise operator saying they should have come back sooner or they shouldn't have left Known that knowing that this was out there or you know hospitals saying that They didn't manage procedures well enough and allowed the virus spread. This is going to be sweeping out there and I it's a potential for just an enormous Jackpot. Four praying trial lawyers. And so this is. I'm really glad to see. Mcconnell has done this in my mind should have been included in the first round of legislation. Not as an afterthought we're talking about the economic damage from Corona virus and you're listening to Potomac Watch from the Wall Street Journal robotics artificial intelligence augmented reality. The future is here. Listen to tomorrow today with the Wall Street. Journal's future of everything the podcast that takes you to the frontlines of science and tech and shows you. What's coming next? Look ahead what do you hear? The future of everything from the Wall Street Journal. Subscribe wherever you get your podcasts. From the opinion pages of the Wall Street Journal this is Potomac. Watch welcome back. I'm Kyle Peterson here with my colleagues Kim Strassel and bill mcgurn so while we're talking about the fees for relief bill or the potential for one. Bill I'm wondering what what the limitations are here so. The Journal has an editorial with the headline the coming. Gop SPENDING SPLIT WHICH IS ITALIAN. Some of figures so it says Congress allocated two point nine trillion dollars already only a handful of weeks that the deficit should be could be near forty million dollars this year and the debt may hit one hundred percent of GDP by the end of the year. I mean is. They're starting to be some real Republican angst about those figures. Do you think I? I think there's a lot of Semi Hidden Angst. I think Senator McConnell was addressing I pick. He's hearing these rumblings. That doesn't sit. Well it's amazing. Look at a crisis. You have to act fast. But it's amazing how much we spent without asking a lot of hard questions. And IT'S AMAZING. How again we've spent all this money. One of the other things. Mcconnell says we should look and see what's working what's not working what needs to be adjusted and I think i. I think there's brewing in the Republican Party. I agree with you. I didn't write the editorial so I can praise it. It was very well done. I think it's time that lines be drawn in the sand. That's what Senator McConnell was. We spent so much money already before we throw another big bucket of money which will have to be paid by future generations. We ought to ask some tough questions and make sure it's doing what it's intended to do. And it's true that that borrowing costs are low but the there are some deficit hawks in the Republican base. Kim both out in the out in the country and also in Congress and I mean. Does that match what you're hearing that if there's going to be another measure they're going to be there's going to be some some strict political pushback on that. Oh absolutely and you know I think. For instance one of the things that you are hearing. I am hearing from Republican. Senators is their own concern about President Donald Trump's interest and infrastructure spending and their point is very basic. Which is that even. If you could make the argument that we need some of that Now is not the time to do it because we've already blown the bank so hard this year on emergency relief but also because that is no fix for the economy. It's not gonna be ready anytime ruin. That's remembered Obama's shovel ready projects. Some of them didn't get online for ten years. So it's not gonna be a help to the economy and we need to be focusing whatever additional dollars. Go in directions that have the best chance of restoring that? Gdp growth we were talking about and in Republicans. Mind therefore helping them out In an election in November. Because a lot of this election is going to hinge on how people are feeling about their prospects in their economic situation. I think what you're also seeing here is simply Republicans Demanding to be part of this debate again because in the previous rounds Senate Minority Leader Chuck. Schumer has been very clever and he basically come out Mitch. Mcconnell and Republicans went to negotiate with Steve Mnuchin and they kept presenting these bills as a fait that. Republicans had no choice but to get behind and I think McConnell and and Republicans are this time. Say No we're going to be front and center at the negotiating table and it's notable that of you know. Of course we have divided government to in the exact opposite message about spending restraint exact opposite to that is coming out of the House bill so Nancy Pelosi was talking about what might go in a face foreign. Here's here's a quote from her. She says quote others have suggested a minimum income. A guaranteed income for people is not worthy of attention now perhaps so unquote so she is coming at it from the exact opposite side here. Bill exactly I think that Mrs Palacio shown this from the beginning in my mind most of what the Democrats want is a tax so that that the Republicans have to pay for getting the things that they want you know mostly like the aid to small businesses and that kind of relief true remember Mr Clyborn is said. You can't waste a crisis like this. We can use it to reshape the economy the way we want. I think that's the absolute worst reason to go forward. But that's what's leading many people to be skeptical. I mean it's hard to justify A lot of these things that the Democrats are pushing and the Republicans agree to it partly to get a bill through their holding Mazda and there's also the question of extending the extra unemployment payments that extra six hundred dollars a week that was part of previous bills. There's seems like there's new evidence all the time about how that's making difficult Any attempt to For employers to reopen or even to take advantage of the paycheck protection program. There's a Wall Street Journal story that says that roughly half of US workers at this point could earn more on unemployment than they could at the jobs that they had before the pandemic. And there's an interesting story of a car. Wash owner says that the state closed his shops. I think he's a New York. The state closest shops and so he had to furlough as workers and then he got a paycheck protection loan and that loan is for payroll and so he needs to put them back on payroll but they earn thirteen dollars an hour. Normally the unemployment benefit works out to twenty three dollars an hour Kim so it seems like I mean this this whether to extend that in a phase for bill could potentially be another big fight. This is exactly what we've been talking about about shoveling money out of the door without thinking about the unintended consequences and there is an excellent example. We are paying a car. Wash owner to Not Furlough workers and get them online again even as we are paying those workers not to come back to work. It's it's crazy and in some ways of course only something that Congress could come up with But look number one worst idea floating around Washington from Democrats at the moment yes is extending that unemployment insurance Which has already proven itself to be one of the could be one of the great bars to getting the economy going again and the problem we have at the moment is that those current unemployment benefits are are slated to run to August and if Republicans are being smart. It's a it's a very tough political call but you try to back. Ease back on them some now. I don't know how you do that politically again. Democrats would would pitch a fit But a from an economic perspective. We should be talking about extending these. We should be talking about reversing them to a certain degree. Yeah so I'll mention another example. The Journal had an op-ed from a guy in the restaurant. Business who mentioned that the That August date that you said so the the extra six hundred dollar boost unemployment runs through July thirty first so I mean he says in this op Ed. Essentially Congress has already locked. Down are reopening date you know. We are going to open our dining rooms on August first. Because that's when we'll be able to get our employees back But bill it does seem like there is a becoming a wider recognition of this problem. There's NPR's story last week. Headlined Bitter Taste for coffee. Shop owner as new jobless benefit drove her to close. There's a political headline restaurants bailout. Problem unemployment pays more. I mean there are a handful of Republican senators who stood up originally to oppose this provision. A you know predicting that it would be be problem. And when this debate comes to a head again they're going to have some pretty strong evidence on their side. It seems to me yet. The evidence is arithmetic. Simple Arithmetic. The gentleman you mentioned who wrote for our pages Runs a service where he supplies employees and so forth to chefs for the restaurants. They had to lay off seven hundred employees be because of the virus and so forth and the reduced demand. Then some of the restaurants figured out how to make up some of that through delivery Pick up curbside pickup and so forth. They WANNA hire people back. But the people that had been Furloughed or laid off. They were they had normally made some at the bottom line Line chef at the bond would have made about six hundred dollars a month. Six hundred something right and with unemployment they were getting three hundred something or four hundred something anyway. They would have to take more than three hundred dollar. Pay Cut to go back to work. That's not Democrats want our present. This republicans opposing this heartless. I think Nancy Pelosi called the senators that you mentioned Tim. Scott Rick Scott Lindsey Graham Ben Sasse I think as cruel but they're just doing the arithmetic and what I think what you're getting at is by by extending This extra six hundred dollar federal benefit. They're extending the economic crisis because of people it means people won't be going back to work and they'll be paid not to work. You can't blame people for following the incentives but you can blake government for creating those incentives right and then finally Hillary Clinton endorsed Joe Biden in a livestream Saying quote I've not only been a colleague. Joe Biden's I've been a friend and I can tell you that I wish you president right now but I can't wait until he is if all of us do our part Unquote Kim. Do you think that helps him? If I were in Joe Biden shoes I might not have played that upgrade so much yeah look Hillary Clinton is if you buy a lot of people as you know the reason ball she. She lost the election for Democrats. Okay and she has had all kinds of excuses for why that happened but Fundamentally was because she was poor candidate and made a lot of mistakes and she has a lot of baggage Now I suppose if you're Joe Biden you have to have her endorsement. It would look weird if you didn't have her endorsement and they'll be some Hillary Clinton fans that may be swayed by the fact that she did so but to to kind of use it as an excuse to go out there to a big town hall and play it up. seems counterproductive. Especially at a moment when Joe Biden's bigger concern at least within the party is is trying to get a lot of those progressives that were Bernie supporters behind him and Hillary Clinton's. Not Take it for doing that bill. Did you watch much of that livestream? And what did you make it? I did watch it and it's it's really fascinating because the big news was was supposed to be and was that Hillary Clinton was endorsing Joe Biden. But the real news it seems to me is what didn't come out of it. Not a single question about Tara read the allegations It's it's so striking you know. In the bread. Cavenaugh case people made incredible allegations including gang rape against Against Brett and then as days went on you'd see that the evidence was very thin growing thinner. Meanwhile misread made her accusations and more people have come forward to confirm that she did tell them about it at the time. It doesn't prove she's telling the truth but it's it's supporting evidence for her claim and yet Joe Biden hasn't been asked in fact The striking thing about that to me was. It was the same as all the other appearances. Joe Biden's been on TV many many times. He's not yet been asked directly about terror. Reads allegations and so he is not even denied it himself. He's left it to his campaign. It's amazing to me that the press corps. Let's say presidential candidate. Get Away with that in the twenty first century well in some sense Biden's shield at right because he's at home he's on livestream. He can control who he gets questions from bill so he's not being pushed in the same way as if he were out on the campaign trail doing these doing these press gaggle taking questions from the public right now. I would. I don't I don't agree with that. I think he's been on. Tv'S ON ABC CNN several times where there's a a moderator that could have asked the question and no one's even asked him it's just extraordinary to me the campaign event that you were talking about Yes they they control it. They control the questions. I think they were read by Michelle Kwan. But even there you would think it's an opportunity for him to address it on his terms then he just thinks I'm not GonNa talk about but it seems to me that this I mean the campaign is still got a ways to go and Kim that this story is not going to go away and one way or another. He's going to have to address it eventually. Do you agree with that? We'll right one of the reasons that we have. Primaries is so that candidates and get all the issues out they can be debated. They can be vetted And then you know. Hopefully for the candidate they can move on. And that's I think the kind of problem that the press corps and Democrats are creating for them themselves and their preferred candidate Joe Biden right now by ignoring this because you know I it will continue to linger and sit there and at some point it may explode and do you want that to happen closer to the election or now when nobody's paying as much attention thank you and bill. Thank you all for listening. We'll be back later this week. With another edition of Potomac Watch.