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Trump vs. governors, 10 million jobless and New York’s devastation. 7 reporters break it down

Victoria Guida, Financial Services reporter: The labor market is certainly looking bleak, with some economists predicting the unemployment rate could rise as high as 30 percent. But the most bizarre element of the horrific numbers we’ve seen — roughly 10 million jobless claims in just two weeks — is that it’s a reflection of how seriously we’re taking the fight against the pandemic. In many ways, this result was inevitable; what matters is what policymakers do to support all of those who’ve lost their jobs and whether enough companies can survive until the virus is under control so that there are jobs to go back to. Much more will need to be done — more direct payments, more support for businesses — if we expect to get out of a recession anytime soon and avoid a depression.

Susannah Luthi, Health Care reporter: There’s an interesting intersection between the tanking economy and the health system that raises a big health policy question: What does this mean for the employer insurance market? Workplace insurance has been the keystone to America’s health system since World War II, and every big overhaul has had to tiptoe around the idea that people need to keep their job-based plan. The employer market has been under a big cost strain for a long time as the entire health system kind of treats it like an ATM. Now that system is looking poised for a big hit as millions of people are projected to lose their workplace coverage as they lose their jobs — right when they need coverage. What does this mean for that market? We’re not well-equipped with a nimble alternative — even if you qualify for a special enrollment period through the Affordable Care Act — unless you qualify for Medicaid in an expansion state. We’re not sure of the fallout from all this yet, but already it’s exposing big holes in our coverage system where the newly jobless have the added stressors of trying to figure out coverage.

What do you make of the CIA flagging in early February that China’s numbers couldn’t be trusted?

Anita: There have been many times in Trump’s presidency when he didn’t trust his own intelligence agencies. This could be another one. Even as the CIA questioned China’s numbers, Trump spent weeks praising the country for its handling of the coronavirus outbreak, including its transparency. He eventually blamed China, but has softened his language again. This is always how it’s been with Trump and China because he’s always looking to protect his yearslong trade negotiations with the country. He mentioned trade again last week while talking about China’s response.

Kyle Cheney, Congress reporter: This is just the latest example of a screaming siren that went unheeded, and even contradicted, by the president, who has vacillated between praising his Chinese counterpart and slamming the country for enabling the spread of the disease that has paralyzed the world. For all the hindsight claims that impeachment distracted Trump from a more concerted virus response, data points like this underscore that his lack of urgency wasn’t based on the warnings coming from his own top officials.

Ryan: It’s a system failure, and the blame games are well and truly underway, though it’s not fully clear which part or parts of the system are at fault. More broadly, there’ll be investigations and political reckonings and probably a bunch of lawsuits over who did what wrong across society. At this moment, decision-makers need to decide if they’re going to spend their energy fixing what they can with what they now know, or if they’re going to focus on airbrushing their past actions. I know what I would choose.

Why did the administration decline to reopen the Obamacare exchanges? What is the administration expected to do instead and what are the potential outcomes of this approach?

Susannah: It’s rinse and repeat with Obamacare politics. Once insurers got on board with reopening Healthcare.gov for a broad special enrollment period, the idea seemed like a no-brainer for many to make sure America’s uninsured have an easy way into coverage in the middle of a historic pandemic. But even after the president himself said he was considering the idea early last week, White House officials seemed tepid and ultimately had their way on this. Some of the resistance seemed linked to political concern about the optics of the administration enrolling perhaps millions of more people into the Affordable Care Act while embroiled in the Texas lawsuit to kill the entire law. But there was also the thought that since newly jobless who’ve lost workplace coverage qualify for special enrollment, there wasn’t a lot of need. The White House has struggled to explain the decision, however, and on Thursday the vice president announced a new plan to use some of the $100 billion hospital bailout fund to cover coronavirus treatment of the uninsured. We don’t know many details of that plan, though, and in any case it’s not a broad coverage net. Of course the Obamacare plans are far from perfect — they weren’t really built for this scenario either, since they were designed with high co-pays and deductibles and are pricey if you don’t get subsidies. But they’re what the system has on offer.

Money from the coronavirus relief bill is starting to be distributed. What should businesses and individuals expect, and how will the government oversee the infusion of money?

Zach Warmbrodt, Financial Services reporter: The rollout of $350 billion in small business loans has been chaotic. Treasury Secretary Steven Mnuchin set a Friday deadline for banks to start offering the loans, but the administration didn’t deliver the final guidelines for lenders until Thursday night. All week, banks were anxious about what they would be required to do. They felt Mnuchin boxed them in with unrealistic expectations.

The kickoff Friday was a struggle and showed that it could be a challenge for small businesses to access the loans. Some banks were beginning to take applications, some were still working to set up their systems, and the industry consensus was that money really won’t start flowing to small businesses until next week. Banks had technical problems making the loans because of issues with a Small Business Administration online portal. Bank of America angered many of its customers by limiting which ones could immediately apply for loans.

Kyle: Early indicators suggest the tsunami of cash about to be unleashed by Treasury could be a mess. The systems meant to parcel out portions of the $2 trillion are being rushed into existence. State unemployment offices are overwhelmed and struggling to meet demand. And Congress is still working on setting up the mechanisms that will safeguard the handling of these funds. Expect a messy few weeks as all of these nascent efforts stumble to life.

Victoria: There’s a lot of confusion about the bailout money for larger corporations. There are some industries, like airlines, that are going to be given direct loans from the Treasury Department. But most of the $500 billion for corporate support will be used to boost emergency lending from the Federal Reserve. The way this is going to work is that the Fed is going to buy debt — corporate bonds — either directly from companies or on the open market. Businesses that want the Fed to buy their debt will have to register with the central bank’s emergency lending facility and pay a fee, and only companies whose debt is deemed safe by credit rating firms are eligible. The money in the relief bill will be kicked in by the Treasury in case of defaults, because the Fed isn’t designed to take losses. The other question is the extent to which using the Fed facility will actually make sense for companies, given the rate they’ll have to pay and potential restrictions on stock buybacks and dividends. The program will probably make more financial sense for companies on the lower-end of the “investment-grade” scale, who are having a harder time borrowing from the private sector.

Source: politico.com
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