Top Federal Reserve Official Says Congress Can Spend Big on Relief Package

The economy could rebound robustly if the virus were brought under control, says Neel Kashkari, president of the Minneapolis Federal Reserve Bank.

“If we don’t do that and we just have this raging virus spreading throughout the country with flare-ups and local lockdowns for the next year or two, which is entirely possible, we’re going to see many, many more business bankruptcies,” Kashkari said.

Kashkari says that Congress is well positioned to spend big on relief efforts primarily because the budget cap can be financed without foreign borrowing. Because those Americans still with jobs are saving a lot more than usual by not spending on restaurants, entertainment, and vacations, he says that we have a lot of resources to support those who have been laid off.

Kashkari stresses that the high amount of domestic savings and low interest rates should allow Congress to support the American people and the economy.

“If we get the economy growing, we will be able to pay off the debt,” Kashkari added.

Minneapolis Fed President Neel Kashkari on coronavirus debt:

“Our inflation has been very low … inflation expectations continue to drift lower. Right now the US can fund itself at very, very low rates. Congress should use this opportunity to support the American people" pic.twitter.com/7Mo4C82JY8

— JM Rieger (@RiegerReport) August 2, 2020

NEWS: @neelkashkari says #unemployment insurance, which for some pays Americans more than past jobs, is solid fiscal policy. He says it should be pulled back once the U.S. enters recovery mode – when the labor market recovers and unemployment returns to low-to-mid single digits pic.twitter.com/o1kp2OToSU

— Face The Nation (@FaceTheNation) August 2, 2020

See Reuters.

Transcript of the full interview on Face The Nation here.