Treasury Secretary Steven Mnuchin warned Tuesday of potential long-term damage to the US economy the longer states are shut down due to the coronavirus pandemic.
“There is risk of permanent damage,” Mnuchin told the Senate Banking Committee.
But Mnuchin also told lawmakers that he expects economic conditions will improve in the third and fourth quarters of this year.
“The country will emerge from the pandemic stronger than ever,” he said.
Mnuchin and Federal Reserve Chairman Jerome Powell faced questions from the Banking Committee about how they’re implementing the $2.2 trillion coronavirus rescue package.
The debate over when and how to reopen the economy was laid bare during the hearing. In a testy exchange, Ohio Democratic Sen. Sherrod Brown accused the Trump administration of being eager to send employees back to work during uncertain times.
“How many workers should give their lives to increase the GDP or the Dow by 1,000 points?” Brown asked.
“No workers should give their lives to do that, senator, and I think your characterization is unfair,” Mnuchin said.
Main Street program could begin at end of May
The program to lend billions of dollars to small- and mid-sized businesses should be ready to launch by the end of the month, Powell said, amid complaints the money has been too slow to reach the public.
The Main Street Lending Program, which was included in the congressional relief bill passed in March, is designed to provide loans to small and medium-sized businesses that were in good financial standing before the pandemic.
Congress appropriated $454 billion to be sent to the Fed to serve as the baseline for lending facilities – including the Main Street Lending Program, as well as lending program for cities and local governments. The Fed has revised the terms and qualifications for the facilities multiple times, but they still haven’t launched yet.
The unprecedented steps taken by the government to shut down parts of the economy and slow the spread of coronavirus has led to soaring unemployment over the past two months.
The hearing came on the heels of a report from the new Congressional Oversight Commission that found the Treasury Department has spent little of the $500 billion Congress specifically appropriated for lending to businesses and state and local governments. That includes $46 billion for the airline industry, none of which has been lent so far.
Congress passed the CARES Act aid package about two months ago. It was meant to help support the economy and help people pay their bills as stay-at-home orders shuttered businesses. More than 36 million people have been put out of work since the middle of March.
The Treasury Department is working to implement the small business lending program and the direct stimulus payment program, which is sending money out to about 150 million Americans. The Federal Reserve is working to implement the Main Street lending program.
Lawmakers are currently considering changing some parts of the small business program, known as the Paycheck Protection Program. The loans are forgivable as long as 75% of the money is spent on payroll. But business owners are having trouble bringing workers back before the eight-week deadline. A bill passed by Democrats in the House on Friday would extend the time period to 24 weeks, but the proposal has little chance of passing the Senate.
The Paycheck Protection Program – which operates on a first-come, first-served basis – also drew criticism as some large companies received loans while mom-and-pop shops were kept waiting.
Some of them, like Shake Shack and the Los Angeles Lakers, have given the money back.
About 4.2 million small business loans have been made for a total of more than $530 billion and about 140 million stimulus payments have been sent directly to Americans, for a total of $240 billion, according to the Treasury Department.
This story and headline have been updated with developments from the hearing.
CNN’s Phil Mattingly, Dave Goldman, and Anneken Tappe contributed to this report.
