- The Trump administration still lacks a clear plan to revitalize the economy and put people back to work as the nation plunges into further turmoil.
- Over 40 million Americans are out of work, and the unemployment rate is expected to hover in the double-digits heading into next year.
- The administration supports a payroll-tax cut, as well as a capital gains tax cut for investors. It’s also reviewing the idea of a hiring bonus for people going back to work.
- Visit Business Insider’s homepage for more stories.
The United States is confronting a stunning array of crises: an economic collapse, the coronavirus pandemic, and now a wave of large demonstrations against the police killings of black Americans.
Over 40 million Americans filed for unemployment in the last three months, or around one-in-four people in the workforce. Economists expect the unemployment rate to hit nearly 20% for May, an increase from around 15% the month before.
The cascading amount of job losses are particularly centered around the low-wage sector. Around 40% of households earning under $40,000 annually were hit by job losses in March, according to the Federal Reserve. The pandemic is also amplifying inequality. Just less than half of black adults now have a job, compared to 52% of white adults.
The protests roiling the country were sparked after George Floyd, a black man, was killed by a white police officer who knelt on his neck for eight minutes in Minneapolis.
"The violence, the anxiety that is taking place - we are naive if we think that it's separable from the economic calamity we are in," Darrick Hamilton, an economist and the executive director of the Kirwan Institute for the Study of Race and Ethnicity at Ohio State University, told The Washington Post.
Yet the Trump administration still lacks a clear plan for addressing rising unemployment as the US plunges deeper into a state of social and economic crisis. It has adopted a wait-and-see approach, and put negotiations on another stimulus bill on pause even as ramped-up unemployment benefits supporting millions of Americans is set to expire July 31.
A sudden end to $600 in weekly unemployment payments would lead to a 50% to 75% pay cut for jobless people. Cutting federal aid that abruptly could risk intensifying the heated protests calling for legal and economic change.
Asked about a plan to address the record levels of unemployment on May 19, Trump snapped at CBS News correspondent Paula Reid and said he was reopening the country.
"Oh, I think we've announced a plan. We're opening up our country. Just a rude person you are," the president said. "We're opening it up very fast."
Some priorities of the administration so far include a payroll-tax cut for workers and employers, and it is reviewing the idea of a "return to work bonus" for employees returning to old or new positions. It also supports a capital gains tax cut for investors.
The White House did not respond to a request for comment.
Olugbenga Ajilore, a senior economist at the Center for American Progress, told Business Insider the administration hasn't grasped the scale of the economic crisis before it.
"It's one of those things where you hope the problem goes away without having to deal with it and sticking your head in the sand," he said of the administration's response.
Ajilore also pointed out that eviction courts are reopening again, increasing the prospects of struggling people being kicked out of their apartments during a pandemic.
"You're having all these problems come up that could have been avoided if we had taken the steps that we needed to take," he said. "It's gonna cost the government more to take care of those problems."
Senate Majority Leader Mitch McConnell said Congress would debate whether another rescue package was needed in July.
Meanwhile, House Democrats passed a $3 trillion spending package last month that includes stimulus checks for families, and maintains the $600 boost in weekly unemployment benefits through January. It would also extend a lifeline for cash-strapped states. But Republicans declared it dead-on-arrival in the Senate and refuse to take it up.
Experts say that the economy will likely need another round of spending to continue supporting the economy as the number of jobless people mounts and states confront plunging tax revenues.
Federal dollars, though, have proved critical in bolstering people's incomes by 10.5% last month, a record increase. It also helped increase the savings rate.
