'The U.S. Is About to Vastly Increase Its Debt. That’s a Good Thing.' diff viewer (13/14)

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The U.S. Is About to Vastly Increase Its Debt. That’s a Good Thing.	The U.S. Is About to Vastly Increase Its Debt. That’s a Good Thing.
2020-06-17 01:00:29 UTC	2020-06-17 01:32:35 UTC (32 minutes later)
The United States government is poised to take on a huge amount of debt to contain the effects of the coronavirus pandemic, with budget deficits on a scale not seen since World War II looking likely.	The United States government is poised to take on a huge amount of debt to contain the effects of the coronavirus pandemic, with budget deficits on a scale not seen since World War II looking likely.
But the only thing worse for the public debt outlook would be if it didn’t. That’s why a broad range of economic analysts — including even many fiscal conservatives who generally view high public debt as a long-term threat — support aggressive action.	But the only thing worse for the public debt outlook would be if it didn’t. That’s why a broad range of economic analysts — including even many fiscal conservatives who generally view high public debt as a long-term threat — support aggressive action.
The very large deficits on the way in 2020 are more likely to leave the United States in a better fiscal situation for the years ahead than an alternative in which the government is more tightfisted but fails to prevent the widespread collapse of American businesses or help workers in desperate financial straits.	The very large deficits on the way in 2020 are more likely to leave the United States in a better fiscal situation for the years ahead than an alternative in which the government is more tightfisted but fails to prevent the widespread collapse of American businesses or help workers in desperate financial straits.
Economists focus not on the absolute level of the debt, but on the interest costs to service it relative to the size of the economy. So a prolonged recession tends to be worse for the debt picture than some extra spending. Moreover, signals from financial markets suggest that the government should have little trouble borrowing vast sums of money on favorable terms.	Economists focus not on the absolute level of the debt, but on the interest costs to service it relative to the size of the economy. So a prolonged recession tends to be worse for the debt picture than some extra spending. Moreover, signals from financial markets suggest that the government should have little trouble borrowing vast sums of money on favorable terms.
Finally, this spending is meant to last only as long as needed to get the economy on track after the containment of the coronavirus pandemic, meaning it should be a one-time increase to public debt rather than an increase to permanent deficits.	Finally, this spending is meant to last only as long as needed to get the economy on track after the containment of the coronavirus pandemic, meaning it should be a one-time increase to public debt rather than an increase to permanent deficits.
The arithmetic of the budget deficit is stark. In forecasts prepared just before the outbreak became severe, the Congressional Budget Office projected a $1.1 trillion deficit this fiscal year, or 4.9 percent of G.D.P.	The arithmetic of the budget deficit is stark. In forecasts prepared just before the outbreak became severe, the Congressional Budget Office projected a $1.1 trillion deficit this fiscal year, or 4.9 percent of G.D.P.
William Foster, the lead U.S. analyst at the credit rating firm Moody’s, now expects it to be more like 10 percent to 12 percent. Fitch, another rating firm, estimated it will be 13 percent. Those numbers would exceed the previous post-World War II record for the deficit, which was in 2009, when it was 9.8 percent of G.D.P.	William Foster, the lead U.S. analyst at the credit rating firm Moody’s, now expects it to be more like 10 percent to 12 percent. Fitch, another rating firm, estimated it will be 13 percent. Those numbers would exceed the previous post-World War II record for the deficit, which was in 2009, when it was 9.8 percent of G.D.P.
The exact numbers are still unknowable. The $2 trillion stimulus package has come together so quickly that the budget office has not had time to do its customary modeling of its fiscal impact. (Parts of the legislation are designed as loans, so the hit to the Treasury will be less than the headline number.) G.D.P. is a guessing game at this point.	The exact numbers are still unknowable. The $2 trillion stimulus package has come together so quickly that the budget office has not had time to do its customary modeling of its fiscal impact. (Parts of the legislation are designed as loans, so the hit to the Treasury will be less than the headline number.) G.D.P. is a guessing game at this point.
But even many analysts who generally prefer fiscal restraint believe it’s a good time to be borrowing a lot of money.	But even many analysts who generally prefer fiscal restraint believe it’s a good time to be borrowing a lot of money.
As the economic outlook dimmed over the last month, interest rates plunged to unprecedented lows. The United States government can issue 30-year bonds at only a 1.44 percent interest rate at Thursday’s close — and in inflation-adjusted terms, borrowing costs are negative.	As the economic outlook dimmed over the last month, interest rates plunged to unprecedented lows. The United States government can issue 30-year bonds at only a 1.44 percent interest rate at Thursday’s close — and in inflation-adjusted terms, borrowing costs are negative.
The market for Treasury bonds has had periods of dysfunction in the last few weeks, causing a spike in longer-term rates, as major investors and foreign governments sold bonds and there were few buyers. But most signs are that this was caused by a global cash crunch, not fears of rising indebtedness by the United States.	The market for Treasury bonds has had periods of dysfunction in the last few weeks, causing a spike in longer-term rates, as major investors and foreign governments sold bonds and there were few buyers. But most signs are that this was caused by a global cash crunch, not fears of rising indebtedness by the United States.
Fitch Ratings, in affirming the nation’s AAA credit rating Thursday, said that it believes “recent dislocations and illiquidity in the market for U.S. Treasuries reflect changes in the structure of the market and exceptional conditions, and do not signal heightened perceptions of U.S. credit risk on the part of investors.”	Fitch Ratings, in affirming the nation’s AAA credit rating Thursday, said that it believes “recent dislocations and illiquidity in the market for U.S. Treasuries reflect changes in the structure of the market and exceptional conditions, and do not signal heightened perceptions of U.S. credit risk on the part of investors.”
If anything, with global central banks expanding bond-buying programs, a shortage of safe bonds in years ahead could be likelier than a glut. That would tend to keep interest rates low.	If anything, with global central banks expanding bond-buying programs, a shortage of safe bonds in years ahead could be likelier than a glut. That would tend to keep interest rates low.
The Fed is now doing open-ended quantitative easing, buying Treasury and other bonds on a vast scale to try to push cash into fraying financial markets. And it has actively encouraged the rest of the government to take advantage of this cheap money.	The Fed is now doing open-ended quantitative easing, buying Treasury and other bonds on a vast scale to try to push cash into fraying financial markets. And it has actively encouraged the rest of the government to take advantage of this cheap money.
“He told me, ‘Think big, because the interest rates are low,’” House Speaker Nancy Pelosi said of the Fed chair, Jerome Powell, in an interview with the PBS NewsHour.	“He told me, ‘Think big, because the interest rates are low,’” House Speaker Nancy Pelosi said of the Fed chair, Jerome Powell, in an interview with the PBS NewsHour.
An important factor in projecting the impact on deficits and debts: Spending on the virus response is intended as a one-off, not as an increase in the structural spending levels and budget deficits the United States should expect to have indefinitely.	An important factor in projecting the impact on deficits and debts: Spending on the virus response is intended as a one-off, not as an increase in the structural spending levels and budget deficits the United States should expect to have indefinitely.
“This is not permanently raising government spending,” said Louise Sheiner, a senior fellow at the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution. “It’s a one-time thing. A big one-time thing, but it raises the level of debt and doesn’t do anything to the trajectory of debt after that, which makes it less challenging in the grand scheme of things.”	“This is not permanently raising government spending,” said Louise Sheiner, a senior fellow at the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution. “It’s a one-time thing. A big one-time thing, but it raises the level of debt and doesn’t do anything to the trajectory of debt after that, which makes it less challenging in the grand scheme of things.”
Simple math shows why. If the national debt were to rise by $2 trillion compared with what had been forecast, and the government paid for it by issuing 30-year bonds at current rates, the debt service cost would be about $29 billion a year, a trivial amount in a $20 trillion economy. And unlike a private borrower, the government never need pay down its debt; theoretically the debt can remain on the books indefinitely so long as the cost of interest payments is manageable, which in turn depends on economic growth.	Simple math shows why. If the national debt were to rise by $2 trillion compared with what had been forecast, and the government paid for it by issuing 30-year bonds at current rates, the debt service cost would be about $29 billion a year, a trivial amount in a $20 trillion economy. And unlike a private borrower, the government never need pay down its debt; theoretically the debt can remain on the books indefinitely so long as the cost of interest payments is manageable, which in turn depends on economic growth.
~~Updated June ~~12,~~ 2020~~	Updated June 16, 2020
	The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.	So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.	Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.	A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.	The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.	Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.	States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.	Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)	If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.	Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.	The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.	If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.	If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
“We are certainly expecting a much faster accumulation of debt than we had previously,” said Mr. Foster, the Moody’s analyst. “But if this is effective, it will cushion the blow to growth, and the economy will pick up faster, and that would have positive spillover in terms of debt dynamics,” meaning the result of successful stimulus would be a larger economy and thus a lower debt-to-G.D.P. ratio than if the government hadn’t acted.	“We are certainly expecting a much faster accumulation of debt than we had previously,” said Mr. Foster, the Moody’s analyst. “But if this is effective, it will cushion the blow to growth, and the economy will pick up faster, and that would have positive spillover in terms of debt dynamics,” meaning the result of successful stimulus would be a larger economy and thus a lower debt-to-G.D.P. ratio than if the government hadn’t acted.
“At this stage, the government can’t be preoccupied with deficits,” he said. “The downside risk of an inadequate response is much more severe.”	“At this stage, the government can’t be preoccupied with deficits,” he said. “The downside risk of an inadequate response is much more severe.”
“Public debt levels will have increased,” Mario Draghi, the former president of the European Central Bank, said in an essay published this week in The Financial Times. “But the alternative — a permanent destruction of productive capacity and therefore of the fiscal base — would be much more damaging to the economy and eventually to government credit.”	“Public debt levels will have increased,” Mario Draghi, the former president of the European Central Bank, said in an essay published this week in The Financial Times. “But the alternative — a permanent destruction of productive capacity and therefore of the fiscal base — would be much more damaging to the economy and eventually to government credit.”
The $800 billion fiscal stimulus the Obama administration enacted starting in early 2009 was widely attacked for increasing the deficit. But the budget deficit peaked that year and declined over subsequent years as the United States economy recovered.	The $800 billion fiscal stimulus the Obama administration enacted starting in early 2009 was widely attacked for increasing the deficit. But the budget deficit peaked that year and declined over subsequent years as the United States economy recovered.
The Fed may one day need to raise interest rates and sell off its holdings of Treasury bonds to prevent inflation. But that would most likely occur at a time when the economy had returned to its pre-coronavirus trajectory and was seeing higher inflation levels than have been evident over the last decade.	The Fed may one day need to raise interest rates and sell off its holdings of Treasury bonds to prevent inflation. But that would most likely occur at a time when the economy had returned to its pre-coronavirus trajectory and was seeing higher inflation levels than have been evident over the last decade.