US President Donald Trump is drawing up a massive emergency spending package while the Federal Reserve opens the financing floodgates to contain growing economic damage from the coronavirus pandemic.
After downplaying the severity of the outbreak for weeks, Trump on Tuesday called for bipartisan support to rush out immediate cash payments to American families.
"We don't want people losing jobs and having no money to live," Trump said at a White House press conference, adding that the package "is a substantial number. We are going big."
With businesses shutting down nationwide due to the spreading pandemic, Americans need "cash now," Treasury Secretary Steven Mnuchin said at the White House.
"We are looking at sending checks to Americans immediately... I mean now, in the next two weeks," he said.
He warned Republican senators on Tuesday morning that the pandemic could drive US unemployment to 20 percent, a Republican Senate source told CNN.
That would be double the worst point of the financial crisis about a decade ago.
Speaking on Capitol Hill, Mnuchin said the package could surpass $1 trillion, in addition to $300 billion in deferred tax payments, making it among the largest federal emergency plans ever and far surpassing assistance during the 2008 global financial meltdown.
The package would include up to $500 billion in direct payments and up to $500 billion for small businesses, according to media reports, as well as the full $50 billion the airline industry has requested.
Mnuchin said that, for airlines, "this is worse than 9/11," with travel virtually ceased.
And while Republicans balked at a large stimulus package in 2008, over concerns about the government deficit, Mnuchin told reporters "this is not the time to worry about it."
"Congress right now should be worried about American workers and small businesses."
The independent Congressional Budget Office last month said the deficit is expected to swell this year to more than $1 trillion and remain above that level for a decade as government debt balloons.
The talk of stimulus cheered battered Wall Street indices, with the Dow closing the day up 5.2 percent after Monday saw its worst drop since 1987.
Flooding the markets
The US central bank in the past two weeks has moved aggressively to boost confidence and keep financial markets and the US economy from seizing up due to fear and a shortage of cash, acting far more quickly than it did during the 2008 turmoil.
The Fed on Sunday slashed the benchmark borrowing rate to zero, ramped up purchases of Treasury debt, and repeatedly made massive cash infusions into financial markets.
In its latest move Tuesday, the Fed unveiled two new credit facilities to help ensure households and businesses stay afloat.
"By ensuring the smooth functioning of this market, particularly in times of strain, the Federal Reserve is providing credit that will support families, businesses, and jobs across the economy," the Fed said in a statement.
One mechanism is aimed at providing short-term funding to major financial institutions so they can push cash out to businesses and households.
The other would allow companies to roll over commercial debt and repay investors.
The more than $1 trillion market for commercial paper "is critical to the plumbing of the financial system" and will allow firms to continue paying their bills and their workers, said economist Mickey Levy of Berenberg Capital Markets, who applauded the moves.
Though slow to react over a decade ago, "this time is very likely to be far different, as the Fed's aggressive action is expected to achieve quicker results, even as the acute stage of the pandemic generates deep economic contraction," Levy said in an analysis.
'Bigger, stronger, better'
Mnuchin presented the stimulus plan to Senate Republicans, but it is unclear when it will be ready for a vote.
Senators Bernie Sanders and Elizabeth Warren, current and former Democratic presidential candidates, warned that any bailout to airlines must come with strings attached, including a $15 hourly wage for workers.
The White House package would be in addition to the $100 billion House measure directed at paid sick leave and expanded unemployment benefits already moving through Congress.
Trump again acknowledged that the economy could be headed for a recession but said it would come back strongly once the virus is defeated.
"We're going to take care of it, we'll be bigger, stronger and better than ever before," the president said.