ARI SHAPIRO, HOST:
Late last night, the Senate approved a third economic rescue package. This one, which the House will vote on tomorrow, is the biggest in history. It will pump $2 trillion into the U.S. economy. For some perspective, $2 trillion is a tenth of the U.S. gross domestic product. At the same time, we learned this morning that almost 3.3 million Americans have filed for unemployment in the last week, which suggests that even this record amount of money might not be enough to help everybody in need.
Austan Goolsbee served on President Obama's Council of Economic Advisers, and he's with us again to discuss these latest developments.
Hi there.
AUSTAN GOOLSBEE: Hey, Ari. How are you?
SHAPIRO: All right. So what is your initial reaction to this rescue package?
GOOLSBEE: Well, definitely necessary. This is a shutdown/slowdown the likes of which we have never really seen. It's - this is not, like, a normal recession. The number of people who file for unemployment for the first time was by factor of five, the most that have ever filed for unemployment in one week. So it's relief but not stimulus in the sense that until we get a handle on this virus, we will burn through this money, and we will have to be back for more. We've got to address that virus part.
SHAPIRO: Explain that distinction between a relief and stimulus 'cause ordinarily, a package like this would tell people to go and spend their money at businesses that will in turn hire people. But right now, businesses are shut down. People are unemployed. What's the hope that this actually does?
GOOLSBEE: Yeah. Look. That's exactly the - if what you were trying to get out of this is, we're going to give money, tax cuts - we're going to give money, unemployment insurance payments and direct checks to people, and we want you to go out and spend it - by that measure, almost certainly this thing would be a failure. Instead, what this is about is we're trying to weather through this storm and put food on the table and so nobody has to go without.
SHAPIRO: Let me...
GOOLSBEE: And that's the point, and that's needed. That's important...
SHAPIRO: Yeah.
GOOLSBEE: ...At a time like this, but it's important also to recognize that that's not a permanent fix.
SHAPIRO: Let me ask you about these unemployment numbers because the thing that really shocks me is that even this staggering number - almost 3.3 million Americans filing for unemployment - does not reflect the totality of the situation. I mean, freelance workers, gig workers are not included in that number. People who spent all week trying to get through phone lines and websites that are overwhelmed are not included in that number. How much bigger do you think this problem actually is?
GOOLSBEE: Yeah. Jeez. This is - if not the tip of the iceberg, this is just the beginning. And for it to happen so suddenly that just in one week - and it's going to be followed up by other mega-weeks of filing for unemployment. One of the advantages of this bill the - at least the part that increases and enhances the unemployment insurance - is they did address this issue that we have all these part-time workers and gig workers and freelance folks that don't fit...
SHAPIRO: And they will be getting benefits from this.
GOOLSBEE: ...In the normal - they will be getting benefits from that unemployment insurance.
SHAPIRO: So do you share Fed chairman Jerome Powell's view that once the pandemic subsides, there's likely to be a quick return to something like normal?
GOOLSBEE: I hope so. I certainly hope that's right. Part of it - part of the answer to that question is just the fundamental thing of, can we do enough tests? Can we do enough social distancing to slow the spread of the virus? That is, by far, the most important thing in a moment of virus economics - is to slow the spread of the virus.
But then the second is how much permanent damage is done for however long we're shut down. And that's what they're trying to do with this relief package - is prevent a permanent damage. But it could be. It all depends on how long this goes. And there's not really any shortcut of letting people out of lockdown because if you start spreading the virus around quickly again, it just sends us back to square one.
SHAPIRO: Economist Austan Goolsbee, who served on President Obama's Council of Economic Advisers - he's now a professor at the University of Chicago's Booth School of Business.
Thank you for the insight.
GOOLSBEE: Thank you. Transcript provided by NPR, Copyright NPR.