National Economic Council deputy director Bharat Ramamurti joins Yahoo Finance Live to discuss January’s jobs report, explaining why it underscores the need for President Joe Biden’s rescue plan.
- Let's talk about how the government is thinking about it, especially with regards to the aid package that the administration has proposed. Bharat Ramamurti is here with us now. He's the National Economic Council Deputy Director. Our Jessica Smith is with us as well in Washington. So, Bharat, when you look at these numbers, what does that tell you, not just about the need for stimulus, but where that stimulus is needed and how the federal government can best target that stimulus?
BHARAT RAMAMURTI: Sure. So look, if you look at today's numbers, I think it's pretty clearly a disappointing result. You look at not only this month's data but the trend over the last few months and it's clear that the jobs recovery is stalling. And I think we're at a level right now where we're 10 million jobs short of where we were at this time last year.
It is a deep hole and one that we are not pulling out of very quickly. And I think the trend that we had here underscores the need for the President's American Rescue Plan. It underscores the need to go big, it underscores the need to go quickly, because there's a lot of people that are hurting out there and there isn't time to waste to provide them with the relief they need to get through the other side of this crisis.
JESSICA SMITH: As we look at more and more people falling into long-term unemployment, what do you think needs to be done to get those people back to work and how concerned are you that those jobs might not come back at all?
BHARAT RAMAMURTI: Well, think the key to getting people back to work is a tighter labor market and the way we get that is to inject more money into the economy. What the President's American Rescue Plan does is that it provides targeted relief to the families that are most in need. It provides $1,400 checks to households that have been hit hard by the pandemic. It provides a $400 a week unemployment insurance supplement to help those families that are struggling through unemployment. It helps provide rental assistance to the nearly seven million Americans who are behind on their rent.
It cuts child poverty in half by providing families with children an additional source of support. And so, this kind of targeted relief sends money to the people who need it the most and sets the stage for the kind of robust recovery that we're going to need. Now remember, the CBO just put out a report this week that said that if we don't act, it will take until 2025 to get back to the unemployment levels that we had pre-pandemic.
That's just unacceptable from the President's standpoint. If we do the American Rescue Plan, according to Moody's, it would get us closer to that point by the end of this year. And so that is a big difference and it's going to avoid a lot of unnecessary suffering on the behalf of American families.
MYLES UDLAND: And Bharat, I'm just curious, the conversation right now around this recovery in relation to what some members of the administration saw happen about a decade ago, where we've heard commentary from some folks who said, you know, we clearly didn't do enough. Is there a concern right now or an awareness that this is the time to go big, because those decisions can echo for years and years?
BHARAT RAMAMURTI: Well, what I think is clear is that between the President, between Secretary Yellen, between a host of outside economic experts, they've all underscored the need to go big at this moment. Right? It is an asymmetric risk situation where the cost of doing too little is severe. It means needlessly long unemployment.
It means families that go hungry. It means families that are potentially facing eviction. Whereas the cost of going to big is not as severe. And so I think that when you're in a situation with some level of uncertainty, which is what we're in right now, you need to weigh those asymmetric risks.
And I think that as a result, the President and his top economic advisors are all saying, now is the time to lean on the side of going too big. And I think that all things considered, the President's package is a bottom up package. And by that I mean, he and his advisors have taken a look at the actual needs in the economy, the people who are going hungry, the people who need help staying in their homes, and has put forward a package that meets the scale of the problems that we have.
And I think that that's critically important, because we have seen, and Secretary Yellen has emphasized this as well, there are serious scarring that occurs when we have elevated unemployment levels for too long. It means that people have a harder time getting back into the workforce and it permanently reduces their lifetime earnings potential. We want to avoid that as much as we can and the American Rescue Plan makes sure that we will avoid that.
JESSICA SMITH: One of the pieces of that plan, of course, is raising the minimum wage to $15 an hour. I hear from Republicans all the time who say, businesses can't handle a minimum wage hike in the middle of the pandemic. What do you say to that argument and would that be something you're willing to set aside and deal with later if it means getting those enhanced unemployment benefits and getting those stimulus checks?
BHARAT RAMAMURTI: Well, look, over the last several months, we've heard a lot about essential workers, right? The people who stock the shelves, the people that pick the crops, the people that are working in retail and keeping the economy going as best as they can. To the President, it's critically important that we not just praise those people, that we actually pay them. And what a minimum wage increase does is that it actually provides a concrete form of compensation for those folks, right?
There's a huge overlap between the folks who would benefit, 30 plus million Americans who would benefit from a minimum wage increase and that group of front-line essential workers. So, I think that the President views it as very important to make sure those people are paid a living wage. And look, it's not just an economic issue, it's a moral issue. I think the President feels very deeply that if you work 40 hours a week in this country, you should not live in poverty. And the $15 minimum wage accomplishes that.
- Bharat, switching topics for just a moment, because I believe your purview is also financial reform and consumer protection. And I wonder, first of all, if you were in that meeting with Treasury Secretary Yellen yesterday, in which they discussed the liquidity situation, the structural situation around GameStop and Robinhood and Reddit, and whether you agree with her assessment that the system did what it was supposed to do. And I wonder if you think any changes need to be made.
BHARAT RAMAMURTI: Well, I was not in that meeting, but I certainly agree with the Secretary and I think that it's important to step back and say, look there are a whole host of issues that are related to what happened with GameStop. Right? Whether it comes to about the functioning of our financial markets, about investor protection, about capital and margin requirements. I think we're going to see a lot of those issues come up over the days and weeks to come, especially as Congress starts to dig into this incident.
I think the administration, overall, is keeping a very close eye on this. It wants to make sure that our financial markets are operating properly, that they're operating fairly. And I think that in the days and weeks to come, as more information potentially emerges about what happened in this incident, we'll continue to try to monitor it and update our views on the situation and also determine whether any additional steps are necessary. I also know that the SEC is taking a leading role in all of this, is convening a working group on these issues. And so we'll look forward to seeing what that working group produces as well.
JESSICA SMITH: Real quick, I wanted to ask about one push by your former boss, Senator Warren, and other Democratic senators and Congress women, asking to President Biden to cancel up to $50,000 in student loan debt. President Biden has seemed kind of skeptical about using executive action to do this. Do you think that he may move forward on some proposal like this and what impact would that have?
BHARAT RAMAMURTI: Well, the President has made clear two things. Number one, he's already taken action to extend the student loan pause, which has given 40 million Americans some peace of mind that they won't have to make their payments as this pandemic continues to stretch on. And number two, he's made clear that if Congress passes a bill that cancels $10,000 of student loan debt per person, he would happily sign that bill.
As for executive action, as our Press Secretary noted yesterday, the President and his team are looking into, what, if any, executive actions are possible here. That's an ongoing process and it will take a little bit of time to go through that, because some of the legalities here are complicated. And Congress has the ability to cancel $10,000 of student loan debt and if it does so, the President would happily sign that bill.
- All right, good to know. Bharat Ramamurti, thank you so much for being here this morning. National Economic Council Deputy Director, our Jessica Smith as well joining us.