c-span 2, c-span.org or listen on the free c-span radio app. >> joining us now is mark zandy, the chief economist with moody emphasis analytics here to talk about and take your questions on the economy. mr. zandy, what is the state of our economy right now? >> greta, it's struggling. we saw that in the december data for the economy. we lost jobs in december. retail sales declined. claims for unemployment insurance remain consistently above about a million per week. just for context in a well functioning economy we should be seeing something like 200 and 250,000 initial claims for unemployment insurance. sentiment is very soft. and obviously it's not hard to connect the straugling economy back to the pandemic. the reintensification of the virus, the hospitalizations, the

deaths has had an impact on the entire global economy but also here at home in the united states so the economy is weak. >> what if congress and president trump had not signed into law the covid relief money that we saw the first round of it and the money that followed? what if that hadn't happened? >> it would have been much worse. the support from the federal government has been i think the word is massive, and it's been critical to keeping the economy together as well. if you totaled it all up at this point things that have actually been passed into law, it's nearly 15% of gdp. and just again for a little bit of context if you go back to the financial crisis the economy was less than 10%. so not even counting what biden and this next congress might do or not do already the support

has been very substantive. this most recent fiscal package this is the $900 billion relief package passed at the end of december came just in the nick of time. because i think without that help and stim kmls checks and other support, without that the struggling economy probably would have gone back into recession. it would be so-called double dip recession. so that support has been critical to the economy. >> why is that? why is that potential there? that could drag this economy overall into a reception? >> well, those industries that are most directly impacted by the pandemic, restaurants, leisure, hospitality, recreational activity, personal services. so this suit i'm wearing i'm maybe a little embarrassed to say, but i haven't cleaned this

in about a year because imv5 wear it. the only time i wearnbs1 i'm doing something like this. retail activity, those are the -- transportation obviously, the airlines. those are the industries that have been hit very hard by the pandemic and continue to struggle. and obviously in this recent reintensification of the virus it's doing a lot more damage. the other thing it's adding to the problems for these industries is that it's the dead of winter and obviously for restaurants you can't eat outside in many parts of the country. and so restaurants have no choice but to stop operating or really have to pull back and layoff workers. so those industries getting hit the hardest. >> president biden wants congress to spend another $1.9 trillion. he referenced moody's analysis of this plan saying it would add to the jobs. what did you find? >> yeah, that's right. he got it right. we did analysis and assessment

of his proposal, $1.9 trillion package. and if passed into law it would have a significant beneficial impact on the economy. not only helping the economy get to the other side of the pandemic but giving it a bit of a boost to get back to full employment more quickly. and if take a look at the numbers it would add about 7.5 million jobs to the economy over the coming year, which is meaningful. again for a little bit of context, the economy is still down about 10 million jobs from its pre-pandemic peak. so we get a bulk of those jobs back if that package that president biden proposed is actually passed into law. so it would be substantive. >> where would the money come from? >> we'd borrow it. it would be deficit financed like the other packages that have been passed during the pandemic. so this is, you know, the u.s.

treasury going out issuing bonds, raising money from invetsers, taking that money and using that to finance all the different aspects of the support, the unemployment insurance, the payment protection program for small businesses, help to airlines, to schools, money for testing, tracing, vaccine distribution, all those kinds of things. so it would be deficit financed, which, you know, in a more normal time wouldn't be a productive policy. but in a crisis with very high unemployment, underemployment, with very low inflation. inflation is well below the federal reserves 2% target and the federal reserve clearly articulating it plans to keep interest rates very low, short-term interest rates close to zero and that's a time we should be borrowing money to support the economy and get back as quickly as possible. >> if you look at the debt of

this country if you go to u.s.debtclock.org, if you look at the number how then do you get that number down after this pandemic is over? >> yeah, good point. this is going to be an issue. i mean, lawmakers really have no choice here. no really good choice. and that is go out, borrow money, provide support to the economy, try to keep it together as well as it's been kept together. if they didn't do that the economy would be much weaker and evaporate and make our fiscal problems even worse. as economists want to say there's no free lunch, this is going to be very costly. we do have bigger deficits and we now have a higher debt load. and we're going to have to address it on the other side of the pandemic, and that will require a restraint on government spending, and we can talk about what that might mean but also tax increases.

both those things will be necessary to get our fiscal situation back in order and getting that debt load back down again. >> beth in tampa, florida, independent, your question or comment about the economy. go ahead. >> caller: hey, good morning, mark and greta. thank you for taking my call. and i've been watching this since the beginning all this in the news. but as far as the economy, i personally feel -- what my husband and i live off of but i feel if they're wanting to help people actually impacted by this and their income and loss of income, they're giving it to people that didn't lose income, they're giving it to people who make $100,000, for one person to make that kind of money and need

a stimulus check is very questionable to me. my husband and i we live off maybe $70,000 a year and feed ourselves and wouldn't even need it if i didn't lose my job, which i did. but if i hadn't my point being. >> understood. so mark, these stimulus checks, what are people doing with them, and what impact do they have on the economy? >> yeah, i hear the caller. as you know the stimulus checks, there's now been two rounds of stimulus checks. the latest round was a $600 check to people with incomes less than $75,000 a year, and then it phases out with people up to income $100,000 a year. so it is designed to be more targeted towards lower income and middle income households. and it's been very helpful in supporting the economy.

so, for example, this is based on a survey that the census bureau conducts on a regular basis since the pandemic hit. much of that money has gone to things like just to daily expenses like to rent. if you look at the percent of rent payments that are made because of help from the stimulus money, it's very, very high. so it has been very helpful. having said all of that, i hear what the caller is saying, and i don't think the stimulus checks are the most effective way to help the most hard-pressed as a result of the pandemic. it's not as targeted as things like unemployment insurance would be or assistance to renters who owe back rent or money for ppp to small businesses struggling to survive. so it's not as well targeted and therefore not as effective as it could be. one needs to consider, though, the politics of all this and

there's the economic -- what's the best economic policy. and then you have to think about how am i going to get but it's not the best form of economic support to the hard-pressed. so i am sympathetic to what the caller is saying. >> wall street journal reporting job losses in 2020 were worse since 1939 with hispanic, blacks and teenagers among the hardest hit. what should congress and this administration do with unemployment benefits? >> well, in the proposal that president biden put forward, he is talking about more unemployment benefits extending the emergency unemployment insurance programs that have been put in place to help people who have been hit hard by the pandemic.

there's additional weeks of support that have been provided. and also increase the amount of unemployment insurance for those that are receiving it. and he's proposing $400 a week in extra unemployment insurance. you may recall in the cares act that was the first relief package that was passed almost a year ago now, march of 2020, the additional money was $600 a week. so he's saying let's scale that back a little bit to $400 a week, but that's a big point of the $1.9 trillion package. as i mentioned earlier and as you pointed out, there's still a very large number of people who are unemployed or underemployed. >> some more details from president biden's plan. 1.9 trillion clz overall is the price tag. he wants $1,400 sent in direct payments, $400 a week for

unemployment insurance supplement. that's in addition to what states provide, a moratorium on eviction and $350 billion for state and local governments, $15 an hour federal minimum wage, expanded paid sick leave for workers and increased tax credits for families with children. what do you think $15 an hour in federal minimum wage would do? >> there's a lot of controversy and debate about that. i think on net it would help the workers that receive the benefit. so lower income workers that get a higher, the minimum wage on net, the amount of income that group receives increases. but it will cost some jobs. so you raise the wage -- if you raise it too high, too fast in certain parts of the country, then it becomes prohibited for

employers. it's got cross winds, real positive tail winds but head winds as well. and the net of all that is a positive for lower income households. i think if you -- it depends a lot -- the impact depends a lot especially any potential negative impact depends a lot on exactly how it's implemented. if it's implemented over a period of time to allow employers and markets to adjust, then i think the negative consequences are relatively modest. but if you try to raise it too fast, too high then you've got more of a problem. so a lot depends on the details here in exactly how that minimum wage would be increased and over what period of time. >> let's go to richard next in philadelphia, independent. you're on the air. >> caller: good morning. how are you doing? my curiosity question is about

national investment as it relates to national debt and taking the crisis aside, i beeve. one thing is that looking at the debt clock i can never tell at what point where this country is moving at the point where the debt amount, what is that number? i guess that's one of the questions i'm asking. what is that number where the debt amount is beyond the national productivity be able to pay for it since they have to deal with making appropriate national investment? and the other question in relationship to who owns the debt, is it true that the largest percentage of the debt owned is by the financial sector in the u.s.? >> okay, we'll take those questions, richard. >> yeah, very good questions.

well, just to give you a number, the publicly traded debt to gdp ratio, that's kind of a measure of the debt load is closing0xce on about 100%. ■ up about 20 percentage points from where it was prior to the pandemic, which was about 20 percentage points above where it was prior to the financial crisis. and really between world war ii and the financial crisis, the debt to gdp ratio, you know, was consistently around 40%, 50%, something like that. so that gives you some context around how much it's increased. i don't think we're at a place or even close to a place where we won't be able to afford that, meaning that, you know, investors in those bonds that are issued by the treasury to finance the deficits lose faith that they're going to get paid in a timely way and demand a higher interest rate, and that

gets into the government's interest expense and you get into the a self-reinforcing negative cycle. we're not close to that at all. in fact, just the opposite. interest rates are incredibly low. short-term rates are zero, long-term rates close to 70%. so that's not an issue we have that this point in time. it's really not i think a significant concern we can't manage the debt loads that we face today as a result of the pandemic. so, you know, we can't continue down this path forever. i mean, at some point it will become an issue. exactly when, hard to know and a matter of great debate. so, you know, we need to change the trajectory of this on the other side of the pandemic, but i think we can feel confident that we have the resources to manage this, you know, at this point in time. again, as i said earlier i don't really think we have a choice

here. if we didn't provide that support, if we didn't borrow that money and use it for unemployed workers and small businesses and airline industry, the economy would suffer a lot more. the impact on our deficit debt even greater. our fiscal problems, you know, even more substantive. in terms of who owns the debt, those investors who are purchasing those treasury bonds to finance all of this, that's really you and i. yes, financial institutions purchase the debt. so that would be everyone from insurance companies and pension funds, different kinds of mutual funds, asset managers. but they're ultimately buying on the behalf of us, you know, americans who have savings and have been saving their money and they're investing in that treasury debt. also global institutions buy our

debt as well. so it's not just american institutions. it's global institutions. in fact, that's one of the most important strengths of the american economy, and that is the debt that we issue, the treasury debt is the safest asset in the world. if you want safety, if you want money good, if you know you're going to get paid back on time, you invest in u.s. treasury bonds, and that's to our collective benefit because we can borrow at these extraordinarily low interest rates. go anywhere else in the rest of the world, they have to pay a higher interest rate over longer periods of time than we do because we're the safest asset on the planet. >> in el paso, texas, republican. >> caller: i want to know when

do you think inflation is going to take off? i mean this is -- the amount of debt that's going on right now is so astronomical that there's no way that it can't take off. if i ran my household the way we're running my country and took on the multitudes of debt compared to my income, there's no way i would be -- have anything i'd have right now. i'd end up being in a constant cycle of paying pack. i so i guess i don't understand how we're going to pay this back. why don't we just do this? why don't we just have the government be one dollar short of what we took in federal taxes the prior year? this way we can just pay for what we need. >> okay, tom. mr. zandy? >> yeah, on inflation -- as you

know, tom, inflation has been very low. it's been consistently low. since the financial crisis it's been below the target the federal set at 12%. reasonable, not too high, not too low. 2% is the bogey and we've been consistently below 2%. and we're still well below 2%. eat least not in a consistent way until the economy is back closer to full employment, until we get those 10 million jobs we lost during the pandemic back. and, you know, we've got a long where to go. even if president biden got his 1.9 trillion package we don't get back to full employment

until 2, 2 1/2 years. in fact, i'd even go so far to say the federal reserve wants the higher inflation. they don't want inflation below 2% so they're working really hard. that's why they're keeping interest rates close to zero to try to get inflation back above that 2% target. hopefully they succeed, and i think they will. and once we're back to full employment, once inflation is back to that 2% target on a consistent basis, then we do need to pivot. and we do need to address our long-term fiscal situation. and that means government spending restraint, and it means tax increases. we're going to have to do both to address that problem. i will say to your point if i ran my household like the federal government did, i would been in a financial mess. i will point out despite all the

borrowing the federal government has engaged in and the higher debt load, the amount of interest expense on that debt has a percent of government revenue or any measure of gdp is very, very low. and that's because of the low interest rates. i'm not saying it won't be a problem down the road as interest rates begin to rise, but at this point in time it's very, very low and very manageable from a fiscal perspective. >> you said congress, this administration would need to raise taxes. who benefitted from president trump's 2017 tax cuts? and are you saying their taxes need to be raised now? >> i think it's clear that principle beneficiaries of president trump's tax cuts back in 2018 were large corporations. so the top marginal corporate tax rate under the trump tax cuts, the tcga, the law that he passed went from 35% to 21%.

so that was a big tax cut for large multinational corporations like the company i work for, moodies. and the high income households and the well-to-do, people with high net worth that are wealthy, they are the principle beneficiaries of that tax cut. and that was deficit financed. we went out and borrowed money to effectively cut a check to large corporations and to higher income households. my sense is when i say future tax increases, those are the folks that are going to have to shoulder much of the burden in large part because that's where the money is, that's where the income is. i don't think the top marginal tax rate should go back to 35%. that would make american companies uncompetitive to many foreign companies. but taking it back from 21% to

28%, i think that's a reasonable proposal. and i think that's what president biden proposed during the campaign. that was part of his build back better agenda during the campaign. and then for hilar income households, same thing. big reduction in top marginal rates, and i think that should be scaled back, that higher income households will need to pay more because again that's where the money is. and they're doing quite well. i'll point out that during the pandemic, and i'm painting with a broad brush here obviously. but in a pandemic high income households, high net worth households, the well-to-do that navigated the pandemic without any significant financial pain. they have their jobs. they're receiving good health care. they own their own home. as you know house prices have risen very strongly because of the record low mortgage rates.

stock prices which roaring back to record highs and that's bene really the top 20% that own stocks of any consequence. lower income households and minority groups have been completely hammered financially as a result of the crisis. they're the people working in those industries i mentioned earlier that have been hammered by all this, they work in retail, and restaurants, airline industry. and they don't own any stock or very little stock and homeownership rates are a lot lower. their health care isn't quite as good. they're just not in a position. when we think about the need to raise future tax revenue, it's going to have to be on the folks that are done well here and have navigated the pandemic financially reasonably gracefully and that's higher

income well-to-do households. >> mike in california, independent. >> caller: good morning. i'd like the guest to comment on some lessons from american history. the administration of warren g. harding has been dismissed as being very poor by scholars, principly a poll was done by american historians 1948 and recent lebeen updated. and warn g. harding was listed as last. and calvin coolidge was lilsed second to the last. his predecessor woodrow wilson, i think number 4, if i'm not mistaken, very highly. yet the performance of the economy in those cases tend to reflect -- tend to suggest exactly the opposite kind of ranking. that is during the 1920s, the roaring 20s harding and coolidge

demonstrated extraordinary -- they cut the federal budget i believe by 25% or more if i'm not mistaken whereas wilson expaag> okay, so, mike, what's your question then for mark zandi? >> caller: so what are the lessons from that period in history for us today? >> okay. >> well, i know my history very well back to fdr and the great depression. prior to that it's a little sketchier. i think the lesson i've taken from our history since the 1930s depression is that in times of crises -- and i would argue that

this is a time of crises. the pandemic is a health care crisis and an a economic one, and it's a global health care crisis and an economic one, that it's important for the government to be very supportive, that they have to have everybody's back both in terms of fighting the pandemic and also financially. when i say government, that's us, collectively us. we have to have each other's back. because if we don't we're going to lose face and run for the proverbial bunker and the economy is going to be worse. i have to say i think to lawmakers credit since the pandemic hit -- now almost a year ago hard to believe just about now a year ago in china quickly went to europe in february and hit us in march that lawmakers have done a good

job. they have stepped up when -- we've had reasonable debates and it's important to have those debates because that makes for better policy choices. i do think, though, the pandemic is still on as we can see from the statistic it's raging and that's a problem everywhere. other parts of the world are struggling more than us, europe immediately comes to mind. as such the government has to continue to provide that support. when i look back at the expanse of american history particularly since the 1930s, the great depression, the key lesson i take from that is in times of crisis it's critical that government steps up and

collectively has our back. >> rudy, california, democratic colleague. you're next. >> caller: good morning. i would just like to find out -- and i'm not very good with economics. my grandson has to remind me that 2 plus 2 isn't 5. but one thing is do the presidents have the power to tell the treasury to -- live now to a briefing with fed chair jerome powell after today's federal reserve board meeting. >> to achieving the monetary policy goals congress has given us, maximum employment and price stability. since the beginning of the pan demb we have taken forceful actions to provide relief and stability, to ensure the recovery will be as strong as possible and to limit lasting damage to the economy. today my colleagues on the