house sends over the article of impeachment and senators are sworn in as jurors in the trial with opening arguments set to begin in early february. the process begins today when house impeachment managers walk to the senate floor for the reading of the article of impeachment, charging president trump with inciting the riot at the capital. that is live at 7 p.m. eastern on c-span2. joining us now is mark sandy, chief he cut -- mark zandi, chief economist with moody's economics. what is the state of our economy right now? guest: greta, it is 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, and a well-functioning economy, we

should be seeing something like 200,000, two hundred 50,000 claims. sentiment is very soft. obviously it is not hard to connect the struggling economy back to the pandemic. the re-intensification of the virus, the infections, the hospitalizations, the deaths have had an impact on the entire global economy, but also here at home, the economy is weak. host: 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? guest: it would be much worse. the support from the federal government has been massive, and it has been critical to keeping the economy together as well as it has been kept together. if you total it all up, at this point things that have actually been passed into law, it is

nearly 15 percent of gdp, and just for a little but of context, going back to the financial crisis a little over a decade ago, the total amount of support the government brought was less than 10%. so not even counting what this next congress might do or not do , already the support has been very substantive, and that has been key. in this most recent fiscal relief package, the $900 billion relief package that was passed at the end of december, came just in the nick of time because without that help, without that support which is now just getting into the economy today, without that the struggling economy probably would have gone back into recession. it would be a so-called double dip recession. so that support has been critical to the economy. host: why is that? why is that potential there? what sectors are seeing the greatest loss that could drag this economy overall into a recession?

guest: it is industry's directly impacted by the pandemic. restaurants, leisure and hospitality, recreational activities, personal services. the suit i am wearing, be i'm a little embarrassed to say, i haven't cleaned this in about a year because i barely wear it. i only wear it when i am doing some thing like this. retail activity, transportation, the airlines, those are the industries that have been hit very hard by the pandemic and continue to struggle, and obviously this recent reintensification of the virus is doing a lot more damage. the other thing adding to the problems for these industries is that it is the dead of winter, and obviously for restaurants, you can't eat outside in many parts of the country, the restaurants have no choice but to stop operating or really have to pull back, so those

industries are getting hit hardest. host: president biden once congress to spend another -- president biden wants congress to spend another $1.9 trillion. he referenced moody's analysis and his plan, saying it would add to the jobs. guest: he's right. we did an analysis of his proposals, and if passed into law, it would have a significant beneficial impact upon the economy, not only helping the economy get to the other side of the pandemic, but giving it a bit of a boost to getting back to full employment more quickly. if you 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 the bulk of those jobs back in

that release package -- in that relief package proposed by president biden. host: where would that relief come from? guest: we borrow it, deficit financed, like other packages financed there and be pandemic. this is the u.s. treasury issuing bonds, raising money from investors, taking that money and using that to finance all of the different aspects of the support. the unemployment insurance, the paycheck protection program, money for small business, help for airlines and schools, money for vaccine distribution, all of those things. anymore normal time, it wouldn't be a productive policy, but in a crisis, with very high unemployment, underemployment, with very low inflation, well below the federal reserve's 2% target, and with the federal reserve clearly articulating

that it plans to keep interest rates very low, that is a time when we should be borrowing a to support the economy to get the other side and get back to full employment as quickly as possible. host: when you look at the debt of this country, if you go to usdebtclock.org, it is nearly 28 trillion dollars. how do you get that number down after this pandemic is over? guest: good point. this is going to be an issue. lawmakers really have had no choice here, no good choice. that is to go about and borrow money, provide support to the economy, try to keep it together as well as it has been kept together. if they did do that, the economy would be much weaker in our fiscal problems would be even worse. but as economists are want to

say, there is no free lunch. this is going to be very costly. we have a higher debt load, and we are going to have to address it when we are back to full employment. that will require both restraint on government spending, but also tax increases. both of those things will be necessary to get our fiscal situation back in order and getting that debt load back down again. host: let's get to calls. beth in tampa, florida, your questions or comments on the economy. caller: good morning, mark and greta. thank you for taking my call. i've been watching this since the beginning, all of this in the news. as far as the economy, i personally feel that the income levels for the stimulus checks are extremely high. from what my husband and i live off of, we don't have children, but i feel that if they are wanting to actually help people

that have been impacted by this in their income and their loss of income, they are giving it to people that didn't lose income, to people that make hundreds of thousands of dollars. for one person to make that kind of money and need a stimulus check is very questionable to me. what kind of spending did they do in their life? because my husband and i live off of maybe $70,000 a year and feed ourselves and plenty, and wouldn't even need it necessarily. i didn't lose my job -- need it if i didn't lose my job, which i did. host: understood. so these stimulus checks, what are people doing with them, and what impact they have on the economy? guest: i hear the caller. as you know, the stimulus checks , the latest is there has now been two rounds of stimulus checks. the latest was for incomes of less than $75,000, and it phases

out with people up to income of $100,000 a year. so it is designed to be more targeted towards lower income and middle income households. it has been very helpful in supporting the economy. for example, this is based on a survey that the census bureau conducts on a regular basis since the pandemic hit, most of those things have gone to things like rent. if you look at the percent of rent payments that are made because of help from the stimulus money, it is very high. so it has been very helpful. having said all that, i here with 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 is 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 that are struggling to survive. so it is not as well targeted, and therefore probably not as effective as it could be. one needs to consider the politics of all of this, and there's the economic policy, and then you have to thing about how i'm i going to get some thing done quickly. the other key is getting something done quickly. if there is political support for it, i'm all for it, but it is not the best form of economic support to the hard-pressed, so i am some pathetic to what the caller is saying -- i am sympathetic to what the color is saying. -- to what the caller is saying. host: "the wall street journal" reporting that unemployment is its worst since 1969. so what should congress do? guest: in the proposal that

president biden put forward, he is talking about more unemployment insurance benefits, extending the programs that have been put in place to help people that have been hit hard by the pandemic. there's additional weeks of support that a been provided. and also increase the amount of unemployment for those receiving it, and he's proposing $400 a week in extra unemployment insurance. you may recall in the c.a.r.e.s. act, the first relief package that was passed almost a year ago now, the additional money was $600 a week, so he is saying we will scale that back a little bit to $400 a week, but that is a big part of the $1.9 trillion package. several hundred billion dollars of that is going to provide that additional unemployment insurance to those hard-pressed unemployed workers. as i mentioned earlier, and as

you pointed out, there's still a very large number of people unemployed or underemployed. host: more details from president biden's plan. one point $9 trillion overall is the price tag. he wants $1400 in direct payments, 1400 dollars a week for unemployment insurance supplement in addition to what states provide, and moratorium on infections -- on evictions, 400 billion dollars to fight coronavirus and open schools, $15 an hour federal minimum wage, expanded paid sick leave for workers, and increased tax credits for families with children. what you think $15 an hour in federal minimum wage would do? guest: 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 , once you raise a minimum wage,

the amount of income that that group receives increases, but it will cost some jobs, so you raise the wage. if you raise it too high, too fast, and certain parts of the country it becomes prohibitive for employers, and they hire a few people or may lay off workers. so it's got crosswinds. some real positive tailwinds, but some headwinds as well. the net is a positive for lower income households. i think it depends a lot, especially any potential negative impact, depends a lot on exactly how it isn't limited. if it is implement it over a period of time to allow employers end markets to adjust, then i think the negative consequent is a 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 and exactly how that men wage would be increased and over what period of time. host: let's go to richard next in philadelphia, an independent. caller: good morning. how are you doing? my curiosity question is about national investment as it relates to national debt, in taking the crisis aside. one thing is that looking at the debt clock, i can never tell at what point this country is moving at the point where the debt amount, what is that number? that is one of the questions i am asking. what is the number where the debt amount is beyond the national productivity being able to pay for it, since they have to deal with making appropriate national investment? the other question, and

relationship who owns the debt, is it true that the largest percentage of the cap owned -- of the debt owned is by the financial sector in the u.s.? host: ok, we will take those questions, richard. guest: very good questions. just to give you a number, the publicly traded debt to gdp ratio, a measure of the debt load, is closing in on about 100%. that is up about 20% from where it was prior to the pandemic, which was about 20% above where it was prior to the financial crisis. really, between world war ii and before the financial crisis, the debt to gdp ratio was consistently around 40%, 50%. so that gives you context around how much it has increased. i don't think we are at a place,

or even close to a place, where we won't be able to afford that, meaning that investors in that debt, in those bonds that are issued by the treasury to finance the deficits, loose faith that they are going to be paid in a timely way, and you get into signed of the self reinforcing negative cycle. -- into kind of the self reinforcing negative cycle. we are not there yet, just the opposite. interest rates are incredibly low. that is not an issue that we have at this point in time. so it is really not a significant concern that we can't manage the debt loads that we face today as a result of the pandemic. so we can't continue down this path forever. at some point it will become an issue. exactly when, hard to know, and a matter of great debate.

so we need to change the trajectory of this on the other side of the pandemic once we are at full employment, but i think we can feel confident that we have the resources to manage this at this point in time. 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 in the airline industry, the economy would suffer a lot more. the impact on the deficit and debt even greater, and our fiscal problems even bigger. those who are purchasing those treasury bonds to finance all of this, that it'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, they are

ultimately buying on the behalf of us, americans who have savings and have been saving their money. they are investing in that treasury debt. also, global institutions by our debt -- global institutions buy our debt as well. in fact, that is 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. so if you want safety, if you know you are going to get paid back on time, you invest in u.s. treasury bonds, and that is to our collective benefit because we can borrow these extraordinarily low interest rates. in the rest of the world, they have to pay a higher interest rate over longer periods of time then we do because we are the safest asset on the planet.

we are the aaa credit of the planet. so investors from all over the world by our debt, and that is a good thing. host: tom and el paso, texas, a republican -- tom in el paso, texas, republican. caller: yes, i want to know when you think inflation is going to take off. the amount of debt that is going on right now is so astronomical that there's no way that it can't take off. you know, if i ran my household the way we are running the country and took on the multitudes of debt compared to my income, there is no way that i would have anything that i have right now. i would end up being in a constant cycle of paying back. so i guess i don't understand from a principal level how we are 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 in federal taxes the prior year? this way we can just pay for what we need. host: ok, tom. mr. zandi? guest: on inflation, as you know, inflation is very low. it has consistently been below the target the federal reserve set of 2%. 2% is kind of their bogey. it is reasonable, not too high, not too low. we can talk about why. we've been consistently below 2%. we are still well below 2%. i don't think that that is going to rise in a significant way, even back to the 2% target, at least not in a consistent way until the economy is back closer to full employment, until we get

those 10 million jobs that we lost during the pandemic back. we've got a long way to go. even if president biden got his $1.9 trillion package, under my calculations, we don't get back to full employment for another two, two and a half years. so that is a long road. i'm not worried about that. you could even go as far as to say the federal reserve wants higher inflation. they don't one inflation below 2%, so they are working really hard. that is why they are keeping interest rates close to zero, so they can get inflation back to that target. hopefully they succeed, and i think they will. once we are back to full employment, once inflation is back to that 2% target on a consistent basis, then we do need to bid it and we do need to address our long-term fiscal situation, and that means spending restraint, government spending restraint, and it means tax increases.

we are going to have to do both. i will say, to your point about if i ran my household like the federal government did, i would be a financial mess. i will point out that even despite all of the borrowing the federal government has engaged in and the higher debt load, the amount of interest expense on that debt as a percent of government revenue, or any measure of gdp, is very low. that is because of a low interest rate. i am not saying it won't be a problem down the road as interest rates begin to rise. but at this point in time, it is very low and very manageable for most from a fiscal perspective. host: you said congress, this administration would need to raise taxes. who benefited from president trump's 2017 tax cuts, and are you saying their tax cuts need to be raised now? guest: i think it is clear the

principal beneficiaries of president trump's tax cuts back in 2018 were large corporations, the top marginal corporate tax rate under the trump tax cuts come of law that he passed, went from 35% to 25%, so that is a large cut for multinational corporations, like the company i work for, moody's. the high income households and the well-to-do, people with high net worth that are wealthy, they are the principal beneficiaries of that tax cut, and that was deficit finance. we went out and borrowed money to effectively cut a check to large corporations and to higher income households. my sense 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 is where

the money is. that is where the income is. i don't think the top marginal corporate tax rate should go back to 35%. that would make american companies uncompetitive against many foreign companies, so i don't think that makes a lot of sense. but taking it back from 21% to 28%, i think that is a reasonable proposal, and i think that is what president biden proposed during the campaign. that was part of his build back better agenda during the campaign. for higher income households, same thing. the 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 is where the money is, and they are doing quite well. during the pandemic, and i am painting with a broad brush here, but in the pandemic, high income households, high net worth households, wealthy households have navigated the

pandemic without any significant financial pain. they had their jobs. they are receiving good health care. they own their own homes. house prices have risen very strongly because of the record low mortgage rates. stock prices have come ringback. they are at record highs. that is to the beneficiary of those high income households. only half of americans earn any stock, and it is 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 are the people working in those industries i mentioned earlier that have been hammered by all of this. they work in retail, restaurants, recreational activities, the airline industry. they don't own any stock or own very little stock, and the homeownership rates are a lot lower. there health care isn't quite as good.

so when we think about the need to raise future tax revenue, it is going to have to be on the folks that have done well here navigating the pandemic, and that is higher income, well-to-do households. host: 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, principally a poll that was done by american scholar historians in 1948 and was recently updated. warren g. harding was listed last, and calvin coolidge was listed second to last. his predecessor, woodrow wilson,

i think number four if i'm not mistaken, very highly. yet the performance of the economy in those cases tends to reflect, tends to suggest exactly theduring the 1920's, hd coolidge demonstrated extraordinary, they cut the federal budget i believe by 25% or more if i'm not mistaken. whereas wilson expanded the military and expenses of the federal government and left the country in depression. host: so what is your question than? caller: so what are the lessons from that period in history for us today? guest: i know my history very well back to fdr

and the great depression. prior to that, it is a little sketch here. the lesson i have taken from our history since the 1930's 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 economic and a global health care and economic crisis, that it is important for the government to be very supportive. they have to have everybody's back, both in terms of fighting the pandemic but also financially paid when i say government, that is us, collectively, -- financially. when i say government, that is us, collectively we are going to -- when we stop doing what we do, the economy will be

immeasurably worse. i have to give lawmakers credit. since the pandemic hit, almost a year ago, just about now year ago in china and then went to europe in february and hit us in march, that lawmakers have done a good job and have stepped up. we have had reasonable debates and it is important to have those debates because it makes for better policy choices. when push comes to shove, they have done what the economy needed and what the american people need and it has been very supportive peer they had our back. -- very supportive. they had our back. the pandemic is a problem everywhere. other parts of the world are struggling within us. europe immediately comes to mind. this is not over and we are

still in the crisis and the government has to continue to provide that support. when i look over the expense of american history, particularly from the great depression, the key lesson i take from that is in times of crisis, it is critical that government steps up and collectively has our back. host: rudy, sun city, california, democratic caller. caller: i would just like to find out, and i am not very good with economics. i grandson has to remind me that two plus two isn't five, but one thing is, does the president have the power to tell the treasury to wipe out the debt, just mark it off? i heard something about the fact of in the obama era and they said no.

you are the economist, so you can that me know. guest: anyone who says they are as humble as you are is probably a smart fellow. that is a great question. no, the president does not have the authority to just extinguish the debt. by the way, we don't want to do that. that would be a big mistake, because we want the ability to continue tomorrow. borrowing for investment is entirely appropriate and is a good thing and we want to be able to continue to do that. we would not be able to do that, certainly at any reasonable interest rate if we decided we were just going to extinguish the debt. here is a little more history. i will go all the way back to alexander hamilton. the genius of alexander hamilton was that he understood that principle. after the revolutionary war, the

issue debt to finance the revolutionary war and that debt was thought of that there is no way we will ever get repaid on that money, so it was being traded in the markets of that day for a couple pennies on the dollar. alexander hamilton said, look, i am going to pay you all back. by doing so, he established the principle that if you invest in the united states of america, your money is good. you will get repaid no matter what. the result has been we have enjoyed the lowest interest rates of any government on the planet for the entire history of american history. that is to our benefit. it helps us finance a trip to the moon. it helped us finance infrastructure, education of our kids and interest rates lower than anyone else on the planet. you can see real life examples

of that today there were countries that tried to extinguish debt by just saying i am not going to pay back. take a look at argentina and what kind of a mess they are in. even if the president had that authority, and the president does not, that would be a particularly bad idea. host: president biden's nominee, janet yellen, is set for a vote in the senate today. it is reported that fed -- former fed chair sailed through. what should be her priorities? guest: let me say first, she is great. she has a wealth of experience as head of the federal reserve, the san francisco fed, and a well-known academic economist. she is right person at the right place at the right time. a bubbly number one is getting that $1.9 trillion package through -- probably number one

is getting that $1.9 trillion package through. the 900 billion dollars package that was passed will run out sometime in march. the economy will need more help to navigate through. she has to figure out a way to convince enough lawmakers to sign on so we get that package in place. that is also critical to addressing the pandemic. a large share of the $1.9 trillion is for combating the pandemic, the vaccine distribution, the testing and tracing, ppe, all the things that we need to have to be able to get this pandemic under control. that has got to be a priority. thinking down the road after the pandemic, her next priority has got to be to get the economy back to full employment.

get those 10 million jobs that we lost back and get unemployment back down to where it was pre-pandemic so that all americans can begin to benefit from the economy and get those folks in the minority groups that have been hammered back up and running they are going to need a lot of help. host: $1.9 trillion -- if the $1.9 trillion is not signed into law, are we headed for a recession? is there a smaller number? guest: first question, will we go back to a recession if no additional money is provided? it will be close. i am not sure. it depends on the pandemic. it depends on how good we are at getting the vaccine out and how quickly we achieve the herd immunity that we need to get to the other side of the pandemic.

it depends on this new mutation of the virus that is more infectious, how rampant it becomes here. it depends, but it will be nip and tuck this spring and early summer if we don't get additional. we need $1.9 trillion to navigate to the other side of a pandemic without going to a recession, probably not. if you got roughly half of that it could get you to the other side without recession. i will say it leaves us in not the most encouraging place on the others the pandemic. we will still have high unemployment and we will still be struggling to get back to full swing. if the biden administration does not get the full $1.9 trillion now, it will need close to that amount of money to get the economy back to full employment in a reasonable period of time over the next two to three years. host: the current fed chair echoes that opinion. this is the wall street journal job market has long recovery

ahead says chair powell. we will go to linda in new york, democratic color -- caller. caller: was president trump's tax cut necessary at the time that was done. i was thought we were in a pretty good place and work heading in the right direction anyway. was it really necessary or would we have been fine without it? guest: no, it wasn't necessary. i think we would have been fine without it. it was expensive, about one point $5 trillion. it was at a time where this was early 2018. the economy was performing well, creating jobs. we were getting back to full

employment. so i don't think it was necessary. not to say that our tax code couldn't do some reform and not to say that lower rates for corporations, particularly given the competitive pressure from businesses overseas, because they have lower tax rates, that makes sense. but it should have been paid for. if we were going to cut taxes over here to make businesses more competitive globally, we would need to raise taxes over here to pay for it. we didn't do that. so the answer is no. it was pretty bad timing, because the economy was close to full employment at that point in time. and when you have deficit financed tax cuts, you create problems with inflation. inflation did start to pick up in late 2018. that was particularly bad

decision. it was not helpful. host:dee in maryland, a republican. caller: regarding the issue of inflation, i pretty much will bet gas will be five dollars by the end of the summer. we have all been here before and we know that will affect goods and services. how long does mr. zandi think the impact will be from higher gas races? thank you. guest: gasoline presses -- prices have picked up off of pandemic low. during the middle of the pandemic almost a year ago, everything shut down, obviously. no one was traveling and going to work. this was globally, so the demand fell and oil prices collapsed.

i can remember one day in trading, i think it was in the late spring or early summer, future oil prices were actually negative, believe it or not. for that to shoe a sense of how low prices got. all that has happened is they have normalized. have fun close to act where they were pre-pandemic, about $50 a barrel of oil and gas prices normalizing. they are off but they are up from incredibly recessionary low levels that we could not expect to continue under any scenario. i don't think this is a particularly concerning effect. it is a sign that the economy is starting to improved. it is probably a positive thing.

i don't think i'd be to concerned about that at this point. i would say one other thing about this though, once we do get to the other side of the pandemic and things start to pick up, and i think they will on the other side of the pandemic, that we might see a pickup in demand for oil that the gasoline prices will see a bit of a spike. it will be temporary, but a bit of a spike so that is one possibility. i am not concerned about the level of oil prices are gasoline prices at this point. host: you know that the record stock market throughout 2020 and responding now to the pandemic, white have we seen rallies on wall street? guest: a few reasons. one is that the lower interest rates, when interest rates are low, investors can't get any money by putting money into a checking account or