WASHINGTON • The Congressional Budget Office (CBO) in the US has projected that the coronavirus pandemic would inflict a serious long-term blow to the economy, taking 3 per cent off the gross domestic product 10 years from now.
Without adjusting for inflation, the budget agency said on Monday, the pandemic would cost nearly US$16 trillion (S$22.4 trillion) over the next 10 years. Adjusting for inflation, that number would still total US$7.9 trillion. The estimates were an official tally of the damage the health crisis has wrought, reflecting expectations of dampened consumer spending and business investment in the United States in the years ahead.
The estimate, requested by Senator Chuck Schumer of New York, the Democratic leader, and Senator Bernie Sanders of Vermont, is likely to become wrapped in the continuing debate in the Senate over another coronavirus relief package, as Republicans urge restraint while Democrats push for another large round of spending.
Much of the diminished output would come from the energy and transportation sectors, which will grow more slowly as Americans pull back on travel.
Mr Phillip Swagel, the director of the budget office, cautioned that "an unusually high degree of uncertainty surrounds these economic projections" because it remained unknown how the pandemic would unfold during the remainder of the year, or how social distancing and future relief measures enacted by the federal government might affect growth.
"If future federal policies differ from those underlying CBO's economic projections - for example, if lawmakers enact additional pandemic-related legislation - then economic outcomes will necessarily differ from those presented here," Mr Swagel wrote in a letter to Mr Schumer and Mr Sanders.
The two had asked the budget office last Wednesday to examine the effect of the pandemic on the economy over the past few months as Democrats press for another quick and substantial round of federal coronavirus aid to spur a recovery.
Last month, the House passed a US$3 trillion stimulus package as an opening offer in anticipated negotiations with the Senate.
Senate Republicans rejected its price tag and scope, arguing that it contained provisions unrelated to relief for families and businesses grappling with the health and economic toll of the pandemic.
Lawmakers have begun discussing a number of proposals, including toughening liability protections for businesses, providing aid to states and watering down unemployment benefits approved in an earlier US$2.2 trillion stimulus package. But some Republicans have begun pushing back against the idea of more federal spending, raising the spectre of the ballooning national debt.
In a joint statement, Mr Schumer and Mr Sanders said the budget office's estimate undercut Republican arguments that Congress should wait to approve another relief package, as well as President Donald Trump's call to include tax cuts in the next measure.
"In order to avoid the risk of another Great Depression, the Senate must act with a fierce sense of urgency to make sure that everyone in America has the income they need to feed their families and put a roof over their heads," the senators said. "The American people cannot afford to wait another month for the Senate to pass legislation. They need our help now."
But Republican Senator Mitch McConnell, the Majority leader, gave little indication that the Senate would soon enter negotiations on another relief package. Instead, he announced on Monday that he hoped the Senate would take up a measure that would soften the terms of a federal loan programme intended to help small businesses during the pandemic.
The House approved the measure last Friday, 417-1. The legislation would give companies more time and flexibility to use the money, altering the pay-cheque protection programme to allow small businesses 24 weeks instead of eight weeks to spend the loan funds.
NYTIMES
