WASHINGTON • The White House is asking Congress to allocate US$500 billion (S$723 billion) for two separate waves of direct payments to American taxpayers in the coming weeks and another US$300 billion to help small businesses continue to meet payroll, according to a Treasury Department proposal circulating on Capitol Hill.
The outline, a copy of which was obtained by The New York Times, calls for a total of US$1 trillion in spending for these programmes, which would also include US$50 billion for secured loans for the airline industry, and another US$150 billion for secured loans or loan guarantees for other parts of the economy hard hit by the virus crisis.
Treasury Secretary Steven Mnuchin started selling the plan on Tuesday to Senate Republicans, warning that without it, the US could face a 20 per cent unemployment rate because of the impact of the coronavirus pandemic, according to people familiar with the matter.
He told the senators that he believes the economic fallout would be potentially worse than the 2008 global financial crisis.
Extraordinarily high unemployment, he said, is a possibility if lawmakers do not swiftly provide financial assistance to wage workers and small and medium-sized businesses.
"During the meeting with Senate Republicans today, Secretary Mnuchin used several mathematical examples for illustrative purposes, but he never implied this would be the case," Treasury Department spokesman Monica Crowley said.
For many lawmakers, plunging stock prices and an abrupt drop-off in consumer spending during a time of social distancing has crystallised the need for Congress to act quickly and boldly.
The US Federal Reserve has already used much of its toolbox to shore up the economy - bringing rates close to zero and announcing crisis-era lending programmes - leaving policymakers to ease the extent of the damage with fiscal stimulus.
The unemployment scenario raised by Mr Mnuchin would be a dramatic turn from last month, when the US jobless rate fell back to a half-century low of 3.5 per cent, as average hourly earnings climbed a steady 3 per cent from a year earlier.
But since then, the virus has continued to spread in the US. On Tuesday, there had been more than 6,200 cases in the country and 105 deaths, according to a tally by Johns Hopkins University.