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Big fiscal players bear grim tidings for rest of 2020 due to coronavirus

Federal Reserve Chairman Jerome Powell testifies remotely Tuesday

Federal Reserve Chairman Jerome Powell testifies remotely Tuesday at a Senate Banking Committee hearing. Credit: Bloomberg / Daniel Acker

Split view of crisis ahead

Overall, the testimony from the top was as sober as it gets. In a widely watched Senate hearing, Federal Reserve Chairman Jerome Powell and Treasury Secretary Steve Mnuchin on Tuesday offered different takes on the risky business that lies ahead in reviving an economy damaged by the coronavirus pandemic.

Both men were picked by President Donald Trump. Of the two, Powell drew nasty fire from the president well before this crisis. Trump griped then that Powell's Fed was not pouring enough dollars into the economy. By contrast, Mnuchin echoes Trump's political messaging.

On Capitol Hill, Powell warned of long-term economic damage if the policy response from the administration and Congress was too weak. But he avoided giving explicit advice on how they should proceed.

“What Congress has done to date has been remarkably timely and forceful,” Powell said. “But we need to step back and ask, ‘Is it enough?’ ” And he warned that layoffs by state and local governments could slow recovery because those entities account for "something like 13% of the workforce."

Powell also warned over the weekend that a full economic recovery may take until the end of 2021 and require the development of a coronavirus vaccine. The gloomy scenario was reinforced in a new report by the nonpartisan Congressional Budget Office, which predicts the nation's unemployment rate will exceed 11% for the rest of the year and average 9.3% next year, the latter of which would be near the levels during the worst part of the Great Recession in 2009.

Mnuchin warned that "permanent damage" to the economy could result — if states extend for months the shutdowns on normal activity aimed at fighting the spread of coronavirus. Earlier Tuesday, happy talk about recovery persisted from the White House.

Members of the Senate Banking Committee asked Mnuchin and Powell when their agencies will distribute more of the emergency aid that Congress provided back in March to struggling small businesses and households. Powell said a loan program the Fed is creating for small businesses should be operating by the end of the month. The so-called "Main Street" lending program is aimed at mid-sized companies that cannot access credit markets.

NY primary vote back on

Now it’s settled: New York will hold a Democratic presidential primary on June 23 despite having Joe Biden as the only active candidate, Newsday's Yancey Roy reports.

A federal court on Tuesday upheld a lower-court decision reinstating the primary, and Democratic commissioners on the state Board of Elections promptly said they wouldn’t try to take the case to the U.S. Supreme Court.

That means the contest is back on — a victory for former candidate Andrew Yang and supporters of Sen. Bernie Sanders (I-Vt.), who want the chance to select convention delegates to try to influence the Democratic platform. The legal fight began last month when the state's Democratic election commissioners voted to cancel the uncontested primary, citing health risks from the coronavirus pandemic.

Making meds partisan again

Despite cautions issued by his own government officials, Trump claims he's been taking hydroxychloroquine to ward off COVID-19, for which he said he's regularly tested negative. On Tuesday, he helped cast his own bizarre "health" advice — that "it gives you an additional level of safety" — as even more of a partisan issue.

Trump bashed a scientific study as a personal attack on him.

"It was a Trump enemy statement," the president said, apparently referring to a study of veterans hospitalized with COVID-19 that found those taking hydroxychloroquine had a higher rate of death than those who did not.

House Speaker Nancy Pelosi (D-Calif.) countered his infomercial message on Monday by expressing alarm about Trump's reported use of the antimalarial drug. The president is "morbidly obese," she said, referring to a group at risk of complications. Trump snapped: "Pelosi is a sick woman. She's got a lot of problems — a lot of mental problems."

WHO wins that point

Trump seems to make up his facts as he goes. Now the top medical journal Lancet has rebuked him for incorrectly citing research it published on the coronavirus outbreak. Trump issued the false claim in a letter threatening to cut off U.S. funding permanently to the World Health Organization.

Trump said the global health group "consistently ignored credible reports of the virus spreading in Wuhan in early December 2019 or even earlier, including reports from the Lancet medical journal.” Not so, the editors of the Lancet said, adding it published “no report in December, 2019, referring to a virus or outbreak in Wuhan or anywhere else in China.”

The first such reports were published by the journal on Jan. 24, describing the first 41 coronavirus patients from Wuhan and evidence of person-to-person transmission. That study was led by scientists and doctors from Chinese institutions who reportedly shared all information.

More coronavirus news

See a roundup of the latest pandemic developments from Long Island and beyond by Newsday's reporting staff, written by Bart Jones. For a full list of Newsday's coronavirus stories, click here.

Another watchdog muzzled?

Trump has been carrying out an unprecedented purge of officials assigned to monitor the conduct of agencies in his domain. The latest backlash concerns the Transportation Department's acting inspector general. Mitchell Behm was in that role until last week, when he was replaced with the head of another agency.

Rep. Peter DeFazio and two other senior House Democrats on Tuesday demanded Behm's reinstatement. One issue that fell to him was Transportation Secretary Elaine Chao's possible conflicts of interest. The department reportedly awarded favorable treatment to Kentucky, where her husband, Senate Majority Leader Mitch McConnell, is up for reelection this November.

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