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Washington's trillion-dollar coronavirus fix may be way too little, too late

Analysis: As lawmakers and the administration hammer out another coronavirus spending package, experts say it could take twice as much — or more — to prevent an economic calamity.
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WASHINGTON — One trillion dollars sounds like a lot of money.

It might be too little, too late to save the economy from the coronavirus.

"I fear we are in for a once-in-a-lifetime shock to our economy that will make 2008 look small," Gary Gensler, a former chairman of the Commodity Futures Trading Commission, said in a telephone interview.

Gensler was one of more than a half-dozen current and former government officials, Democratic and Republican, who told NBC News that the White House and Congress should be looking at injecting a sum much larger than — even double — the $1 trillion stimulus package proposed by President Donald Trump.

Several said they believe that the White House and top lawmakers will see a need for more money, given the size of the economy and the hit it is taking across sectors, but that they may send relief in additional batches that are more politically palatable than a multitrillion-dollar chunk.

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"The amounts of support they're talking about would be about right if we were dealing with a normal recession, but that's not what this is — this is much broader and much deeper than any recession we've ever seen," Tony Fratto, who was a White House and Treasury Department official during President George W. Bush's administration, said in an e-mail exchange.

"They're estimating 1 trillion, but it probably needs to be $2 trillion — just from fiscal spending providing direct support," he said. "They also need to be much faster. We needed it yesterday. Every day of delay means more hundreds of thousands of Americans losing their jobs. Speed is critical."

But if sloth can kill the economy, speed can kill political careers.

The last dozen years of American politics have been defined by the populist backlash that followed the 2008 financial crisis and the ensuing bailouts and fiscal stimulus. The era gave rise to the tea party movement on the political right and the Occupy Wall Street movement on the political left — to Trump in the Republican Party and the debate-shaping Bernie Sanders in the Democratic Party.

With Trump and most lawmakers on the ballot in November, politicians are weighing the collective peril of averting another depression against the individual risk of arousing populist fury with subsidies perceived as "bailouts."

No one wants to take a bad vote, and aides in both parties report that phones are ringing off the hook with constituents urging their bosses not to vote to bail out corporations.

Trump's plan, which is more than the $750 billion alternative put forward by Senate Minority Leader Chuck Schumer, D-N.Y., would be divided between direct payments to workers and subsidies for distressed businesses.

Senate Majority Leader Mitch McConnell, R-Ky., unveiled his version of the stimulus plan Thursday without an exact price tag. But he said the bill, expected to be in the neighborhood of $1 trillion, "will not be the last word."

The main reason the coronavirus promises to be so costly is that it has halted so much of the nation's economic activity at once. Federal and state governments have asked — and in some cases required — businesses to stop operating, and consumers and workers have been encouraged to stay in their homes.

Most fiscal stimulus plans represent efforts to juice activity or to save particular companies or industries. But in this case, the government is essentially trying to keep businesses from closing — and workers from being unemployed — while their operations pause.

"Here's a case where we're paying a lot of money to stop things," Trump said at a White House news conference Thursday.

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A Republican who has worked on Capitol Hill and advised the Trump White House said that the president's decision to lay down a trillion-dollar marker was meaningful and that it's important to enact the bill quickly and move on to the next tranche of spending.

"Get one done, but it's not one and done," this person said. "With a trillion dollars, that's a signal that they do understand that the economy is in deep short-term trouble and that they need to keep the pipeline going. At the same time, we are all in uncharted territory. We need another rescue package after that is done."

Pia Carusone, founder and CEO of Republic Restoratives Distillery in Washington, D.C., said she is trying to save the jobs of her remaining dozen employees after the closing of bars and restaurants in the nation's capital forced her to lay off workers at her public-facing shop. She and other small business owners need the government to step in with cash, not loans, she said, because "if you can survive [the shutdown] it's not tenable to come out under a mountain of debt."

"There's no time," said Carusone, who was chief of staff to then-Rep. Gabrielle Giffords, D-Ariz., for many years. "There are no weeks or months that companies like ours can wait. That's more people out of work, more people collecting unemployment and more people without health care."

Fratto said policymakers have the tools to ensure that relief efforts aren't open-ended or wasteful even if the bottom lines are big.

"The key is to create these programs so that they're easy to dial down and end, and that can be done," he said.

The most crucial question may be whether Washington can act as quickly — and with enough money — as the virus is spreading and the economy is crashing.