• USA. Street Street sinks 7.8% after panic over the decline in oil and the coronavirus

Just 11 years ago, on March 9, 2009, Wall Street marked its minimum in the 'junk mortgages' crisis. That day, the three indexes of the big American companies - the Dow Jones, the Standard and Poors, and the NASDAQ - hit bottom, with falls of between 54.1% and 56.8% in relation to their maximums, reached, exactly, 17 months before.

The United States destroyed 9,000 jobs a day, the two largest banks - Citigroup and Bank of America - and the largest insurer - AIG - were nationalized, the state had injected capital into several thousand more entities. General Motors and Chrysler had also received public funds, and two and a half months later those two companies, too, were to be nationalized.

Now, the situation of the American economy is different. For better, and also for worse. The unemployment rate is 3.5% and in February that country generated just 9,413 daily jobs (including Saturdays and Sundays) on average. But it is also true that, with official interest rates in a band ranging from 1% to 1.25%, the monetary policy's margin of action is practically zero. So the only measures that the US can afford are tax. The public deficit, which has grown with Trump from 3.5% to 4.8% of GDP, will continue to expand. Fortunately, with the ten-year bond rates at record lows and falling, the world's largest economy has room to borrow more.

And fiscal measures is what the White House wants. Trump, who has spent the weekend at his Mar-a-Lago country club in Florida, returned to Washington on Monday and met with his economic advisors to address the crisis. Shortly after, in a press conference without questions, the president announced that on Tuesday he would meet with the Republican leaders of the Senate to approve a temporary reduction of retentions (Social Security and Personal Income Tax) and a sick leave system for workers for hours. This last group is the most vulnerable, since their income is lower and they have no protection. Trump did not specify any of these plans: neither how much will it be or reduction of contributions, nor how that sick leave system will be organized.

The measures that the White House team is considering fall short of what was requested by the Democrats, who control the House of Representatives, and have requested a sick leave system for all people who contract the virus, as well as another for those parents who have to take care of sick children.

The republican co-religionists of Donald Trump oppose many of these measures, since they frontally reject any regulation of the labor market or the entry of the State into the health system, which in the US is, above all, private.

There are companies that are changing their human resources policy to deal with Covid - 19. The Uber transport company, for example, has announced that it will pay two weeks off those drivers who contract the disease, even though, legally , their Uber workers are not employees, but freelancers. Others, such as the Chipotle restoration chain, have been accused of breaching their own commitments to their employees in the epidemic.

The reforms are because the economic vulnerability of American workers to the coronavirus is unimaginable in Europe. 29% of private sector employees do not have sick leave, according to the Bureau of Labor Statistics, which depends on the Department of Labor. Therefore, the days that do not appear in your job do not charge. It doesn't matter if that's because they are sick, because there is a snowfall that prevents them from reaching the place of employment, or for any other reason. Add to that the fact that 8.5% of the population (27.5 million people) lacks health insurance of any kind.

Even those with medical insurance face overwhelming costs. Although the tests to detect the disease are free in many cases, hospitals and insurers charge for visits to the ER, ambulances, and other medical services linked to the 'tests'. This means that the total bill for a coronavirus test can easily be around $ 3,250 (2,850 euros). If you add to this the loss of salary for a day when you are not going to work, the cost to the person is enormous. That, in turn, makes people with symptoms continue to go to work, which causes the spread to go off.

But the measures that the White House is assessing go beyond. They include a possible temporary cancellation of the withholdings of workers to Social Security - which in the United States are a unique rate of approximately 6.2% of the gross salary -, which would imply in practice a rise in the salary for taxpayers who they are subject to this tax, which is applied to income from work income up to the first $ 128,400 of income (111,850 euros). It is also being studied to postpone the payment of Corporate Taxes to certain companies, especially airlines and, perhaps, companies in the leisure and tourism sector, which are being severely affected by Covid-19.

According to the criteria of The Trust Project

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  • Donald Trump
  • U.S
  • Covid 19
  • Coronavirus
  • economy
  • Macroeconomy

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