U.S. Treasury Secretary Steven Mnuchin warned Republican senators on Tuesday that the country’s unemployment rate could hit 20% if they failed to act on a proposed coronavirus rescue package and there was lasting economic damage, a person familiar with the closed-door meeting said.
Mnuchin met with senators to persuade them to pass a $1 trillion stimulus package that would send cash to Americans within two weeks, and backstop airlines and other companies. The Senate is majority-controlled by President Donald Trump’s fellow Republicans.
A Treasury official said Mnuchin was not providing a forecast but trying to illustrate the potential risks of inaction.
“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 spokeswoman Monica Crowley said in an emailed statement.
Mnuchin’s comments to the senators were first reported by Bloomberg.
The warning was similar to one issued to U.S. lawmakers at the depths of the 2008 financial crisis, when Treasury Secretary Henry Paulson and Federal Reserve Chair Ben Bernanke went to Capitol Hill to urge passage of a $700 billion plan to buy toxic mortgage assets.
They told lawmakers here that inaction could devastate an already weak economy, sending the jobless rate soaring. Congress ultimately passed the plan and later stimulus measures to tackle the crisis. Unemployment peaked at 10.2% in October 2009.