Mnuchin says US unemployment could surge without rescue: Reports

United States Treasury Secretary Steven Mnuchin has warned Republican senators that the country’s unemployment rate could hit 20 percent 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 senators on Tuesday 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.

The US unemployment rate peaked at 10.2 percent in October 2009 during the global financial crisis but fell to a half-century low of 3.5 percent last month.

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 a statement emailed to Reuters News Agency.

Mnuchin’s comments to the senators were first reported by Bloomberg.

The warning was similar to one issued to US legislators 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 $700bn plan to buy toxic mortgage assets.

They told legislators 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.