White House economic adviser Larry Kudlow tells FBN's Lou Dobbs that the Trump administration has devoted enormous resources to the COVID-19 stimulus package to keep families and small businesses afloat amid the coronavirus outbreak.
VARNEY: You can’t sugarcoat this thing, you can’t. The economy looks absolutely awful. Would you tell us, honestly, from your perspective how bad is it?
KUDLOW: Well, look, obviously this comes from the exponential spread of the virus and the containment and mitigation measures that our health team has put together, which in affect has shutdown the economy, or shut-in the economy.
So we are suffering through a very painful, very difficult economic contraction. That’s the way I look at it. It’s going to be temporary, but it’s going to be very difficult.
VARNEY: Is it a depression Larry? Is this a depression Larry? I’ve got Morgan Stanley coming out saying the second quarter we contract 38 percent. OK, on an annual basis but that’s a -- an extraordinary contraction. That is a depression.
KUDLOW: Well, look, I -- first of all, annualizing quarterly numbers, I think, in this case -- because this is not going to last a year, is the wrong approach. I’ll leave them to whatever their views are. My point is that the virus itself and the steps we’ve taken to mitigate the virus have interrupted a very strong business prosperity, a very strong jobs prosperity, and the whole economy is suffering and I do not think it’s going to get any better in the weeks immediately ahead.
I do think however that this will prove to be temporary, that over the next four to eight weeks or so -- I say that perhaps with hope, optimism, and some prayer, that’s what the health people are suggesting -- it’s not going to last the rest of the year. I do believe, Stu, that we’re taking steps to deal with this. We’ve got a $6.2 trillion assistance package on the books to help Americans keep their jobs and their families and their medium to small business -- we can talk about that in a moment. This is not going to last throughout the year and I do think that we will see a very strong economic recovery when this has played itself out.
VARNEY: Now we want to get the money out quickly. It’s supposed to start going out today, $350/$360 billion. But we’ve got reports that some of the banks, the big banks, are not ready and cannot at this moment pump out the money. What’s your response?
KUDLOW: Well I don’t know. I’m not hearing the same. Secretary Mnuchin, who has led the charge on this, has been meeting with, for example, you mentioned the big banks and he has taken amendments to his proposal, changes to his proposal, and I think they are ready. I mean all of us have been talking to the big banks and others, community bankers as well, so I think this program is ready. It went through -- these things always have glitches when they start out. It is a massive undertaking, $350 billion. But at the end of the day, these are guaranteed loans, they will be forgiven if you cover your payroll and other expenses -- you got eight weeks to do that.
I think it’s a tremendous opportunity. A 1 percent interest rate. Again the U.S. government is guaranteeing these loans. And let me also say, for people who are looking to apply they should be moving rapidly. Any bank -- I mean any FDIC bank, Federal Reserve sponsored bank, Federal Credit Unions, all of those are eligible for this program and it’s not going to be hard to put together. So I just -- I think the kinks will be worked out and we’re starting this up today and there’s already brisk demand as there must be.