Economist says congress needs to offer debt relief to save US economy after coronavirus
Fox Business speaks with economist Peter Morici about the potential collapse of the United states economy due to the looming debt New Yorkers are facing.
The United States economy could come crashing down due to New York Gov. Andrew Cuomo’s Tenant Safe Harbor Act, which gives protection for renters facing financial hardship during the coronavirus pandemic, according to one economist.
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Peter Morici, an economist and business professor at the University of Maryland says the issue of debt that was created because the government encouraged people to take it by giving them 'a holiday' on their rent.
“This is the thing that could bring the economy down," Morci told FOX Business.
Signed as an executive order in May, the Tenant Safe Harbor Act prohibits courts from evicting residential tenants who experienced financial hardship during the coronavirus. Nearly two-thirds of New York City residents are renters and according to the Community Housing Improvement Program, 25 percent of them haven’t paid rent since March. Without this rental income, many landlords simply can’t pay their mortgages and tax bills, Morici said.RENT EVECTION BANS BEING TO EXPLORE IN SOME STATES, FUELING HOUSING CRISIS CONCERNS“Whenever you talk about suspending rent or suspending mortgages, there's always someone on the other side of that IOU – someone that's not getting paid,” Morici explained.
More than 700,000 of the city’s workers lost their job as a result of the pandemic, according to New York University’s Furman Center. But as the state reopens, four months of debt is looming over the heads of these New Yorkers and Morici believes it won’t just be rent collectors knocking at their door.
“It's really much bigger than rent. It's also credit card debt, auto loans, mortgages, and so forth,” he added.NEW YORK SCITH RENT LAW EXPOSES TENANTS TO 'SLUM SITUATIONS'Morici says if this debt crisis is handled correctly, “there's no reason why the economy cannot be in three years where it was last year."
The only solution Morici sees is a bailout of American debt.
“If the federal government can print three trillion dollars in stimulus relief, they probably can print three trillion dollars more in debt relief,” he said. “If people can't pay, they can't pay. The question is, what do we do with these lives?”
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