U.S. Treasury Secretary Steven Mnuchin said Monday he is not worried about the $3 trillion the government is spending to alleviate the coronavirus crisis because it can finance the debt at unusually low interest rates.
As the pandemic forced the closure of thousands of U.S. businesses and the layoffs of more than 30 million workers, Congress and President Donald Trump agreed to send the money to companies and most U.S. taxpayers to help them through the crisis.
With the fast-paced emergence of the pandemic, the money was newly minted, not covered by current tax revenues. But Mnuchin told CNBC he was not concerned.
“One of the reasons I do feel comfortable with us spending all this money is because interest rates are very low,” he said. “And we’re taking advantage of long-term rates. Between 10 years, 20 years, and 30 years, we’re borrowing an awful lot of money long term so that we can lock in this $3 trillion for a very, very long period of time.”
Long-term Treasury interest rates are near their lowest levels ever. The 10-year-note yield was at 0.68% on Monday, down from 1.87% in December. The 30-year bonds traded at 1.38%, down from 4.5% in 2011.
The Treasury chief said, however, the government would not refinance existing debt.
“We obviously don’t want to disturb the markets too much,” he said. “I don’t think we need to buy back debt. ... I think we have tremendous opportunities without having to buy back debt.”
The government on Friday said the country’s April unemployment rate was 14.7%, the highest since the Great Depression in the 1930s.
Mnuchin said Sunday the jobless rate could reach 25% before falling in the second half of the year.
The U.S., with nearly 80,000 coronavirus deaths, has recorded far more deaths than any other country in the world. Some health analysts are predicting that 137,000 Americans could die by August.