Phantom Palihuptia on Coronovirus Stimulation: Give Americans Money

Any additional coronavirus relief from Congress should primarily focus on giving money directly to Americans, venture capitalist Chamath Palihapatia told CNBC on Tuesday.

“We know that this economy is always consumer-led. It is consumption that drives growth in the United States. It drives jobs and capital allocation and the more money is in the hands of individuals, the better They can support businesses, buy different products, “the founder and CEO of investment firm Social Capital said on” Squawk Box. ” “That’s how we develop ourselves.” Consumer spending accounts for about two-thirds of US economic activity.

While lawmakers in Washington and the White House remain deadlocked during the talks, Paliapitia said he believes there is a pain in the US economy that needs to be addressed as it exits the coronovirus-induced recession.

“Unlike other recessions, where you don’t know where the bottom was, this recession was actually pretty easy … The first few months were down because literally everything was closed, so we went to zero,” Palihapatia, who One was an early Facebook executive. “Now we are slowly returning to normalcy, but the reality is that the economy is not in a good place.”

However, it would be a mistake for Congress to provide additional support for the business. He is already critical of some provisions of the $ 2.2 trillion CARS Act, which was approved in late March, as well as the Federal Reserve’s extraordinary monetary response. In early April, he said billionaire and hedge funds are benefiting from the government’s response at the expense of most Americans.

As part of earlier relief efforts, Americans had a round of direct payments and a weekly $ 600 per week federal boost for state unemployment insurance. Unemployment growth benefits expire in July. President Donald Trump signed an executive order last month offering partial options.

On Tuesday, he said, “The first phase of excitement was, you know quite honestly. Wasted. A lot of money was sent to companies. Those companies did not allocate it properly.” “They were still eliminating tens, if not hundreds, of thousands of employees, the day after the true excitement that they could. The money was not functionally useful.”

Some major US airlines have said they have plans to lay off or lay off thousands of employees Perhaps as soon as next month, after $ 25 billion in Kovid-19, aid for the industry designed to protect aviation jobs is ending. Airlines and members of Congress have pushed for additional support to industry jobs through next March.

More than 5 million loans were approved through the Paycheck Protection Program, which was set up to help small businesses across the country as they grapple with government restrictions and changes in consumer activity due to the epidemic Used to do

Members of the Trump administration have deferred the PPP program as a saving of jobs and received some strong employment benefits this summer. However, some people who have received loans – who can convert to grants if certain conditions are met – have warned that they will still need to lay people out anyway. Critics of the program point to the number of large, and in some cases publicly traded, companies that lacked credit.

Palihapitia said that he believes that supporting companies, rather than directly financing American companies, is in effect the long-term change in the economy that will happen anyway. “The more money we waste and give to zombie companies, we’re just going to be pushed down the road and all of this is unnecessary.”

Also during his “squawk box” interview, Palhapatia announced his SPAC, social capital Hedosophia II, will acquire Opendoor, an online marketplace to buy and sell houses. The special-purpose acquisition company values ​​Opandoor in a $ 4.8 billion deal.