Yahoo Finance’s Brian Sozzi and Alexis Christoforous speak with Aron Betru of the Milken Institute about the coronavirus crisis and expectations for the next relief plan.

Video Transcript

BRIAN SOZZI: In rally mode-- The Dow is up more than 460 points. I say surprisingly, because we did get a pretty bad and pretty shocking jobless-- jobless claims reading this morning. I want to get right to Aron Betru, managing director, Center for Financial Markets of the Milken Institute.

Aron, good to see you again. You know, there's a lot of speculation starting to come into the market that we need-- that we need a fourth stimulus plan. Do you share that need, and how should that be applied, especially to underserved communities in the country?

ARON BETRU: Thank you for having me. Before I begin, let me just offer my condolences to all the folks that are dealing with the loss of their loved ones at the moment. It is seriously a tragedy.

You've been hearing quite a bit about what was in the third stimulus package. The health crisis, as unprecedented as it was, the response thus far has been unprecedented. But was it fast enough that it hit everything that we needed to? I think the question isn't so much, did we hit all the areas? I think what we have to realize is, the first bit was purely to address the negative impact of the health crisis itself.

Now we have to start thinking about, how do we build back? Clearly, clearly, we're headed towards a recession where we're not talking about, you know, a 10% or 20%. We're not talking about something that's a short-term recession but something that could potentially last much, much longer. While we're waiting for the health measures to actually take hold, this is the perfect time for members of Congress to actually pause and actually think about, how do we build back and build back better to address much larger issues?

And fortunately, there are a number of members of Congress on both sides, both chambers, that are actually starting to have those conversations. And there's a couple of things in particular that they're bringing about. One, I would say, we need to be thinking about infrastructure. One of the largest areas of potential job growth that we need to be fixing is definitely addressing the longstanding infrastructure gap that we've had, but we need to take the lessons learned of the past.

When we were talking post-2008 and '09, it was all about shovel-ready projects, and we found out there weren't that many. I think what we're going to see more folks saying is, we actually need to put the shovels in the ground to create it, and I'm talking about predevelopment funds in particular that would actually help the states to identify resilient infrastructure that's been addressed with a lot of these things.

We're going to end up seeing strategic industries needing to be prioritized. Never before had we had a question of the strongest country in the world not being able to tap supply chains or addressing a pandemic like today. We're going to see corporations asking themselves, how do they harden their supply chains? And we're going to see repatriation coming back.

But where are the areas where a stimulus package should provide that? Fortunately, in the 2018 Tax Cut and Jobs Act, there was a measure around opportunity zones which provided unrealized capital gains to be made into low-income neighborhoods. The principal area was in the real estate area. We didn't see enough of it in the job-creating, operating company side of it.

We didn't even see too much on corporations getting involved. I think that's going to change. And I think you're going to find pharmaceutical companies, medical device companies, taking advantage of those type of provisions, and they should be thinking about repatriating supply chains in a serious way.

And I would say probably the third and one of the most important areas is addressing the longstanding wealth inequality in this country. And I think we're going to see a number of measures that this government has had on design, specifically around the Minority Business Development Agency, bringing a little bit more diversity in terms of who's participating in the supply chain and the recovery going forward.

ALEXIS CHRISTOFOROUS: Aron, what are your thoughts on how the government should be handling the lowest denominator right now, those folks who perhaps are on fixed income, right? Just-- they're living off their social security? How do we reach those people and help them through this pandemic in a meaningful way other than perhaps-- You know, we're seeing these checks are going to start going out to folks in the next couple of weeks. But in addition and above and beyond that, what should the government be doing?

ARON BETRU: Well, let's-- let's be honest here. I think whatever we do on the economic front pales in comparison to what we need to do on the health front. Clearly, clearly, that is the number one thing, and we need to make sure that parts of the first and second stimulus actually are resulting in a rapid medical response.

However, this is not like something that was done in the past where we could do things in sequential order. We need to walk and chew gum at the same time and make sure that we are planning on the economic front. And to your point, those that are kind of at the bottom of the pyramid in this country, it's-- we have to remember, prior to this crisis, the average household could not withstand a $400 economic shock, and the average small business had, like, three weeks of cash on hand.

The average small business is the one that actually houses all the job growth in this country. Like, 2/3 of the job growth is from the small business side. So for those that are at the bottom, and particularly in most disadvantaged populations, getting them the immediate cash is-- is a critical part of it, making sure that they have jobs to go back to.

And all of these things are just an intermediary fix just to make sure the negative economic shock isn't-- is something that they can withhold for this period of time, but keeping them in mind as we think about the recovery, bringing them forward, because we've always been talking about pre-crisis what happens with artificial intelligence and this disadvantaged group actually being marginalized going forward. As we rethink of our entire economy, that has to be kind of central in the fourth stimulus package and making sure that they're healthy, that they withstand [? the ?] [? shock, ?] and that they are hired later on.

BRIAN SOZZI: All right, let's leave it there. Aron Betru, managing director, Center for--