JUDY WOODRUFF: As the economic
fallout from the coronavirus
outbreak continues, businesses

across the county
are being crippled by
closings and layoffs.

The number of Americans filing
for unemployment benefits surged
last week to a 2.5-year high.

For a look at how this
economic downturn compares
to others, Paul Solman
sat down with Harvard

University economist Ken
Rogoff. His book "This Time Is
Different" examines the history

of financial crises.

It's part of our regular
series, Making Sense.

PAUL SOLMAN: Is
this time different?

KENNETH ROGOFF, Economist,
Harvard University: Well, this
is something extraordinary we're

facing.

It is really hard to think
of a historical parallel. I
have talked about this with my

co-author, Carmen Reinhart,
and we have to go back to
1918-1919, the Spanish influenza

epidemic, which killed, you
know, millions and millions of
people, to think of something

like this worldwide.

And it's not exactly the same.
It was after World War I, when
things were pretty bad already.

PAUL SOLMAN: Is this a war?

KENNETH ROGOFF: I think so.

I really feel like it's an
alien invasion. We're being
occupied. We're hiding in our

houses. We're told not to leave.
We're having a sudden stop
in economic activity. We are

going to see a recession, at
least in the short term, the
likes of which we have not

seen at least going
back to World War II.

PAUL SOLMAN: In terms of
the U.S. economy, the global
economy, how bad could it get?

KENNETH ROGOFF: Well, we don't
know how long we're going to
be in lockdown. When will there

be antivirals? How soon
will there be a vaccine?

We just don't know how the
crisis will unfold. We're still
in the war, and until we come

out the other end,
it's hard to know.

But I think what we do know is,
the short-term drop in output
and quite possibly in employment

could be worse than 2008.

PAUL SOLMAN: Is there any
chance that we won't come
out of it in a year or two?

KENNETH ROGOFF: If the virus can
be conquered, and we can reach
a stable situation, I'm very

optimistic that we will
be able to do that.

But it will be different for
different countries. Italy's in
trouble. I mean, they have big

pension problems, big debt
problems, growth problems going
into this. Emerging markets

are in trouble. We're actually
already seeing emerging markets
start to fold under the weight

of this.

I don't know where China will
be. That's a big question
mark. I mean, everybody thinks

China did great, China's
conquered this. Not
their economy. If they're
lucky, getting people

back to work in the
manufacturing sector,
but who's going to buy
the stuff once they

start manufacturing? The rest
of the world's in recession.

PAUL SOLMAN: Are Congress,
the president and the Fed
responding appropriately?

KENNETH ROGOFF: Let's say
they're moving forcefully
in the right direction.

I think their response here
to protect the healthy part of
the economy needs to be just

massive.

PAUL SOLMAN: More massive
than what they're doing now?

KENNETH ROGOFF: Oh --
oh, $1 trillion is just
a starter package on
what's going to end up

needing to be done here.

If you're shutting down a $23
trillion economy for two months
or three months, the expenses

are just massive, workers losing
their jobs, businesses going
out of business. You can't

allow that to happen too far.

So, no, I think we will see many
further packages of different
types, not all like this one.

PAUL SOLMAN: Bailing out the
airlines, for example, the
hotel industry, restaurants?

KENNETH ROGOFF: So, one of the
tough things in this -- and I
don't know how to make that

judgment -- is how
much, who to bail out.

But, certainly, the hospitality
industry, to some extent the
airlines, they're bystanders

here. They didn't create this.
They weren't flying too many
routes and about to go bankrupt.

So, I think you have to --
first, really importantly,
the health care sector.

We have to go in a military,
wartime stance, if necessary
taking over parts of the private

sector for production
of mass of respirators,
building up facilities.
That will calm people

down. That will
help things pass.

Then you have to help
the directly affected
people and sectors. And
then the kind of bailout

that they're talking about with
sending checks to individuals,
that's to protect the healthy

parts of the economy.

All of these things need to be
done. And the Fed has to come
in and the Treasury to provide

loans to corporates,
to businesses, so they
don't go bankrupt, so
that we have businesses

when we come out of this.

PAUL SOLMAN: You are someone
who's worried about governments
taking on too much debt.

That's now not a
consideration anymore?

KENNETH ROGOFF:
No, absolutely not.

I mean, there's never been a
concern about our government's
defaulting. The concern is

being able to borrow massively
when you need to. That's the
whole point of saving for a

rainy day. When it
rains, you want to really
open up the floodgates.

And, here, I just -- there's
no limit. We're in a war. You
have to win the war. I would

have no problem with the
government debt magically
going up $5 trillion
in the blink of an eye,

if we could get out of this in
two or three months healthily.

This is an emergency. You're
not worrying about your credit
standing right away. I don't

think that's going to a problem.
And you know what? If we have
inflation at the end of this,

so what, if that is what we
needed to do to win this war.
We're trying to protect the

American people, protect our
interests, protect the future.

This is really -- think like
World War II, World War I. It's
this -- tiny little viruses

invading us, but you know,
make no mistake, this is like
a war, an alien invasion.

JUDY WOODRUFF: Sobering.

Once again, that was Paul
Solman talking to Harvard
economist Ken Rogoff.