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Mexico’s Leftist Leader Rejects Big Spending to Ease Virus’s Sting Mexico’s Leftist Leader Rejects Big Spending to Ease Virus’s Sting
(32 minutes later)
MEXICO CITY — For the second time in a month, top business leaders sat down with Mexico’s president to implore him to do more to save the economy.MEXICO CITY — For the second time in a month, top business leaders sat down with Mexico’s president to implore him to do more to save the economy.
People were losing jobs by the tens of thousands, they warned. Small and medium-size companies, which employ more than 70 percent of the Mexican work force, were running out of cash. The government needed to intervene, they argued. The data was irrefutable.People were losing jobs by the tens of thousands, they warned. Small and medium-size companies, which employ more than 70 percent of the Mexican work force, were running out of cash. The government needed to intervene, they argued. The data was irrefutable.
“I have other data,” shrugged the president, Andrés Manuel López Obrador, according to two businesspeople with direct knowledge of that conversation in April. “You do whatever you think you need to do, and I’ll do what I need to do.”“I have other data,” shrugged the president, Andrés Manuel López Obrador, according to two businesspeople with direct knowledge of that conversation in April. “You do whatever you think you need to do, and I’ll do what I need to do.”
Across the globe, governments have rushed to pump cash into flailing economies, hoping to stave off the pandemic’s worst financial fallout.Across the globe, governments have rushed to pump cash into flailing economies, hoping to stave off the pandemic’s worst financial fallout.
They have mustered trillions of dollars for stimulus measures to keep companies afloat and employees on the payroll. The logic: When the pandemic finally passes, economies will not have to start from scratch to bounce back.They have mustered trillions of dollars for stimulus measures to keep companies afloat and employees on the payroll. The logic: When the pandemic finally passes, economies will not have to start from scratch to bounce back.
In Mexico, no such rescue effort has come. The pandemic could lead to an economic reckoning worse than anything Mexico has seen in perhaps a century. More jobs were lost in April than were created in all of 2019. A recent report by a government agency said as many as 10 million people could fall into poverty this year.In Mexico, no such rescue effort has come. The pandemic could lead to an economic reckoning worse than anything Mexico has seen in perhaps a century. More jobs were lost in April than were created in all of 2019. A recent report by a government agency said as many as 10 million people could fall into poverty this year.
Yet most economists estimate that Mexico will increase spending only slightly — by less than 1 percent of its economy — a small amount compared with many large nations.Yet most economists estimate that Mexico will increase spending only slightly — by less than 1 percent of its economy — a small amount compared with many large nations.
The reason? Critics and supporters agree: Mr. López Obrador.The reason? Critics and supporters agree: Mr. López Obrador.
Hostile toward bailouts, loath to take on public debt and deeply mistrustful of most business leaders, Mexico’s president has opted largely to sit tight despite what is expected to be widespread pain up and down the economic ladder.Hostile toward bailouts, loath to take on public debt and deeply mistrustful of most business leaders, Mexico’s president has opted largely to sit tight despite what is expected to be widespread pain up and down the economic ladder.
“The government should help the private sector as much as it can, otherwise our gross domestic product could drop as much as 10 percent, which would be a disaster,” said Carlos M. Urzúa, a former minister of finance under Mr. López Obrador.“The government should help the private sector as much as it can, otherwise our gross domestic product could drop as much as 10 percent, which would be a disaster,” said Carlos M. Urzúa, a former minister of finance under Mr. López Obrador.
“It can be done,” Mr. Urzúa continued, noting the relatively low public debt levels in Mexico. But “López Obrador really has no clue of the storm that is coming.”“It can be done,” Mr. Urzúa continued, noting the relatively low public debt levels in Mexico. But “López Obrador really has no clue of the storm that is coming.”
In a time of utter polarization in Mexico, when reactions to Mr. López Obrador vacillate between complete devotion from supporters and vitriolic anger from detractors, the need to mount an economic response has offered a rare glimmer of unity.In a time of utter polarization in Mexico, when reactions to Mr. López Obrador vacillate between complete devotion from supporters and vitriolic anger from detractors, the need to mount an economic response has offered a rare glimmer of unity.
Still, Mr. López Obrador, a populist leftist, has resisted the pressure to do more, wary of taking on public debt and saddling the country with bills it may struggle to pay down the road.Still, Mr. López Obrador, a populist leftist, has resisted the pressure to do more, wary of taking on public debt and saddling the country with bills it may struggle to pay down the road.
Some of the pressure on Mr. López Obrador has come from predictable places: opposition politicians, pro-market economists and the wealthy business community, groups that tend to find wrong in nearly every step he takes.Some of the pressure on Mr. López Obrador has come from predictable places: opposition politicians, pro-market economists and the wealthy business community, groups that tend to find wrong in nearly every step he takes.
But members of the president’s own cabinet have also urged him to take action, arguing that failing to do so could cripple the nation, government officials say. So, too, have federal bank officials and a range of economists sympathetic to his politics.But members of the president’s own cabinet have also urged him to take action, arguing that failing to do so could cripple the nation, government officials say. So, too, have federal bank officials and a range of economists sympathetic to his politics.
“Every day counts,” said Santiago Levy, an economist who was offered the role of finance minister in Mr. López Obrador’s government shortly after his election in 2018. “A recession was inevitable, but the cost of not doing more is going to be a much longer and deeper recession.”“Every day counts,” said Santiago Levy, an economist who was offered the role of finance minister in Mr. López Obrador’s government shortly after his election in 2018. “A recession was inevitable, but the cost of not doing more is going to be a much longer and deeper recession.”
A group of state governors, including one from Mr. López Obrador’s own party, has formed a coalition to demand that he do more to help them financially. Some have even threatened the equivalent of financial secession.A group of state governors, including one from Mr. López Obrador’s own party, has formed a coalition to demand that he do more to help them financially. Some have even threatened the equivalent of financial secession.
“We need a strategy of unity, and instead we have received absolutely nothing,” said Martín Orozco Sandoval, the governor of Aguascalientes in central Mexico.“We need a strategy of unity, and instead we have received absolutely nothing,” said Martín Orozco Sandoval, the governor of Aguascalientes in central Mexico.
The government says it will take a cautious approach to bailouts and heavy spending.The government says it will take a cautious approach to bailouts and heavy spending.
Graciela Márquez, the secretary of the economy, challenged assertions that Mexico could easily increase debt to spend more. The cost would be prohibitive, she said, and taking on debt liberally could ultimately be more problematic than beneficial.Graciela Márquez, the secretary of the economy, challenged assertions that Mexico could easily increase debt to spend more. The cost would be prohibitive, she said, and taking on debt liberally could ultimately be more problematic than beneficial.
“If at a certain point we need to raise more debt, we will,” said Mrs. Márquez, a Harvard-trained economist. “It’s not a closed-off road.”“If at a certain point we need to raise more debt, we will,” said Mrs. Márquez, a Harvard-trained economist. “It’s not a closed-off road.”
For now, the government is spending more, she said, including by issuing micro-credits and other payments to the most vulnerable people.For now, the government is spending more, she said, including by issuing micro-credits and other payments to the most vulnerable people.
As for whether that additional spending is sufficient, she noted that even the $2 trillion stimulus package in the United States has not been enough.As for whether that additional spending is sufficient, she noted that even the $2 trillion stimulus package in the United States has not been enough.
“What is sufficient under these conditions?” she asked. “It must be done responsibly, without generating more problems than the ones it is trying to resolve.”“What is sufficient under these conditions?” she asked. “It must be done responsibly, without generating more problems than the ones it is trying to resolve.”
Economic damage from the pandemic is a given. But the difference between a long, protracted crisis and a meaningful recovery, in the eyes of many economists, depends on a government’s ability to help companies and workers stay afloat until the worst is over.Economic damage from the pandemic is a given. But the difference between a long, protracted crisis and a meaningful recovery, in the eyes of many economists, depends on a government’s ability to help companies and workers stay afloat until the worst is over.
European nations have spent trillions to counter the financial devastation and are considering raising more than $800 billion in collective debt to stave off economic collapse.European nations have spent trillions to counter the financial devastation and are considering raising more than $800 billion in collective debt to stave off economic collapse.
Some of Mexico’s Latin American neighbors have acted decisively: Chile, Peru and Brazil have all passed packages valued at 8 percent to 12 percent of their economies.Some of Mexico’s Latin American neighbors have acted decisively: Chile, Peru and Brazil have all passed packages valued at 8 percent to 12 percent of their economies.
But in Mexico — between tiny business loans and spending for cash-transfer programs for the poor, the young and the elderly — additional government spending is less than 1 percent of the economy, most economists calculate.But in Mexico — between tiny business loans and spending for cash-transfer programs for the poor, the young and the elderly — additional government spending is less than 1 percent of the economy, most economists calculate.
Even before the coronavirus hit, Mexico was in recession. But the government agency that measures poverty recently said that 6.1 million to 10.7 million Mexicans could be cast into poverty by the end of the year. The president rejected that assessment and placed the number of formal jobs lost at around one million.Even before the coronavirus hit, Mexico was in recession. But the government agency that measures poverty recently said that 6.1 million to 10.7 million Mexicans could be cast into poverty by the end of the year. The president rejected that assessment and placed the number of formal jobs lost at around one million.
The actions taken so far include a series of microloans of about $1,000 to tiny businesses in both the informal and formal sectors. Experts say the two million loans available will barely scratch the surface of the informal market, where some 30 million people work.The actions taken so far include a series of microloans of about $1,000 to tiny businesses in both the informal and formal sectors. Experts say the two million loans available will barely scratch the surface of the informal market, where some 30 million people work.
And the money is not a grant; it is a loan that struggling mom-and-pop stores will need to start repaying in a few months.And the money is not a grant; it is a loan that struggling mom-and-pop stores will need to start repaying in a few months.
“Mexico is way below the world’s average in terms of the amount of resources being channeled to help the economy,” said Oberto Vélez Grajales, an economist at Centro de Estudios Espinoza Yglesias, a left-leaning research group. “Mexico is way below the world’s average in terms of the amount of resources being channeled to help the economy,” said Roberto Vélez Grajales, an economist at Centro de Estudios Espinosa Yglesias, a left-leaning research group.
The president’s resistance, according to those who know him, is based on his interpretation of Mexico’s troubled financial history.The president’s resistance, according to those who know him, is based on his interpretation of Mexico’s troubled financial history.
Having lived through numerous financial crises, including sharp devaluations of the currency and defaults on debt, he believes that bailouts and rescues simply do not work, they say.Having lived through numerous financial crises, including sharp devaluations of the currency and defaults on debt, he believes that bailouts and rescues simply do not work, they say.
He even wrote a book about the government bailout of the financial sector after the 1994 economic collapse known as the Tequila Crisis. Many viewed that aid as a poorly managed effort that lined the pockets of the wealthy.He even wrote a book about the government bailout of the financial sector after the 1994 economic collapse known as the Tequila Crisis. Many viewed that aid as a poorly managed effort that lined the pockets of the wealthy.
Many economists and analysts say Mexico can afford to increase debt to help weather the crisis. But from the moment he took office, Mr. López Obrador, while calling himself a leftist, has won praise from analysts and economists for being a fiscal conservative.Many economists and analysts say Mexico can afford to increase debt to help weather the crisis. But from the moment he took office, Mr. López Obrador, while calling himself a leftist, has won praise from analysts and economists for being a fiscal conservative.
To pay for the ambitious infrastructure projects and poverty programs central to his vision, the president has cut federal programs and his own ministries, unlike his predecessor, who ran a budget deficit.To pay for the ambitious infrastructure projects and poverty programs central to his vision, the president has cut federal programs and his own ministries, unlike his predecessor, who ran a budget deficit.
Updated June 5, 2020
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
But with the coronavirus lashing small, medium and large businesses, clinging to a more traditional vision of debt and bailouts has come under fire. So have the president’s pet projects, which he views as essential for the country.But with the coronavirus lashing small, medium and large businesses, clinging to a more traditional vision of debt and bailouts has come under fire. So have the president’s pet projects, which he views as essential for the country.
Mr. López Obrador has dubbed his efforts the “fourth transformation,” seeking to imbue his tenure with the historical brio of Mexico’s independence from Spain and its revolution.Mr. López Obrador has dubbed his efforts the “fourth transformation,” seeking to imbue his tenure with the historical brio of Mexico’s independence from Spain and its revolution.
As part of that, he has promised large-scale infrastructure projects, including a $8 billion oil refinery and a tourist train to circumnavigate the Mayan region of southeastern Mexico.As part of that, he has promised large-scale infrastructure projects, including a $8 billion oil refinery and a tourist train to circumnavigate the Mayan region of southeastern Mexico.
Even as oil prices have plunged and experts have questioned the utility of the oil refinery, the president has held fast to his commitment to construct one.Even as oil prices have plunged and experts have questioned the utility of the oil refinery, the president has held fast to his commitment to construct one.
In fact, he says, none of his marquis projects, including the multibillion-dollar train, will be sacrificed to the virus.In fact, he says, none of his marquis projects, including the multibillion-dollar train, will be sacrificed to the virus.
“This is typical AMLO, and yet it still surprises me,” said Carlos Elizondo, a former Mexican ambassador to the Organization for Economic Co-operation and Development, using the president’s nickname. “No other country in the world, amid a world pandemic and an emergency like this, continues on the same track.”“This is typical AMLO, and yet it still surprises me,” said Carlos Elizondo, a former Mexican ambassador to the Organization for Economic Co-operation and Development, using the president’s nickname. “No other country in the world, amid a world pandemic and an emergency like this, continues on the same track.”
The president’s persistence has worked for him in the past. He lost two elections for the presidency but maintained his message against corruption and for benefits for the poor.The president’s persistence has worked for him in the past. He lost two elections for the presidency but maintained his message against corruption and for benefits for the poor.
In 2018, Mexicans tired of rampant graft and inequality brought Mr. López Obrador to power with the most resounding victory the country had seen in decades.In 2018, Mexicans tired of rampant graft and inequality brought Mr. López Obrador to power with the most resounding victory the country had seen in decades.
“AMLO’s great strength was his stubbornness,” Mr. Elizondo continued. “Now, Mexico’s great weakness at a time when the world has changed is having a president that refuses to adapt to a new reality.”“AMLO’s great strength was his stubbornness,” Mr. Elizondo continued. “Now, Mexico’s great weakness at a time when the world has changed is having a president that refuses to adapt to a new reality.”
Those close to the president say he believes that the coronavirus, while serious, is transitory and that his mark on his nation’s history, punctuated by the symbols of large, state-led projects, will outlast the current headwinds.Those close to the president say he believes that the coronavirus, while serious, is transitory and that his mark on his nation’s history, punctuated by the symbols of large, state-led projects, will outlast the current headwinds.
He says that having a clean conscience fights the virus. “No lying, no stealing, no betraying, that helps a lot to not get coronavirus,” he told reporters.He says that having a clean conscience fights the virus. “No lying, no stealing, no betraying, that helps a lot to not get coronavirus,” he told reporters.
While critics demand that he shutter his infrastructure projects and channel the money into a rescue package, some economists say it would not be enough, anyway.While critics demand that he shutter his infrastructure projects and channel the money into a rescue package, some economists say it would not be enough, anyway.
“At the end of the day, the amount of money being spent on infrastructure projects in 2020 is not that important,” said Mr. Levy, the economist. “The political significance is way beyond economic significance. It’s a little bit like Trump’s wall.”“At the end of the day, the amount of money being spent on infrastructure projects in 2020 is not that important,” said Mr. Levy, the economist. “The political significance is way beyond economic significance. It’s a little bit like Trump’s wall.”
“But you need to protect formal employment, and we need to do more to help informal workers,” he added.“But you need to protect formal employment, and we need to do more to help informal workers,” he added.
Instead, state governors are vowing mutiny, and a tableau of economic disaster threatens the nation.Instead, state governors are vowing mutiny, and a tableau of economic disaster threatens the nation.
Tourism has all but dried up. Remittances from the United States are expected to plummet. And with oil prices flirting close to historical lows, Mexico’s economy has lost yet another engine.Tourism has all but dried up. Remittances from the United States are expected to plummet. And with oil prices flirting close to historical lows, Mexico’s economy has lost yet another engine.
“For all of them to take this hit at the same time is devastating,” said Roberta S. Jacobson, a former American ambassador to Mexico. “And meanwhile, the president appears to be only doubling down on policies he already had in place.”“For all of them to take this hit at the same time is devastating,” said Roberta S. Jacobson, a former American ambassador to Mexico. “And meanwhile, the president appears to be only doubling down on policies he already had in place.”
Paulina Villegas contributed reporting from Mexico City.