$1.9 billion COVID stimulus package – necessity or excess?
The covid-19 pandemic seriously harmed the U.S. economy. The lawmakers responded to the global crisis with lots of fiscal stimulus. The latest wave should be the $1.9 billion COVID relief bill, which President Joe Biden proposed even before the U.S. presidential elections. However, the vaccine rollouts have already begun, and the officials seem hopeful of rapid recovery from the global crisis. Some even argue that the proposed bill may be excessive, considering the progress with vaccine and economic rebound.
If the bill gets approval, the legislation will send checks of $1,400 to most Americans. It would also extend a Fed’s bonus to unemployment benefits through August, increasing the amount to $400 per week. Furthermore, it would set aside $75 billion for coronavirus vaccinations and treatments while simultaneously providing more aid to small businesses, as well.
According to reports, the bill expands various programs, including the earned income tax credit and Medicaid, increases the federal minimum wage from $7.25 to $15, and rescues pension plans.
What are the dangers of too much stimulus aid?
Some experts are concerned that the legislation reaches over and beyond its main mission of coronavirus relief. Unfortunately, it risks a spike in inflation by overindulgence. That could hinder the economic recovery or increase the nation’s $28 trillion debt. The results are more far-reaching, as such inflation would leave little resources for other vital investments, and eventually, borrowing costs for consumers and businesses would rise, as well.
In addition, analysts argue that the lawmakers could distribute the stimulus package better. Maya MacGuineas, the president of the Committee for a Responsible Federal Budget (CRFB), noted that while the package is filled with important priorities and good ideas, it could be targeted much better.
According to the CRFB, more than $310 billion in spending has little to do with the coronavirus pandemic. Besides, lawmakers could cut another $500 billion without fundamentally changing the package.
On the other hand, some experts think that the American Rescue Plan is a fitting response to a health and economic crisis. Despite a robust partial recovery, the pandemic has left approximately 10 million Americans unemployed, simultaneously shuttering hundreds of thousands of small businesses and leading millions of others to drop out of the workforce.
They argue that it’s better to go big than don’t do enough. Louise Sheiner, the policy director for the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, stated that while they have lost a ton, if they can make up some of it and get back to pre-pandemic levels rapidly, that’s very valuable.
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