The first step to this package? Acknowledging that in this emergency there is nothing wrong with borrowing the funds to help Americans in need. Interest rates are low
, and borrowing conditions are easy. Tax increases to help fund the government in the longer term will be important down the road, but they are not the priority at the moment.
President Joe Biden has announced a first step in addressing the crisis, unveiling an immediate rescue plan for an additional $1.9 trillion
in federal spending, to be followed in the coming weeks by a recovery plan for the long-term structural challenges of jobs, health care, energy, education and infrastructure.
There are three main categories of spending in the Biden rescue package. The first is funding to fight the pandemic: to pay for vaccines, supplies, federal health workers, workplace and school safety, paid sick leave and other essential public health needs. This funding, proposed at around $400 billion
, should be a no-brainer. The federal government should be spending this sum to bring Covid-19 under control, not only to stop the deaths but to revive the economy, where losses will be in the trillions of dollars if the epidemic is not brought under control.
In round numbers, the US GDP is around $20 trillion,
so each 1% loss of GDP amounts to around $200 billion. The economy shrank by more than 3%
in 2020, instead of growing by more than 2%, as the Congressional Budget Office had expected
before the pandemic. Therefore, the shortfall of GDP relative to pre-pandemic expectation was more than 5%, or more than $1 trillion, not counting the painful costs in deaths and disease.
The second category of spending is direct relief of about $1 trillion
aimed at working-class families that have borne the brunt of the crisis, such as the millions of workers who lost jobs in restaurants, stores, offices and day care centers. The Biden plan offers several urgent support measures, including expanded unemployment benefits, rental assistance for families facing eviction, $13 billion to expand nutrition programs and financial support for child care for working families. All of these are obvious priorities in a national emergency.
The third category of spending is $440 billion
directed mainly towards state, local and territorial governments, and funding for low-interest loans to small businesses. While the federal government can borrow trillions of dollars, most state and city governments are generally bound to balance
their budgets or borrow only very small amounts.
The crisis has hit state and local government tax revenues very hard
, while simultaneously increasing the critical needs for first responders such as police and firefighters, and other essential workers, including teachers, school nurses and staff for public health services.
Former President Donald Trump largely opposed
help for the states and cities, but this urgent funding is needed everywhere — red and blue states alike. It is again a…
Go to the news source: Opinion: Biden’s most important stimulus measure of all