Biden’s $ 1.9 trillion COVID-19 bailout is a ‘lifeline’ for millions of Americans
President-elect Joe Biden has said he will call for $ 1,400 stimulus checks and more vaccine funds in a $ 1.9 trillion economic coronavirus relief plan when he takes office this month -this.
Analysts say that after the proposal, which was released this week, was debated in Congress, the final COVID-19 bailout is unlikely to be as generous as it is currently proposed, but analysts say ‘it couldn’t come too soon for millions of Americans.
The government’s unemployment rate hovered at 6.7% in December and the number of unemployed stood at 10.7 million.
However, the Economic Policy Institute, a progressive think tank, argues that a breakdown of figures from the Bureau of Labor Statistics and other estimates based on these paint a much darker picture due to business closures and public health restrictions related to the COVID-19 pandemic.
He estimates that around 26.8 million workers are negatively affected, or nearly 16% of the workforce.
This figure, he said, includes those who are misclassified as “employed, not at work” instead of unemployed (1 million), the number of officially unemployed who have been underestimated (2.7 million) , those who have dropped out of the workforce (4.9 million) or are employed but are experiencing a drop in hours and wages (7.5 million).
“President-elect Biden has announced a proposed relief and stimulus package that provides relief commensurate with the scale of the economic challenge facing the United States, due to the damage caused by the COVID-19 pandemic,” said Josh Bivens, director of research. to PPE.
“The pressing economic priorities facing the nation are simple: controlling the spread of the virus, then ensuring that US households, businesses and governments spend and invest enough to drastically reduce unemployment and raise workers’ wages,” Bivens said.
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“The Biden package ticks those boxes,” Bivens added. “Continuing improved pandemic-related unemployment insurance programs, substantial tax assistance to state and local governments, investments in virus control and mitigation, and increasing the federal minimum wage to $ 15l time are all absolutely essential for quick relief and a quick and fair recovery.
Some 1.2 million people applied for unemployment insurance benefits last week, up 304,000 from the previous week; this included 965,000 people who applied for regular state benefits and 284,000 who applied for unemployment assistance in the event of a pandemic. Last week was also the 43rd week in a row that initial claims total exceeded that of the worst week of the Great Recession.
As of Saturday, COVID-19 had infected more than 94.6 million people worldwide, most of which does not represent asymptomatic cases, one of the main ways the virus has spread so quickly around the world. , and killed more than 2 million, including 395,855 in the United States.
The United States has the highest number of COVID-19 cases in the world (23.8 million), followed by India (10.5 million), Brazil (8.4 million) and Russia (3 , 5 million), according to data aggregated by Johns Hopkins University.
The Biden plan would serve as a lifeline, Bivens said.
Republican lawmakers pushing for more restraint signaled concern over federal budget deficits and said low interest rates obviously won’t last forever, while commentators lamented the need for such a massive stimulus in the first place.
The EPI estimates that 26.8 million workers are negatively affected, or nearly 16% of the workforce.
“The plan presented by the president-elect is ambitious and expensive, but this cost must also be seen in the context of the combined tolls of the still raging pandemic and the resulting economic damage,” Mark Hamrick, senior economic analyst at Bankrate .com, mentioned. “Without containing the health crisis, the economic crisis was both lasting and deep. “
The job losses indicated in the December employment report and an “increased level of new jobless claims and actual benefits received all underscore the need for an extension of aid,” added Hamrick. (A recent Bankrate poll found that only 39% of Americans would or could pay an emergency expense of $ 1,000 or more with their savings.)
The economists Peter Orszag, Robert Rubin and Joseph Stiglitz wrote in a common paper For the Peterson Institute: “Because a strong economy benefits low-income groups the most, especially those who were previously marginalized, we have to wait for more convincing evidence that a new fiscal stimulus is not needed before decree compensations ”.
“We are proposing a new approach in which fiscal discretion is retained but exercised after more automatic and rapid fiscal adjustment in areas where there is a broad consensus that this is compatible with the achievement of broader societal goals.” , they added.
For its part, the Trump White House highlighted state efforts to contain the coronavirus and business closures as the reason for the job losses in a statement released Monday.
“As we saw at the start of the pandemic, employment in the leisure and hospitality industry fell by almost 50% between February and April, while employment in all other industries fell by almost 50% between February and April. fell 10% much lower but still substantial, ”he said.
Maya MacGuineas, chair of the Committee for a Responsible Federal Budget, a bipartisan budget watchdog, told CNN: “It seems rather premature to say that we need an additional $ 2 trillion now given what we just went through”, but she added “we probably need to do more borrowing before it’s gone. time to walk away. “
People are suffering, of course, economically. At the height of the pandemic in March, more than 30 million Americans were laid off or put on leave when the economy shut down to curb the spread of COVID-19. The unemployment rate at that time was 14.7%; it has since fallen to 6.7%. The leisure and hospitality sectors have been particularly affected by the pandemic.
The Dow Jones Industrial Average DJIA,
S&P 500 SPX,
and Nasdaq Composite COMP,
had a tumultuous 2020 and was down on Friday, as investors effectively sold the news of Biden’s more generous stimulus proposal, which had been widely anticipated. The market was also held back by concerns about the potential for tax hikes and the heightened risk of further political unrest following the siege of the U.S. Capitol last week by supporters of President Donald Trump.
President-elect Biden calls on Congress to provide the $ 160 billion for a national immunization program.
Analysts expect markets to react positively to the announcement of Biden’s bailout on Friday. “To support the spending and investment needed to completely repair the labor market, we estimated in early December that around $ 3 trillion was needed,” Bivens added.
“Less than a third of that amount was included in the year-end turnaround plan, and the Biden administration’s proposal fills in the remaining amount. In short, it is a proposition that is motivated by a careful review of the evidence and is not artificially constrained by outdated fears about the federal debt, ”he added.
“This marks a welcome departure from the mistakes made in past downturns, such as the Great Recession. It is essential that the new Biden administration and Congress strive to adopt this important relief and recovery measure, ”Bivens concluded.
Another factor that supports the markets. There have been advancements on vaccines – which, assuming they work, could eventually get people back to work. President-elect Biden calls on Congress to provide the $ 160 billion for a national immunization program, “expand testing, mobilize a public health jobs program and take other necessary steps to build capacity to fight the disease.” virus, ”according to a statement released Thursday evening by its transition team.
BioNTech SE BNTX,
and Pfizer PFE,
said a final analysis of their vaccine candidate showed 95% efficacy. Meanwhile, Moderna MRNA,
said his own candidate was 94.5% effective.
An AstraZeneca vaccine candidate
and the University of Oxford also showed an average efficiency of 70% in a pooled analysis of interim data, according to a peer-reviewed study published last week. This is about the same level of protection as a flu shot.
Biden, meanwhile, has pledged to move forward with a massive stimulus package when he takes office in a government with a Democratic-controlled House and Senate.
“While the bipartisan action by Congress in December was a step in the right direction, it was only a down payment. He was well below the resources needed to deal with the immediate crisis, ”added the statement from his transition team. “We are in a race against time, and in the absence of additional government assistance, the economic and public health crises could worsen in the months to come; schools will not be able to reopen safely; and the vaccinations will remain much too slow.
“As pointed out in last month’s jobs report, the virus and our economy are closely linked,” added the statement announcing the $ 1.9 trillion bailout. “We cannot save our economy without containing this virus. “