US: The Biden administration has hit the ground running with an explosive agenda focusing on three crises that need immediate attention:
- The COVID-19 pandemic.
- According to President Biden, the related alleged weak economy, particularly COVID-related job losses, require a more potent stimulus than we have seen so far.
- The economic inequality crisis.
The trilogy of crises follows the former White House Chief of Staff and Chicago Mayor Rahm Emanuel’s famous saying: Never let a situation go to waste. President Biden has devised three to draw his attention and build voter support, in part because three is more convincing than one. The current emphasis is mainly on the second leg of the trilogy – the coronavirus’s economic downfall – probably because it probably disappears the fastest without the opportunity to spend a massive amount, $ 1.9 billion, to really shock voters with the size of the problem and its solution. The third leg of the trilogy defecation – the war on economic inequality – is long overdue, and Biden’s $ 1.9 trillion plan does not address it directly.
Biden’s proposal, called the US bailout plan, is after the Senate’s early Saturday walk. Besides, three laws passed in March 2020 cost more than $ 1.9 billion and address the same nationals, while deaths from the virus have increased rapidly. A fourth bill, signed on December 27, 2020, restored federal unemployment benefits to $ 300 per week (from $ 600 from mid-March 2020 to July and $ 400 from August to about mid-September) in January 2021 to mid-March, and ‘ a new one-time payment of $ 600 to couples earning less than $ 150,000 a year and earning fewer amounts to individuals, as well as other extensions. This fourth bill cost $ 900 billion, bringing the total to $ 2.8 billion. The Biden bill will total $ 4.7 trillion, of which more than 40 percent is in this latest effort.
Biden has forgotten his experience as vice president. When the Obama administration was re-elected eight years ago, the economy slowly recovered for 17 months from a deep recession that continued for 13 months until they took office; it lasted 18 months from their first term. Biden played a vital role in adopting the 2009 American Recovery and Reinvestment Act, which cost about $ 800 billion and includes tax cuts but more lavish spending, especially infrastructure and other capital spending incentives. Nevertheless, the unemployment rate when the team was re-elected in November 2012 was 7.8 percent, roughly the same as the 7.7 percent when they won four years earlier. While the unemployment rate rose to a high of 10 percent in October 2009, it has only declined disgustingly. Even by January 2013, when the second term began, the unemployment rate was 8 percent. Nevertheless, the Obama administration was sufficiently comfortable with the economic performance that no significant new stimulus was planned or proposed.
In stark contrast, by the election in November last year, the unemployment rate was only 6.7 percent, with 8 percentage points lower than a high of 14.7 percent just seven months earlier. It was even lower, at 6.3 percent, in January when Biden’s term began. Despite a remarkable recovery from an equally great short but deep recession of February last April, the government now feels the need to provide $ 1.9 billion in the new stimulus.
Many of these expenses are for items not related to the coronavirus, but federal unemployment assistance is proposed to rise to $ 400 a week and last until August 29th. A one-time payment of $ 1,400 to each member of a couple earning less than $ 150,000 a year, or an individual earning less than $ 75,000, is included.
Nearly half of the proposal is to have federal, state, local and territorial, and tribal agencies for public health care for costs associated with the distribution and administration of vaccines, with additional support specifically to ensure the process gets into underserved areas. Of course, these components were also covered by legislation two months ago, and the demand for them began to shrink almost immediately.
There is also the little case for another general transfer to most taxpayers. Given the progress made in reducing unemployment, there is also little reason to increase the already generous federal unemployment benefits. These benefits should start to decline to zero, where they were until March last year, rather than increase and extend for more than five months. The unemployment rate by that time would probably be well below 5 percent, a level that some even considered full-time during the earlier Obama-Biden administration.
Besides, a federal extension of state unemployment benefits to self-employed persons and others who have never been eligible for unemployment benefits should be phased out soon, and not extended for another five months. If there is still a large increase in the coronavirus, as it did in November and December, or other related new closures, there is no reason to treat the economy, as it is fast again when it is sick.
There is much more in this proposed plan to alleviate the coronavirus, including massive assistance to state and local governments, even though most state and local governments have benefited considerably from COVID-19 relief in recent years, have balanced budgets or fiscal surpluses, and many have ample rainy reserves. There are many benefits for state and local governments, especially for schools and health care, that are mainly not spent on the law that was passed less than two months ago.
The Biden rescue plan is massive and is clearly unnecessary with each passing day. This is why the government believes that it is urgent to tackle this particular crisis immediately before it disappears. A leading forecast updated daily shows that this quarter is still one of the strongest quarters in recent history, and widespread forecasts for rapid growth during the year raise severe questions about stimulating an already strong economy.
While the pandemic has killed more than 500,000 people in the US since March and infected tens of millions of people, the number of new cases, hospitalizations, and deaths has now fallen back to levels not seen since the first boom last spring, and they are going continues to decline. Meanwhile, new vaccines are starting to spread through the population, which according to Dr Anthony Fauci, offers hope that a return to more normal conditions can come by June.
The expected path of future COVID-19 costs was well funded in the previous legislation. It also gives the economic recovery renewed momentum. The unemployment rate is likely to fall to almost 5 percent, and the current real GDP level will fully recover in the current quarter. It is much faster than predicted earlier in the year, even without Congress passing the largely unnecessary American rescue plan. The plan is a boondoggle looking for a problem that has already been addressed.Thr