‘Lifeline to employees’: For some, Biden’s $1.9 trillion COVID-19 rescue plan isn’t coming a second too quickly
On Thursday evening, President-elect Joe Biden said he would call for stimulus checks of $ 1,400 and more in vaccines as part of a $ 1.9 trillion COVID-19 relief plan.
“President-elect Biden announced a proposed aid and recovery package that will provide relief commensurate with the scale of the economic challenge facing the United States from the damage caused by the COVID-19 pandemic,” said Josh Bivens, director of research at Economic Policy Institute, a progressive think tank.
The government’s unemployment rate in December was 6.7% and the unemployment rate was 10.7 million.
However, the EPI argues that a breakdown of the Bureau of Labor Statistics numbers and other estimates based on them paints a far bleak picture due to the store closures and public health restrictions associated with the COVID-19 pandemic: 26.8 Millions of workers are negatively affected – or almost 16% of the workforce.
This number includes those who were wrongly classified as “employed, not employed” instead of unemployed (1 million), the number of officially undercounted unemployed who were undercounted (2.7 million), those who left the workforce ( 4.9 million). or are employed but have a decrease in hours worked and pay (7.5 million).
“The nation’s pressing economic priorities are simple: Control the spread of the virus, then ensure that US households, businesses, and governments spend and invest enough money to radically reduce unemployment and raise workers’ wages” said Bivens.
“The Biden package meets these criteria,” added Bivens. “Continuing increased pandemic-related unemployment insurance programs, substantial tax aid to state and local governments, investments in virus control and reduction, and raising the federal minimum wage to $ 15 an hour are essential for rapid relief and a speedy and equitable recovery. “
Around 1.2 million people applied for unemployment insurance last week, 304,000 more than in the previous week. These included 965,000 people who applied for regular government benefits and 284,000 people who applied for pandemic unemployment benefits. Last week was also the 43rd straight week in which total initial claims were higher than the worst week of the Great Recession.
Last week was the 43rd straight week initial unemployment claims were higher overall than they were during the worst week of the Great Recession.
The Biden Plan would serve as a lifeline, Bivens said.
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More reluctant Republican lawmakers have signaled concerns about federal budget deficits, saying that low interest rates are clearly not going to last forever, while commentators have primarily complained about the need for such a massive stimulus.
“The plan outlined by the president-elect is ambitious and costly, but those costs must also be seen in the context of the combined consequences of the still raging pandemic and the economic damage it has caused,” said Mark Hamrick, senior economic analyst at Bankrate.com. said. “By not containing the health crisis, the economic crisis has been both persistent and deep.”
The job losses and “increased levels of new unemployment benefits and benefits actually received” in the December Employment Report underscore the need to expand aid, “Hamrick added. (A recent Bankrate survey found that only 39% of Americans would or could pay an emergency expense of $ 1,000 or more from savings.)
Economists Peter Orszag, Robert Rubin and Joseph Stiglitz wrote in a joint paper for the Peterson Institute: “Since a resilient economy benefits the low-income groups most, especially those previously marginalized, one should wait for more convincing evidence that there are no more fiscal ones Incentives are needed before the offsets are put into effect. “
“We propose a new approach in which discretion in public finances is maintained but exercised after the budget is adjusted more automatically and more quickly in areas where there is broad consensus that this is compatible with achieving broader societal goals will, “they added.
For its part, Trump’s White House in a statement released on Monday highlighted efforts by states to contain the coronavirus and company closures as a cause of job losses.
“As seen in the early days of the pandemic, employment in the leisure and hospitality industries fell nearly 50% between February and April, while employment in all other industries fell by a much smaller but still significant 10%” , it was said.
Maya MacGuineas, president of the Federal Responsible Budget Committee, a bipartisan financial regulator, told CNN: “It seems pretty premature to say that, given what we just passed, we need another $ 2 trillion, but she added: more borrowing before it’s time to turn away. “
Of course, people suffer economically. At the height of the pandemic in March, more than 30 million Americans were laid off or on leave as the economy shut down to help contain 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 industry has been particularly hard hit by the pandemic.
The Dow Jones Industrial Average USA: DJIA,
S & P 500 US: SPX
and Nasdaq Composite US: COMP
had a tumultuous 2020, but they were marginally higher on Thursday as investors weighed the likelihood of a more generous incentive among Biden as the risk of major political turmoil increased following the siege of the U.S. Capitol by supporters of President Donald Trump last week was.
President-elect Biden calls on Congress to allocate the $ 160 billion for a national vaccination program.
Analysts expect markets to react positively to news of Biden’s bailout on Friday. “To support the spending and investment needed to fully repair the job market, we estimated it would take around $ 3 trillion in early December,” added Bivens.
“Less than a third of that amount was included in the year-end recovery package, and the Biden government proposal fills in the remaining amount. In short, it is a proposal that is based on a careful review of the evidence and not artificially constrained by outdated federal debt fears, ”he added.
“This is a welcome relief from mistakes made in previous downturns like the Great Recession. It is important that the new von Biden administration and Congress work to get this vital relief and recovery measure passed, ”Bivens concluded.
Another factor that boosts the markets. Progress has been made on vaccines which, if they work, could ultimately bring people back to work. President-elect Biden calls on Congress to allocate the $ 160 billion for a national immunization program, “expand testing, mobilize a public health employment program and take other necessary steps to build capacity to fight the virus” According to a statement released on Thursday evening by his transition team.
BioNTech SE US: BNTX
and Pfizer US: PFE
said a final analysis of their vaccine candidate showed 95% effectiveness. Meanwhile Moderna US: MRNA
said his own candidate was 94.5% effective. A vaccine candidate from AstraZeneca US: AZN
and Oxford University also showed an average effectiveness of 70% in a pooled analysis of intermediate data, according to a peer-reviewed study published last week. This corresponds roughly to the protection level of a flu vaccine.
Meanwhile, Biden pledged to press ahead with a massive stimulus package if he takes office in a government with a democratically controlled House and Senate.
“While the bipartisan action by Congress in December was a step in the right direction, it was just a down payment. The resources needed to deal with the immediate crisis were far from lacking, ”added the statement from his transition team. “We are racing against time and without additional government support, the economic and health crises could worsen in the coming months. Schools cannot safely reopen; and vaccinations will be far too slow. “
“As last month’s job report underscores, the virus and our economy are intertwined,” the statement said in a statement that announced the $ 1.9 trillion bailout. “We cannot save our economy without containing this virus.”