Nearly 80 percent of Americans are in favor of further economic recovery. For ordinary citizens, money has manifested itself, for example, in checks paid to state citizens and in some places even higher than wage unemployment benefits.
Washington
Money is. Last year, the U.S. Congress pledged more than $ 3.1 trillion, or $ 3,100 billion, to revive the coronary virus-ravaged economy.
By mid-March, the Congress of Democrats and the President Joe Biden intend to adopt a new stimulus package, estimated at € 1.9 trillion. In total, therefore, around EUR 4 100 billion is available for recovery. The amount is more than five times that of the EU Recovery Fund.
For ordinary Americans, money has manifested itself, for example, in checks paid to state citizens and increased unemployment benefits, which may have been higher than wages last spring. People were paid to stay home.
Read more: Thanks to the Crown Recovery, unemployment benefits in the United States can now be higher than wages
The money has been spent enormously, economist Price V. Fishback The University of Arizona says in a video interview. The sums are so cheeky that he laughs out loud as he talks about them.
“It’s all weird all at once.”
Fishback knows exceptional economic times. He specializes in the 1930s recession and president Franklin D. Rooseveltin The New Deal program, which increased the role of the state in the economy and created, for example, the U.S. pension system.
Roosevelt and the New Deal flickered in headlines and politician speeches even before the pandemic, but over the past year they have been talked about even more. It’s time to forget the talk of a small state, they say. Exceptional times require exceptional action. A new New Deal is needed.
Fishback disagrees. There is no need for state emergency relief work. Now you have to get rid of the virus.
“We don’t need a new New Deal. We are already well past what the New Deal achieved. ”
Let’s spin little numbers. According to Fishback, the New Deal raised government spending to about ten percent of GDP. During World War II, the proportion rose to 40 percent.
From the 1970s onwards, the share remained steady at around 20 per cent until the 2008 financial crisis raised it to 24 per cent.
Now, in ten months, the United States has risen to about 38 percent – if all the money allocated for stimulus had been spent. Biden’s package is expected to raise the full-year figures to about 40 percent. So to the level of World War II.
“Last spring’s stimulus package made sense,” Fishback says, though.
“It’s amazing that the economy finally shrank by just a few percent last year,” Fishback says.
Thanks are largely due to him for the revitalization of the state, but more has happened.
In spring In the United States, almost everything was put on hold. From the summer onwards, the situation was already different. Factories and construction sites were opened. People dared to shop. Mainly the service sector continued to torture.
At the end of last year, the entire world economy suffered less from the second wave of the virus than expected, a senior economist at JP Morgan focusing on the world economy. Michael Hanson says.
“Closures are better targeted. Businesses and individuals have learned to change their behavior so that it is not so destructive to the economy. ”
There are still more than ten million more unemployed in the United States than a year ago. In January, however, the unemployment rate was only around 6.3 per cent, after rising to 14.8 per cent at its worst last April.
Hanson points out that the world economy contracted by more than 3.5 percent last year, more than 70 years. For this year, however, his employer is forecasting 6.5 percent economic growth – the hardest in half a century.
The bank expects economic growth in the United States to double in the second quarter. It has lowered the impact of the new stimulus package on the forecast.
Governor of the US Federal Reserve Jerome Powell however, topped up expectations for the rise on Tuesday at a congressional hearing.
“The journey is still long.”
Powell does not take a position on the stimulus package. However, he reassured fears that a further stimulus could accelerate inflation, meaning that prices would rise to dangerous levels.
“I do not expect at all that we will end up with a situation where inflation will rise to a problematic level.”
Biden the stimulus package enjoys exceptionally unanimous popularity in a divided country and is becoming the first major political victory for the new president.
According to polls, about seven in ten Americans support a 1.9 trillion package. Even more, or nearly 80 percent, support the new stimulus money of $ 1,400, or about $ 1,100.
“I have been surprised by the fact that talk of austerity policies have not been included harder,” Professor of Economics Barry Eichengreen Write from the University of Berkeley by email.
Criticism has been so subdued that the opinion of Fishback, an economist colleague at Eichengreen, is startling.
“The economy is rolling. I see no need for a big resuscitation. The most important thing is to get the vaccinations done quickly, ”he says.
Fishback thinks the $ 1,400 resuscitation money, for example, goes largely to people who don’t need it. He would understand supporting the poor, but a large proportion of people have been able to save previous checks as well.
The Republican Party is also opposed to further revival. Ordinary legislation in the Senate requires the approval of ten Republicans in addition to all 50 Democrats. Despite the support of voters, it is not promised.
That is why Democrats are pushing through the package through an exception procedure. Republicans once used the same means Donald Trumpin approval of tax cuts.
What of the historic thousands of billions will end up in the hands? Is something changing in the U.S. economy or Social Security permanently?
So far, the stimulus packages have not brought about structural changes. According to Fishback, the biggest changes to social security were made in unemployment benefits. An even larger crowd was included, and instead of employers, the state took over the peak. However, the change is temporary.
“So far, we haven’t changed the system very much.”
A majority of Biden and Democrats have tried to push the stimulus package to double the federal minimum wage to $ 15 an hour. The company seemed to be crashing early on Thursday in Finnish time. According to U.S. media reports, the Senate Enforcement Officer will not approve the increase in the minimum wage as part of an exceptionally approved package of laws.
Biden himself had previously admitted that raising the minimum wage seem unlikely. Not all Democrats are in favor of it. That would be a big structural change, the effects of which are being disputed.
“At least it wouldn’t be about emergency aid.”
Fishback believes the U.S. economy doesn’t need a revolution either. It just needs to get rid of the coronavirus.
Barry Eichengreen sees new opportunities instead. The pandemic and the state’s reaction to it have opened the debate on the more comprehensive role of the state in the United States. Talking about child benefits, minimum wage increases, a more ambitious industrial policy, Eichengreen writes to HS.
“Opportunities are just being talked about. But without the pandemic, the debate would not have started. ”
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source https://pledgetimes.com/united-states-the-united-states-has-spent-so-much-money-on-corona-resuscitation-that-it-makes-even-the-economist-laugh-will-the-role-of-the-state-in-the-economy-change-permanently/
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