Two House Democrats want to enhance the $2.2 trillion stimulus package known as the CARES Act. Representatives Tim Ryan (D-OH) and Ro Khanna (D-CA) have introduced new congressional legislation — the Emergency Money for the People Act.
What We Know:
- The House looks to extend the fiscal expansionary policies that were introduced last month with the $2.2 trillion CARES act.
- The actions by the House Democrats are predicated on the fear that the coronavirus will not only continue to ravage the countries health care system but also the macroeconomic outlook for the 2nd and 3rd quarters of the 2020 fiscal year.
- According to the St. Louis fed chair, the unemployment rate could peak around 30% , if these numbers come into fruition this would exceed the Great Depression unemployment numbers where 25% of the American population was out of work. The $2,000 each month payments would be an attempt to add liquidity to the economy for consumption as well as ease the shock of the massive layoffs that are expected to continue during the pandemic and a prolonged global recessionary period in the upcoming quarters.
- If these expansionary measures continue, the U.S. could spend over $4 trillion, which is an unprecedented amount of spending in one year. G-7 countries, which are the most advanced IMF backed economies in the world including Germany, Canada, France, the United States, Japan, the United Kingdom and Italy, have decided that government spending should increase in order to curb the economic fallout in the coming months in the global economy.
- The United States and other advanced economies have also agreed on forbearing debt payments from low income nations for the rest of the year because of the coronavirus. Some believe this forbearance may not be enough for countries in the developing world to take on the pandemic because of the lack of social welfare programs in these nations as well as a lack of foreign currency reserves to pay external debts in a prolonged recession if it extends to Q1 of 2021.
- House Democrats are trying to be proactive during the pandemic in the domestic market to avoid a financial meltdown that some believe could be greater than the 2008 financial crisis. In 2008, the House and Congress received a tremendous amount of backlash for “bailing out” banks and large corporations but being austere when it came to regular Americans falling on hard times during the crisis.
- House democrats are seemingly attempting to right the wrongs of the 2008 crisis by introducing plans that would put a significant amount of liquidity into the hands of the everyday American.
- The plans details are as follows:
- Eligible Americans would receive $2,000 in cash per month guaranteed for at least six months.
- The monthly cash payments would not adversely impact anyone’s ability to qualify for an income-based federal or state assistance program.
- Every American adult age 16 and older making less than $130,000 annually would receive $2,000 a month.
- Married couples earning less than $260,000 would receive at least $4,000 per month.
- Qualifying families with children will receive an additional $500 per child, with funds capped at a maximum of three children.
- This proposal is still in its infancy but Trump has been in favor of putting money in the hands of Americans. Congress which is currently held by majority Republican members would also have to sign off on the proposal for it to become a bill. Republicans Lindsey Graham, Tim Scott and Ben Sasse pushed back on the increased unemployment benefits in the first Covid-19 stimulus package.
Pushing this proposal through Congress may be an uphill.