US Congress Fiscal Stimulus Bill Preview (with more to follow)
March 24, 2020 by jackrasmus
Here’s some details of what’s in the Senate fiscal bill agreed on today, but not yet released (as far as I know) as of 8pm est. My detailed analysis to follow tomorrow.
It’s a $2 trillion package. But as Larry Kudlow, Trump’s advisor admitted, that total includes an assumed multiplier effect and the total stimulus to US GDP, not the actual spending total. At $2T and an assumed multiplier impact of $700B (1.5), the actual spending total is $1.3 trillion, not $2 Trillion.
On the business side it includes $350 billion in small business loans. What’s ‘small’ is unclear. So too is whether some of that falls under the Federal Reserve’s announced $4T pre-emptive bailout of bankers, credit card companies, mortgage lenders, private student loan lenders, and auto finance lenders (What the Fed calls its ‘Main St. Package). The Fed claimed that package included loans to small business too. If that overlaps with Congress’ bill remains to be clarified. Clarified too will be how much of $350 is in loans vs. in outright grants to small business.
It’s also known that Airlines will get $61 billion–$32 billion in grants and another $29 billion in loans. Seems their management threat to layoff all airline workers if they didn’t get the $61 billion handout had their desired lobbying effect.
Democrats pushed to get oversight on the remaining loans/grants to big corporations. Unclear as yet what that means
What Pelosi-Shumer couldn’t get from McConnell, they got by going around him and negotiating with Mnuchin.
Some details favoring workers & middle class households include a $1,200 cash payment per family, plus $500 more per child. Limits on # children eligible for $500 also unknown as yet. Same for income level for eligibility. Also if only unemployed get the $1,200 cash or all families. Some estimates are this amounts to $300B total. Others, $500B.
Other provisions verified include $130 billion for hospitals and $150 billion for state and local governments Democrats were demanding.
Looks to me like they ‘moved the money around’, as they say in union negotiations. Instead of the previously $3,000 cash per family and more unemployment insurance for rest of year, the Dem leadership agreed to only 4 months for the latter, moving some of the $3k to unemployment and some to hospitals & local governments.
A full analysis to be posted here when available, as well as my assessment why it will not work and why $4T for households workers is need, not just $1.3T. Plus why the bankers and investors will be getting $4T from the Fed, plus another $.5T in the Senate bill, but workers only $.5T?
Looks like the Obama recovery package of 2009 in terms of total fiscal stimulus. That was $787 billion and failed to stimulate a normal recovery from recession in 2009-10. This economic contraction is more severe, with economy falling faster and deeper, with unemployment rising at 2 million a month instead of 1 million, and GDP forecasts for coming 2nd quarter at -24% to -30%. Unemployment rate could rise to 30%, according to St. Louis Fed governor, Bullard.
Giving money to business in loans and tax cuts will have absolutely no effect on the real economy recovery. It didn’t in 2008-09 and won’t now. If Trump’s 2018 $4.5 trillion tax cut plus 2019 additional $427B investor loopholes tax cut resulted in real investment declining all last year, 2019, more tax cuts and more loans now won’t have much effect either again.
$500 billion for the working class and middle class falls far short of the $4T that is needed. If the Federal Reserve can give bankers and investors $6.2 trillion ($2.2 trillion last week and another $4T to come) why are workers being ‘short changed’? Even if there were a recovery starting today, the longer term recovery will be slow and tortured for working families. Slower than even after 2009.
But this current economic crisis is still unfolding and has a long way to go. As this writer forewarned back in September 2018, this ‘great recession 2.0’ now unfolding promises to be significantly worse than the 2008-09 event.
Dr. Jack Rasmus
March 24, 2020
It’s a $2 trillion package. But as Larry Kudlow, Trump’s advisor admitted, that total includes an assumed multiplier effect and the total stimulus to US GDP, not the actual spending total. At $2T and an assumed multiplier impact of $700B (1.5), the actual spending total is $1.3 trillion, not $2 Trillion.
On the business side it includes $350 billion in small business loans. What’s ‘small’ is unclear. So too is whether some of that falls under the Federal Reserve’s announced $4T pre-emptive bailout of bankers, credit card companies, mortgage lenders, private student loan lenders, and auto finance lenders (What the Fed calls its ‘Main St. Package). The Fed claimed that package included loans to small business too. If that overlaps with Congress’ bill remains to be clarified. Clarified too will be how much of $350 is in loans vs. in outright grants to small business.
It’s also known that Airlines will get $61 billion–$32 billion in grants and another $29 billion in loans. Seems their management threat to layoff all airline workers if they didn’t get the $61 billion handout had their desired lobbying effect.
Democrats pushed to get oversight on the remaining loans/grants to big corporations. Unclear as yet what that means
What Pelosi-Shumer couldn’t get from McConnell, they got by going around him and negotiating with Mnuchin.
Some details favoring workers & middle class households include a $1,200 cash payment per family, plus $500 more per child. Limits on # children eligible for $500 also unknown as yet. Same for income level for eligibility. Also if only unemployed get the $1,200 cash or all families. Some estimates are this amounts to $300B total. Others, $500B.
Other provisions verified include $130 billion for hospitals and $150 billion for state and local governments Democrats were demanding.
Looks to me like they ‘moved the money around’, as they say in union negotiations. Instead of the previously $3,000 cash per family and more unemployment insurance for rest of year, the Dem leadership agreed to only 4 months for the latter, moving some of the $3k to unemployment and some to hospitals & local governments.
A full analysis to be posted here when available, as well as my assessment why it will not work and why $4T for households workers is need, not just $1.3T. Plus why the bankers and investors will be getting $4T from the Fed, plus another $.5T in the Senate bill, but workers only $.5T?
Looks like the Obama recovery package of 2009 in terms of total fiscal stimulus. That was $787 billion and failed to stimulate a normal recovery from recession in 2009-10. This economic contraction is more severe, with economy falling faster and deeper, with unemployment rising at 2 million a month instead of 1 million, and GDP forecasts for coming 2nd quarter at -24% to -30%. Unemployment rate could rise to 30%, according to St. Louis Fed governor, Bullard.
Giving money to business in loans and tax cuts will have absolutely no effect on the real economy recovery. It didn’t in 2008-09 and won’t now. If Trump’s 2018 $4.5 trillion tax cut plus 2019 additional $427B investor loopholes tax cut resulted in real investment declining all last year, 2019, more tax cuts and more loans now won’t have much effect either again.
$500 billion for the working class and middle class falls far short of the $4T that is needed. If the Federal Reserve can give bankers and investors $6.2 trillion ($2.2 trillion last week and another $4T to come) why are workers being ‘short changed’? Even if there were a recovery starting today, the longer term recovery will be slow and tortured for working families. Slower than even after 2009.
But this current economic crisis is still unfolding and has a long way to go. As this writer forewarned back in September 2018, this ‘great recession 2.0’ now unfolding promises to be significantly worse than the 2008-09 event.
Dr. Jack Rasmus
March 24, 2020
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