CoronavirusEconomyU.S.

What the $900 Billion Stimulus Package Looks Like

(Noted News) — Ravaged from 9 months of COVID-19, the American economy is set to finally get some relief in the form of a $900 billion stimulus package, as well as $1.4 trillion in government spending. 

With congress set to finally sign off on it, attention is now turning to what exactly is inside the package. Generally speaking, the bill is underwhelming; The average person will get $600.

This will add up to $166 billion worth of direct checks being sent to individuals. Anyone making under $75,000 a year will get a check for $600, while couples making under $150,000 a year will receive $1,200 plus an additional $600 per child they have.

$120 billion will go towards enhancing unemployment benefits in the form of $300 per week checks for jobless workers and long-term unemployed gig workers.

$325 billion in stimulus will go towards relieving small businesses, the bulk of that being $284 billion in “forgivable loans” to small businesses. $20 billion will go to businesses in low-income areas, and an additional $15 billion will go to struggling venues, like theaters, museums, or music venues.

$82 billion in education stimulus includes $54.3 billion for K-12 schools and $22.7 billion for colleges. State governors will be given a discretionary $4 billion to spend on education however they like. An additional $1.7 billion will be set aside for the historically black colleges, tribal colleges, and other minority-oriented institutions.

$10 billion will go towards various childcare services, $25 billion for rental assistance, and $13 billion for food-stamps and children-nutrition benefits are also included in the package.

 $69 billion will be deployed into research, testing, tracing, and the administering vaccines during the COVID-19 crisis. 

A controversial part of the package is the $15 billion that will be sent to the dying airline industry. Airlines have suffered perhaps more than any industry, with hundreds of them permanently falling off the map, and surviving ones forced to lay off tens of thousands of employees. 

The stimulus for airlines, dubbed as a “payroll assistance” package, is intended to help airline companies slow down the loss of employees, or hopefully rehire those who have been furloughed. However, since there is no provision to enforce this, airlines are free to theoretically continue getting rid of employees while using the money for other things that benefit shareholders and management, like repurchasing stock. 

Unfortunately for airlines, this stimulus, along with the $25 billion they received in March, is almost entirely insignificant considering their troubles. It is estimated that airlines are burning $180 million in cash every day, with not even hints of an end in sight. In the case of American Airlines, they have lost over half of their market cap, trading at $30 a share before the pandemic, and ten months later are still struggling to break the $16 mark.

Investors around the world seemed underwhelmed by the stimulus agreement; All the major US indices slumped roughly 2% after news of the deal spread. Britain’s FTSE 100 fell 3%, the Euro Stoxx 50 fell 3.6%, and Germany’s DAX fell 3.6%. 

The reaction is arguably justified. The very thing that caused this mess is at new levels of severity, with total COVID-19 cases topping 18 million, including over 320,000 deaths and climbing. At the same time, on the other side of the Atlantic, a new strain of the virus has been discovered to be 70% more contagious, triggering new travel ban against flights from the UK in multiple European countries including France, Italy, the Netherlands, Ireland, with more likely to follow. 

With all the chaos, Paul Donovan of UBS Global Wealth Management, said that “The package is more anti-depressant than stimulus, although sending adult Americans $600 might lead to more spending.” 

In order to come up with all the money needed for these packages, the Federal Reserve has printed over $3 trillion US dollars. This means that over 20% of all the American dollars ever created since the founding of the country were created in 2020. This has drawn criticism from many investors, and may also explain global stock markets underwhelming reaction to a stimulus package that was supposed to uplift the sentiments.

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