The Last (Economic) Stimulus?

Will this “economic stimulus” actually stimulate the economy?

By: Elijah Braswell, Staff Writer

The United States Capital Building in Washington D.C.
Photo by Jacob Politte.

Subsidies, stimulus, and salaries; oh my! On March 27, the House passed the third economic stimulus bill since the COVID-19 outbreak in the United States.

While the first two primarily focused on increased funding for the Centers for Disease Control and Prevention (CDC) and sick leave for affected workers, this most recent package contains increased funding for various industries and people most affected economically by COVID-19. According to CNN, over $2 trillion has been allocated for this third stimulus package alone.

That’s a lot of money… but where is it all going?

According to the text of the bill, the airline industry will receive $50 billion in no-interest loans from the total money allocated by the U.S. Treasury. $150 billion will go to other “distressed sectors” of the U.S. economy; though whether this will be through loans or bailouts is not immediately apparent. 

However, according to the website Axios, this section will likely be used to fund cruise lines, hotels, and other travel or tourist centered businesses. $500 billion will be used to make two direct payments to individual U.S. taxpayers, with the exact amount to be decided at the discretion of the U.S. Treasury. Though $1,000 for most and $500 for dependents has been mentioned by members of the Senate and House, the actual bill does not specify exact amounts. The final part of the bill allows for $300 billion in small business loans regulated by the U.S. Treasury, and a suspension of current regulations on the Exchange Stabilization Fund; estimated to make up the remaining allocations of the $2 trillion total.

But will this “economic stimulus” actually stimulate the economy? The sure answer is… no one should be sure they have the answer. 

The U.S. GDP is roughly 19 trillion dollars; we are allocating almost a tenth of that to the latest stimulus package. We cannot be sure what the overall effect of the package will be. However, there are specific parts of the package that history tells us should be concerning; for instance, $50 billion for airlines and $150 billion for “distressed sectors.” These seem to be poorly defined ways to spend your tax dollars. Should we really be rewarding businesses who have chosen not to save enough for two months of economic downturn? Is endless stimulus after stimulus sustainable? 

One thing is for sure… don’t count your stimulus check before it’s mailed.