Joe Biden’s epidemic-relief bill is a mess
At the onset of the epidemic, the government made a deliberate effort to reduce economic activity that was widely thought of as a necessary measure to slow the spread of COVID-19. While much of the recession is for policy that stimulates the economy, the COVID-19 recession called for the opposite – measures that enable workers and businesses to hold off until a vaccine or therapeutically becomes widely available . Now that vaccines are being administered, policy-makers are faced with a different challenge – not keeping Americans in, but getting them back to work as quickly as possible. In this context, President-Elect Biden’s $ 1.9 trillion stimulus package missed the mark. The proposal puts public health at a jolt – allocating $ 20 billion for vaccine delivery, $ 50 billion for testing and $ 40 billion for medical supplies and emergency-response teams – but most for COVID-19 immunity More pressure fails to address bottlenecks. Vaccines sit unused for lack of funds, but thanks to cumbersome regulations that determine which patients can receive shots and which doctors can administer them. Additional spending to accelerate vaccine delivery is welcome, but its impact will remain muted if bureaucratic bottlenecks persist. Even if public-health provisions were to succeed in reopening the economy, much of Biden’s rest of the plans guaranteed that it would reopen weakly. For one, an extended unemployment-insurance top-up of $ 400 per week would mean that more than 40 percent of people receiving unemployment benefits would do more jobs than they would at least until September, and possibly longer. The food-service and retail industries have been most affected by the epidemic, which will see the biggest labor shortage, facing the challenges of the past year. Increased unemployment can be justified when we wanted workers to stay indoors, but it is disastrous when we want them to return to work. Meanwhile, Biden’s proposed $ 15 increase in the minimum-wage would eliminate an estimated 1.3 million jobs nationally, hitting low-income states the hardest. In Mississippi, where the average salary is $ 15, half of the state’s employees would be at risk. The minimum wage increase may be higher in the Democratic Wish List, but it is not included in the emergency relief bill. The Biden plan is not all Democratic priorities though. He took a page from Trump’s book and proposed a $ 1,400 check in the house, bringing the second round total to $ 2,000. With household incomes now 8 percent higher than the pre-epidemic trend, the additional check pad would be slightly higher than savings accounts. In fact, 80 percent of those receiving last year’s checks spent money on savings or loan payments, not consumption. Key items in Biden’s plan would be Keynesian assumptions to reduce economic growth as well. The same goes for state and local aid, for which Biden is seeking $ 370 billion on top of $ 170 billion in public-education grants. The total cost of $ 540 billion is more than the income of nearly $ 50 billion in state and local tax revenue last year. As we wrote in December, states and cities are slow to spend federal grants, so the lion’s share of this incentive won’t be visible until 2023. Instead of attempting to stimulate the economy, Biden is expecting a bailout of opposition democratic states through COVID. -19 relief. Other parts of the bill – the expansion of earned income and child-tax credits – are defensive long-term structural reforms, but as year-round emergency measures, they will have the same muted effect as direct investigations. By engaging a group of proposals unrelated to the epidemic, Biden has weakened his hand in negotiations and makes it less likely that immediate measures pass quickly. In the depths of the COVID-19 epidemic, economic policy-makers rose to the occasion. After an unprecedented external shock, the US economy has grown into relatively good shape, with low unemployment and bankruptcy fears. But the policies implemented to curb COVID-19 are not conducive to what will start to happen later this year, after an epidemic economy. Biden may have campaigned during a recession, but he is taking office during a recovery. He should rule accordingly.