The Republican Party’s anti-stimulus rallying cry: What happened to the trillion dollars unspent?

Republican lawmakers seek to stoke public concern over extraordinary levels of federal support: $ 4 trillion in aid enacted last year, nearly $ 2 trillion more on the verge of passage, and another multi-million dollar bill expected in the coming months. It’s a strategy that worked a decade ago, when deficit fears spawned the Tea Party movement, which eventually crippled much of President Barack Obama’s agenda.

But Democrats in Congress, the White House, and many economic experts argue that even as money continues to reach unemployed Americans, small businesses, cities, and schools, it is clear that they and the wider economy need more.

“Just because there is unspent money doesn’t mean there are no needs yet,” said Marc Goldwein, senior vice president and senior policy officer for the Committee for a Responsible Federal Budget, a nonpartisan group that established the COVID money tracker to follow the help as it comes out.

At this point, most of the unspent money (exhaustive estimates put the figure at $ 1 trillion) has been allocated to various programs that were designed to be distributed over an extended period of time.

Enhanced unemployment insurance benefits are sent weekly. The Paycheck Protection Program and other small business aids are provided upon request by employers. Enhanced federal Medicaid supplemental funds are provided to states on a regular basis as long as the public health emergency remains in place. And the refunds and tax breaks will be distributed after Americans file their taxes.

Focusing on the money left to get out of those and other programs, then, “is mostly a red herring,” said Jason Furman, who was Obama’s chief economist.

Lawmakers could have a real discussion about substantive aspects of the plan, such as the size of the stimulus checks or who should receive them, said Furman, now a Harvard economics professor. But the trillion dollars unspent is simply a reflection of how aid packages are designed – that is, to spend money over a long period of time.

“Congress does not legislate once a month for bills that will be presented next month,” he said. “It’s much better to spend money three months early than three months late, especially when you’re in the middle of a war.”

Republicans in Congress have made a risky but calculated he opted to unify against Biden’s aid plan, since it is popular with Democrats and Republicans across the country. Four out of five adults said last month another financial aid package was needed, the Pew Research Center found. And a morning consultation poll this week showed that three out of four voters back Biden’s plan.

But focusing on unspent money helps clarify the GOP’s argument that Democrats are the party that “spends money like there’s no tomorrow,” as Sen. Lindsey Graham (RS.C.) put it this week. . Republicans have also framed the legislation as too generous, a “liberal wish list for Democrats” that addresses much more than just the coronavirus and its economic consequences, and spends too much even in those key areas.

The broader concern, too, among some critics of the plan is that even as Democratic lawmakers explain where the remaining $ 1 trillion is going, that money isn’t being taken into account enough as Congress debates how big the next one should be. package.

Goldwein, whose organization advocates for deficit reduction, said that while more help is still needed, he feels that “this package is almost written as if December didn’t happen,” when Congress approved a $ 900 billion aid package. and two coronavirus vaccines began to become available.

“I think Congress should be nervous about adding another $ 2 trillion to the mix,” said Michael Strain, director of economic policy studies at the conservative American Enterprise Institute.

Concern about the size of the package has become a hot spot in the debate even among some Democrats, especially amid new economic projections that suggest significant growth this year.

the latest forecast from the Congressional Budget Office, which is nonpartisan shows that the economy is returning to pre-pandemic levels this year and reaching growth levels of 4.6 percent without significant new relief measures. Taking into account an expected tax relief of $ 1.5 trillion, Goldman Sachs economists forecast a breakneck growth rate of 6.8 percent by 2021, which would be the highest since the Reagan era.

However, many economists argue that despite these forecasts, there is still much work to be done. Federal Reserve Chairman Jerome Powell warned lawmakers in a pair of congressional appearances this week not to declare victory in the economy too soon, warning that “the job is not done.”

“We are far from returning to normal,” said Kathy Bostjancic, chief US financial economist at Oxford Economics. “When you have a hole like that, a deficit where you have fallen from where the economy was previously running … you have many ways to compensate to get back there.”

Even taking into account unspent federal money, excess personal savings, and the launch of coronavirus vaccines, another $ 2 trillion in fiscal stimulus is just the right amount for the U.S. economy to return to full employment at the middle of next year, said Mark Zandi, the boss. Moody’s Analytics economist.

“In terms of arithmetic,” he said, “that’s correct.”

One area of ​​particular concern for some Republican lawmakers and other critics of the plan is funding from state and local governments. Biden’s plan would send an additional $ 350 billion to states, cities, and localities, adding to the $ 150 billion approved early last year. Republican members of the House Ways and Means Committee released this week a report that almost a third of that original money remains unspent, and some states face a significant budget surplus, as high as $ 15 billion in California.

The risk of sending too much money to states that don’t need it is if governors or local officials use it as an opportunity to cut taxes, for example, and there is no easy formula to allocate aid only to the states that have the most. suffer. But those who closely follow this area argue that while states are doing better than originally hoped, they are still not doing well.

The National Association of State Budget Officials also says that states on average have allocated 97 percent of their initial funding round and spent 77 percent, contradicting the Means and Ways figures. Other experts point out that federal restrictions make it difficult for state officials to spend money faster than they have.

And more generally, as officials in the Biden administration say, many economists feel that the risk of doing too little to help the economy right now is far greater than the risk of spending too much, even when a trillion dollars in aid is still coming out.

“It’s like your garden needs water, but you only have a certain amount of hose that can remove the water. That’s the problem here, we just can’t get the water out as fast as we need to, ”said Zandi. “But that doesn’t argue that you need less water.”

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