President Trump has signed into law the largest-ever US financial stimulus package, worth $2 trillion, to combat the increasing threat posed by Covid-19 towards the US economy.
The Coronavirus Aid, Relief, and Economic Security Act was introduced and approved by Congress after the US was confirmed to have more cases of Coronavirus than any other country, including Italy and China, with more than 100,000 testing positive to date. This has subsequently resulted in 3.3 million people filing for unemployment, with economists predicting that a fifth of the US workforce is on some form of lockdown. This comes after federal officials and Governors across the US have closed restaurants, bars, cinemas, hotels and gyms. Car firms have also dramatically halted production and air travel has fallen in an effort to slow the spread of the virus.
The last time a US President signed a stimulus package into law was in 2009, when Barack Obama passed the ‘American Recovery and Reinvestment Act’ to combat rising US unemployment that had reached 9.9% in 2009 and negative US economic growth that peaked at minus 4%, thanks to the effects the 2008 financial crisis. This legislation saw the Public sector receive a total of $1.6 Trillion between 2009 and 2019.
Democrats and Republicans in the Democratic-led lower legislative chamber, the House of Representatives, approved The CARES Act by voice vote on Friday, following a three-hour debate, Senate debates on its provisions and Representative for Kentucky’s 4th Congressional district, Thomas Massie, criticising the package for introducing excessive spending. Democrat House Speaker, Nancy Pelosi, spoke favourably of the bill stating, “Our nation faces an economic and health emergency of historic proportions due to the coronavirus pandemic, the worst pandemic in over 100 years”. While no Democrat lawmakers were invited to the historic signing ceremony held at the White House and disputes regarding CARES bill previously raged in the Senate and House along largely Partisan lines, President Trump thanked both parties “for coming together, setting aside their differences and putting America first”.
The CARES Act introduces:
-Direct payments that will be made to individuals and companies whose livelihoods and businesses have been affected by the pandemic.
-A form of ‘basic income’, with $1,200 set to be paid to every American earning less than $75,000 per year and $500 per child.
-An extension of jobless benefits to those not normally covered, such as freelancers and workers in the gig economy.
-An economic boost to the national unemployment benefits programme.
-Economic stimuli that will be directly paid to state governments.
-Loans and tax breaks to companies that face going out of business.
While there is little doubt that Trump is not ordinarily a supporter of government-led economic stimuli, with the current President calling Obama’s economic recovery “a con job” and “the weakest recovery since the Great Depression” only a month ago. The 45th President will no doubt be hoping that his latest decision will prevent a further economic down-turn on the eve of the 2020 Presidential election.