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Original Caption: Former US Treasury Secretary Issued Document Against Biden’s Stimulus Plan Under Pressure
Biden said, “We will not be too late, we will only do very little.
The US Senate and House of Representatives voted to pass the 2021 budget resolution, which paved the way for US President Biden to launch his $ 1.9 trillion economic stimulus bill. In the next weeks.
The vote allowed Democrats to push Biden’s plan through Congress with the approval of Democrats alone, which also meant that Biden’s efforts to seek bipartisan cooperation ended in failure. “If I have to choose between helping Americans who have been seriously injured and engaging in lengthy negotiations,” Biden said in a speech at the White House, “I will act and act quickly.”
But at the same time, former United States Secretary of the Treasury and former Harvard University President Larry Summers, former Republican Senator and economist Phil Gramm, and others believe that Biden’s $ 1.9 trillion bill is too. Redundancy The current idea of focusing on stimulating consumer demand with expenses is incorrect and its risks may outweigh the benefits.
For this point of view, Zhou Shijian, principal investigator of the China-United States Relations Center of Tsinghua University, expressed his disagreement with the CBN reporter, saying: “This time, a lot of Americans have lost their jobs because to the epidemic, especially in tertiary industry. According to the data just released by the US Department of Labor, the number of new jobs in January was only 49,000. ” and the unemployment rate was 6.3%. In general terms. The unemployment rate in the United States is said to exceed 4%, which is considered a high unemployment rate. In the United States, consumption represents 80% of gross domestic product (GDP), and the economy cannot develop without consumption.Common peopleYou cannot consume if you lack money. “
The Stimulus Bill Size Debate: Too Big or Too Small?
After the unexpected drop of 140,000 non-farm jobs in the United States in December last year, according to the latest report from the US Department of Labor, there were only 49,000 new jobs in January, of which only 6,000 were in the private sector. The result was well below expectations. Compared to this time last year, the job market still lost 9.9 million jobs.
Biden’s long-term economic adviser Jared Bernstein also pointed out at a recent press conference that the latest “employment report reveals that the engine of job creation in America is stagnant and emphasizes how unstable the American economy is.” . He said: “The lack of job growth is the result of our inability to take appropriate action in response to this huge crisis. Our economy and our family cannot again afford our inaction.”
But on the other hand, Summers recently published a signed article in the “Washington Post”, questioning that Biden’s huge stimulus plan may be too “excessive”. “We must ensure that its enactment does not threaten future inflation and financial stability, or our ability to rebuild better through public investment,” Summers wrote. In other words, an aid package that is too large will “unleash inflationary pressures our generation has never seen before” and lead to a larger public deficit, affecting the possibility of reducing other spending laws in the future, such as investment in building construction. infrastructure. .
The Biden administration responded by saying it did not turn a blind eye to inflation risks, but was more concerned about other risks. Recently, Fed Chairman Jerome Powell (Jerome Powell) and newly appointed Treasury Secretary Yellen also expressed similar views. “I am even more concerned because because there is no full recovery, people cannot return to work on time and lose their hard career and life.” Powell said: “I am more concerned about this and the damage it causes. Not only for their lives, but also for the damage to the American economy.”
“In my opinion, you can say that Biden’s stimulus plan is ‘send coal into the snow to buy the hearts of the people.’ Because the Democratic Party’s support rate is mainly in the middle and lower classes , Reuters said the survey showed that the poor population (in the United States) increased by 2.4 in the second half of 2020 percentage points, which is 8.1 million people. The bill needs to subsidize these people “. Zhou Shijian explained: “A large-scale rescue measure will only be introduced this time. This is to save the emergency, not the poor, and it is to save the economic recession. And the move.”
“I know that some people in Congress think that we have done enough to face the crisis in the United States … But this is not what I see, I see the great pain in this country. There are many people who are unemployed, many people pass hungry “. Faced with criticism that this bailout bill is too redundant, Biden said: “One of the lessons we learned (from 2009) is that we will not be too late, we will only do very little.
Summers admitted that if the Obama administration increased fiscal stimulus in 2009, the economy would improve. However, economists who criticized the scale of the aid program believe that the current situation is much more optimistic than the economic crisis of 2009. Statistics show that in the last economic crisis, the US economy did not end its recession until June 2009, and the unemployment rate continued to rise, peaking at 10% in October 2009. However, in this new corona pandemic, the U.S. economy has resumed positive growth since the third quarter of 2020.
Zhou Shijian replied: “America’s GDP fell 2.5% in 2009 and 3.5% in 2020, the most since the end of World War II in 74 years. The financial crisis on Wall Street was seen mainly affected by the financial crisis. This time it is the service industry with a broader scope. In April 2020, the unemployment rate even exceeded 14.7% “.
Additionally, according to US media reports, after the “CARES” stimulus bill was enacted in March last year, the US personal savings rate soared to 33.7% in April 2020. Before that issued the 900,000 million dollars in aid at the end of December of last year, this figure remained at 13.7%. In the context of labor shortages, wages in most industries are increasing. As of December 2020, the total salary of employees has exceeded the level of February of that year.
“The savings rate has actually increased, but how did it come about? This is because the epidemic has spread so severely that luxury consumption such as tourism has been greatly compressed. The money that could have been spent now is not being spent. You can spend nowhere, so you save. Banks. But for the poor, the money is used for emergency aid and will not be used for deposits. ” Zhou Shijian said that in addition to subsidizing the poor, Biden also subsidized the aviation industry and other poor-business industries. . Money will never be issued by flooding, it should be a target. ”Recently, the Biden administration even expressed its willingness to further adjust the threshold for writing checks of $ 1,400.
A research report released by the Brookings Institution estimates that if Biden’s $ 1.9 trillion bill passes, it will boost economic activity in the United States by about 4% by the end of this year. Society estimates that without financial support, the economy will remain below its pre-coronavirus level in a few years.However, “a notable risk is that GDP will return to its maximum sustainable level，It can cause economic difficulties after 2021. Although our estimates indicate that there will be a temporary and superficial decline in GDP after the fourth quarter of 2021, the slowdown may be more sudden and painful than our forecasts indicate. “The report says.
Zhou Shijian told a China Business News reporter: “When the epidemic is under control, the economy starts to recover and business activities resume, according to forecasts, the US economy will grow to 6% in 2021. Then, by the end of this year or early next, the Biden administration will consider raising taxes. Raising taxes to reduce the deficit is the traditional view of the Democratic Party. “
Timeline of Biden’s $ 1.9 billion plan
Despite unanimous opposition from Republicans in the Senate and House of Representatives, with the effort of Democrats, on February 5 local time, the Senate and House of Representatives passed 51 to 50 and 219 to 209, respectively, to approve the stimulus includes $ 1.9 trillion The planned budget plan. Beginning the week of February 8, Congressional committees will begin drafting legislation on the specific content of this relief plan and will work to accelerate approval by the House of Representatives by the end of the month.
According to US media reports, the majority party (Democratic Party) will face obstacles in issuing economic stimulus policies. Democrats are yet to discuss the specifics of the bill, including how to determine who is eligible for the direct pay of $ 1,400 and whether to attempt to raise the federal hourly minimum wage to $ 15 by 2025. Thursday night, when the Senate voted to pass non-binding budget amendments, to disapprove of the issuance of checks to “high-income” individuals, and to raise the minimum wage during the COVID-19 pandemic, signs emerged from this debate.
The House Ways and Means Committee (Ways and Means Committee) may dedicate three days to discuss the amendments presented by both parties. Committee chair Richard Neal said he plans to vote in the committee on economic stimulus, unemployment and tax provisions from Wednesday to Friday (February 10-12). At the same time, the Senate will be primarily concerned with the impeachment of former President Trump.
By February 16, the 12 House committees and the 11 Senate committees that collectively deal with the economic stimulus bill must present their responsibilities to the House and Senate budget committees. Subsequently, the Senate Budget Committee will summarize the final bill and seek evaluation from the Congressional Budget Office.
House Majority Leader Steny Hoyer said the House plans to vote on the final plan in the week of February 22 and present the bill to the Senate. If the Senate completes impeachment by then, it can begin voting on the bill later in the week. According to US media estimates, once the Senate makes changes to the bill, the House of Representatives will have to vote again on the revised bill. The Senate and House of Representatives can resolve their differences through formal conference committees or back-and-forth voting until the two houses reach an agreement.
House Speaker Nancy Pelosi is optimistic that Congress can pass the stimulus bill before unemployment benefits from the stimulus plan approved in late December expire on March 14.
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