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Then go. The new president isn’t even in office, so Joe Biden’s reconciliation strategy appears to be working. After eight months of turmoil, Democrats and Republicans agreed to a new stimulus package worth $ 900 billion, and also passed a budget bill.
Yet the reason for the breakthrough is less the willingness to start over after Trump’s baffling four years than the fear on both sides of the wrath of Americans, who looked into the financial abyss on Christmas of all time:
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Around twelve million people would have lost their unemployment benefits without a deal.
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Up to five million tenants were threatened with eviction from their homes, and many middle-class families feared that wages would be stopped in the event of illness and childcare.
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A total of 25 government aid programs were about to expire.
And this at a time when the recovery of the US economy is stuttering.
But the euphoria in financial markets, which in the past had recognized any alleged rapprochement with price increases, over the second-largest economic stimulus package in US history did not materialize. Stock markets relented on Monday. Even beloved Tesla lost four percent before the debut of the S&P 500. Investors’ fear of the coronavirus mutation outweighed their relief that politicians had recovered.
The economists’ verdict on the state’s billion-dollar injection: better than nothing. “The deal is months late and will not prevent a harsh winter,” says Gregory Daco of Oxford Economics. But at least the package could cushion the economic slowdown and strengthen momentum from vaccines.
“Three Martinis Lunch” for Donald Trump
This time, too, Congress uses the tools of the March firefighting campaign, but in the savings version: The unemployed will receive an additional $ 300 per week and each American receives a “helicopter allowance” of $ 600 up to an annual income. of $ 75,000. For airlines, $ 15 billion is budgeted if they recover around 32,000 employees from compulsory leave. A new $ 300 billion jackpot is being launched to bail out businesses. And the special concerns of incumbent President Donald Trump, who has to sign the law, were also taken into account: fresh money for the construction of the wall and tax relief on restaurant expenses. Critics call this the “three martini lunch.”
However, there are concerns that the program does not contain: aid for states, cities and municipalities whose tax revenues have collapsed and therefore are cutting their staff en masse. Of the 1.5 million jobs that were cut in administration after the outbreak of the pandemic, only a tenth returned, while the rate in the private sector is 60 percent, according to Ian Shepherdson of Pantheon Macroeconomics. He thinks that the helicopter money would have been better spent with the states. In the first round, instead of consuming, many Americans would have canceled loans or put money to the limit: “The money that is not spent does not protect jobs and does not create new ones,” says the economist.
Economists also fear the effects of the programs could wear off quickly amid rising corona infections and new lockdowns. Many stores are closed and consumers are restless. In the all-time Christmas business, retail sales contracted 1.1 percent in November after a 0.1 percent drop in October. Another month and the economy is in recession by an economic rule, explains Chris Rupkey of MUFG Bank.
And “it would take a miracle” for the trend to reverse in December. After all, the largest US state, California, has imposed its most stringent lockdown to date.
Future President Joe Biden prepared Americans for a “dark winter.” However, immediately after taking office in January, he will campaign for a new economic and aid package. In Washington, however, it is doubted that the will of all parties to compromise will last that long.
