WASHINGTON: A flood of money for Covid-19 vaccines, stimulus checks and unemployment benefits is set to flow into the US economy this week, with Congress's expected approval of President Joe Biden's $1.9 trillion stimulus package.
The bill -- approved by the Senate on Saturday and set for a vote in the House on Tuesday -- will pay for programs credited with helping the world's largest economy survive the mass layoffs and business disruptions sparked by the Covid-19 pandemic.In a departure from previous relief measures, the package also specifically targets poverty by expanding tax credits meant to help low-income families, which economists say could lead to child poverty being cut almost in half, reports AFP.
"It's a sea change for American social policy," Samuel Hammond, director of poverty and welfare policy at the Niskanen Center, said of the reforms included in the bill known as the American Rescue Plan.
Congress is only narrowly controlled by Biden's Democrats, and analysts believed the president's initial proposal would be whittled down significantly.
But the bill survived largely intact, and firms believe the US economy will expand even faster this year, with Oxford Economics forecasting a seven percent expansion in GDP.
"That was the calculus on the part of the Democrats -- 'we're going to get one more bite at the apple, and we're going to make it big enough that we don't have to worry about not doing enough'," economist Joel Naroff said of the Democrats' surprisingly expansive package.
The United States began spending big as its Covid-19 outbreak morphed into the world's largest, and unemployment skyrocketed after businesses shut down or curtailed operations.The $2.2 trillion CARES Act passed nearly a year ago increased weekly unemployment payments, expanded eligibility, offered aid to small businesses and funded stimulus checks to consumers. An additional $900 billion in relief was passed in December.
After taking office in January, Biden proposed a third measure that would, among other things, keep the expanded unemployment aid going until September 6, despite arguments from Republicans that the bill is wasteful, and some economists' concerns that it could spark inflation.
It would also apportion money to speed up the US vaccination campaign against Covid-19, without which Naroff warned the crisis -- and the need for massive government spending -- will not end.
"Once you've got the pandemic down to the level where you probably wouldn't call it a pandemic anymore, you can start the process of moving from a government-run economy to a private sector-run economy," he said.