Passed by the House of Representatives on Wednesday, President Biden’s $ 1.9 trillion economic stimulus package now needs his signature to become law. Scheduled to be signed by the president on Friday afternoon, the relief plan – also known as the American Rescue Plan (ARP) – is expected to give a much-needed boost to the country and its economy, ravaged by the spread. relentless COVID-19 from early 2020. ARP is the largest aid program to move into the United States since then.
Speaking about the plan, President Biden said, “This bill represents a historic and historic victory for the American people. I look forward to signing it later this week, ”he said. “Everything about the US bailout meets a real need – including investments to fund our entire vaccination effort, more vaccines, more vaccinators and more vaccination sites,” he added. .
A brief sketch
Although the priorities include carrying out tests for the coronavirus and distributing vaccines, the relief program will fund a host of other measures, such as a program to fight poverty for the most disadvantaged segments of society. . The CRA will provide direct payments to Americans in this category. States, local governments and schools are also expected to receive substantial funding. The relief plan will also be used to finance health care subsidies, unemployment reimbursements and other unemployment benefits.
It will care for people with an annual income of less than $ 75,000, including children and elderly dependents, married couples with a combined income of less than $ 150,000, and heads of households with less than $ 112. $ 500. The payments would cease gradually with an increase in income, that is, when they reached $ 80,000 for individuals and $ 160,000 for married couples. Federal unemployment benefits are $ 300 per week, with an extended duration of one month.
The other side of the coin
However, the $ 1.9 trillion ARP is expected to dramatically increase the country’s already booming federal deficit. The Congressional Budget Office (CBO) expects it to add $ 1.1 trillion to spending in fiscal 2021 and $ 458 billion in fiscal 2022. A CBO Report Says: “High debt and increasing as a percentage of GDP increases federal and private borrowing costs, slows the growth of economic output, and increases interest payments abroad. A growing debt burden could increase the risk of a budget crisis and higher inflation, as well as undermine confidence in the US dollar, making it more expensive to finance public and private activities in international markets.
CBO estimates also reveal that the federal budget deficit was already high, reaching $ 1,048 billion in the first five months of fiscal 2021. This figure is significantly higher than the $ 423 billion deficit for the corresponding period. from the previous year.
A Fitch Ratings report echoed this sentiment, in which it said: “While President Biden’s proposed $ 1.9 trillion stimulus package would give the economy a big boost, the scale of the package indicates a delayed return to a budgetary position compatible with the stabilization of the government’s debt ratio.
The global rating agency predicts the country’s federal deficit will reach nearly 7% of GDP in fiscal year 2022, assuming there are no other key spending during the fiscal year.