These days, nothing can happen in Washington unless it’s done on a bipartisan basis. The approval of the $2 trillion aid package late last week proves that there are times when party rivalries come second. The aid package includes $500 billion in aid to big corporations, $377 billion in aid to small businesses, $150 billion to the states and territories, $150 billion for hospitals, and of course, $300 billion in direct aid to the public in the form of checks. Together this comes to $2 trillion, 10% of America’s GDP. For comparison, the current aid package is double the size of the two others signed in the past decade, one by George W. Bush and the other by Barack Obama, together which came to $1 trillion.
The winners of the aid package are of course private citizens, who will soon be receiving checks in the mail, but corporations in industries that have been hurt — like airlines, restaurants, hotels, and retailers — will also benefit. For small businesses, there’s loss and gain. On the one hand, $377 billion is a lot of money. On the other hand, it’s all in loans (the debt might be canceled in the future, if they meet certain criteria). The biggest losers at this juncture are the oil and renewable energy corporations. People aren’t driving, using public transportation, or flying. Oil prices are at a nadir not seen since the ’90s.
But for all its upsides, the aid package comes with a significant price. According to Forbes, America’s budget deficit will soar to an unheard of $4–5 trillion in 2020. That total includes the aid package of $2 trillion, the Trump tax cuts of 2018, the expected fall in tax revenue this year (as a result of people losing their jobs), and the rise in applications for social security. All this could account for 20% of GDP.
Speaking of the American economy, it’s in big trouble. Last week 3.3 million people filed claims for unemployment. How crazy is this number? Three weeks ago the number of applicants for unemployment benefits stood at around 200,000, and the current number is six times the all-time high of 650,000 in 1982. And this is only the first wave of the devastation the corona will wreak. With every passing day, more and more people are quarantined and non-essential businesses are closing. This has a cumulative effect — it’s not a switch that you can turn right back on if the crisis is over within a month — and it almost certainly won’t be. Unemployment figures will continue rising.
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