Passage of a $2 trillion economic stimulus package in and of itself would be no great reason to celebrate. After all, the genesis of the aid – the coronavirus pandemic – has wrought untold economic damage on the world already and will continue to do so.
But Americans should be pleased nonetheless. The aid package, which appeared imminent but was still awaiting final approval while this piece was being written, would make a difference for struggling businesses and families. It was formed with bipartisan support.
Mostly, though, this package is needed during what certainly will be a trying time for many Americans. According to some, past economic stimulus packages have worked.
The details started coming in early Wednesday morning, after hours of negotiations. The package appears to include $250 billion for direct payments to most Americans, plus billions of dollars going to industries and public entities, unemployment insurance and small-business loans.
Of greater interest to Americans: The package is likely to include direct payments of up to $1,200 to most adults and $500 to most children. Single adults who earn more than $99,000 probably will not qualify; same for couples who earn a combined $198,000.
It also would increase unemployment insurance and offer up to an additional $600 a week to laid-off workers for up to four months, in addition to other unemployment pay that already exists.
Importantly, as reported by The Washington Post, it appears to include $130 billion for hospitals.
But will it all work? It sure can’t hurt.
The Economic Stimulus Act of 2008 paid up to $600 per person in hopes of boosting a sagging economy. Some studies that followed indicated that it succeeded.
For example, a study completed that year and posted on the website Vox, in conjunction with the Center for Economic Policy Research, noted that the 2008 stimulus package was “aimed at increasing disposable income … in the hope that it would stimulate spending and end or at least mitigate the severity of a U.S. economic slowdown.”
The study’s authors – Christian Broda and Jonathan Parker – concluded: “We find that to a significant extent (the program) succeeded.”
The authors, who studied expenditures of some 30,000 households, wrote that spending at grocery stores was barely affected, but spending at supercenters and non-grocery businesses increased significantly. Spending rose on products such as appliances, electronics and furniture.
Instead of saving the money, Americans seemed to spend it, Broda and Parker concluded, and their research showed the typical family increased spending by 3.5%. Of course, that was the idea behind the stimulus package.
That’s the goal of this one, too. So when those checks come, spend the money.
And before browsing products online at some faraway merchandiser that will never support local programs, after-prom parties or kids’ sports, think of what that money could do for Greater Grand Forks businesses.