The Biden Administration has proposed a $1.9 trillion stimulus package, and for roughly two weeks, leaders on both sides of the aisle are debating whether or not the aid will help our economy and those in need.
The answer is split among party lines in Congress, with Democrats backing Biden’s proposal, while Republicans voice concerns it is too expensive. Cutting through possible partisan positions, top economists are now weighing in.
“$1.9 trillion is roughly 9 percent of the overall GDP of the U.S. economy, so a fairly large package, and it comes on the back of over three trillion in stimulus aid in 2020,” explained Gregory Daco, the chief U.S. economist at Oxford Economics.
Oxford Economics is a leader in global forecasting and quantitative analysis. Daco agreed the amount of aid the government is proposing and has already dished out is unprecedented.
“We have to remember the conditions we are living through are unprecedented, too,” he added.
Dishing out an additional $1.9 trillion after the more than $3 trillion stimulus bill in 2020 is a lot, but Daco and other economists agree that from a purely economic standpoint the U.S. can afford the hefty bill.
“The U.S. government can borrow money at incredibly low rates right now. Basically, negative real yields” said Kyle Anderson. “So, from that point of view, we can certainly afford it and we can pay it back later, so that is not a problem. It still comes down to trade-off. Will it stimulate enough growth to make it worthwhile?”
Anderson is an economist at the Kelley School of Business. Both Anderson and Daco agree the proposed package is priced right to boost the economy, spur job growth and create an economic recovery that could potentially get to pre-pandemic levels by the third quarter of 2021.
In fact, a recent Reuters poll showed 90 percent of economists around the country believe the $1.9 trillion stimulus bill will “significantly boost the economy” and 87 percent of those economists also agree we could be back to pre-pandemic levels within a year. Critical to this timeline is the proposed package getting passed quickly.
“A significant portion of this spending is for vaccine distribution, and so, there has kind of been this game in Washington on ‘do we need it or not? Let’s wait and see,’” said Anderson. “We need the vaccine distribution funds right away. That is the biggest economic recovery tool we have right now.”
Democrats are hoping for Republican support to quickly push the proposed stimulus relief through, although, with a majority in both the Senate and the House, they don’t need it.