Almost All of The US Stimulus Funding Has Been Distributed
More than two months after Congress passed its $3 trillion stimulus package, the funds are almost depleted, according to the Wall Street Journal.
Most of the direct cash that was intended to keep the economy afloat during the pandemic has been spent or committed. The Cares Act originally included $1.2 trillion for expanded unemployment benefits, forgivable business loans, and cash payments for individuals. Congress bolstered that amount with an additional $400 billion in April. 70 percent of these funds have been distributed so far, accord to a Wall Street Journal analysis and estimates by the Committee for a Responsible Federal Budget.
“This fiscal stimulus has spent out very quickly relative to reasonable expectations, certainly relative to historical expectations, which is to the credit of the administration,” said Ernie Tedeschi, an economist with Evercore ISI who served in the Treasury Department under President Obama. “In terms of the core assistance to households and businesses, we’re already past the peak.”
Direct payments have been the most effective measure thus far. “We’re getting most of the benefit from that stimulus right now,” Mr. Tedeschi said. “Virtually everything is committed, and a great deal of it has gone out the door already.”
Lawmakers have debated adding more funds as they closely watch states reopen, active cases of COVID-19, and the development of a vaccine. Congress has passed four emergency bills totaling $3.3 trillion in new spending. House Democrats want more funding and passed a $3.5 trillion bill that includes another round of payments for Americans, $1 trillion in aid for state and local governments, and other measures. “We think this is a major investment in the lives of the American people and in the budgets of our states and localities,” Speaker Nancy Pelosi said.
Republicans have acknowledged that more legislation may be needed, but they want to assess the effect of the current measures before throwing more money at the problem. “You can make a pretty strong case that before we rush out and do another spending bill we actually let some of this stuff go to work and understand the consequences of what we’ve already done,” Senator Pat Toomey said. The White House is also focusing on incentives to reopen the economy and ideas for another legislative package.
The Congressional Budget Office stated that the current legislation “will partially mitigate the effects of the deterioration in economic conditions,” with most of the desired effect occurring in the second and third quarters of the year. However, they expect the economy to be smaller at the end of 2021 than it was at the end of 2019.
Government spending to replace business and personal income is also close to depletion. The IRS has delivered 89 percent of direct payments to households in 2020. The SBA has allocated 76 percent of the funding for the Paycheck Protection Program, including the boost after the original $349 billion ran out. The Treasury Department has distributed $144.3 out of the $150 billion for the Coronavirus Relief Fund.
Donald Schneider, an economist at research firm Cornerstone Macro
“I don’t think there’s some big boost in growth waiting in the wings because relief hasn’t been disbursed yet,” said Donald Schneider, an economist at research firm Cornerstone Macro.