On December 21, tens of millions of individuals, families and small business-owners finally got what they had waited for anxiously– at least they thought so. That was the day Congress finally passed the COVID relief bill. The $900 billion measure is the second largest spending bill in history, surpassed only by the CARES Act, which was passed earlier this year.
For starters, the stimulus package gives every adult and child $600 (this number may be increased to up to $2,000). This means a two-parent family with three children will receive a total of $3,000 (or as much as $10,000). The legislation also will help cities, fund costs of vaccine-distribution and other pandemic-related programs, and also assist cultural institutions.
Very wealthy people don’t need $600 and they were not counting the days until they would receive it. But lots of ordinary folks were. The number of Americans living in poverty rose to 52 million during November, and they are desperate for more money. So are the many tens of millions who are unemployed, under-employed and those whose work hours have been cut or who aren’t making as much in tips, commissions, or bonuses as they had been.
According to a very recent survey by Bankrate.com, half of US households said their incomes had taken a hit during the pandemic; only 17% said their earnings are back to their former levels. The survey also noted that more than 80% of adults are worried that their earnings will never bounce back to what they had been. The bill also extends unemployment benefits.
Money Well Spent?
Officially, the stimulus package is geared to provide urgently needed relief for Americans impacted by the pandemic. For example, in addition to emergency relief checks, the bill will fund nutrition, education, and other programs. Does this mean the bill is doing what it’s supposed to?
Zero Hedge was wondering about that, so it added the cost of the checks, airline bailout, funds for the MTA, provisions for nutrition and education and related aid and came to a surprising conclusion. Its calculation found that “roughly four of every five dollars the bill will spend will go to special interests; the one remaining dollar will be divided by 330 million people.”
A great deal of the bill is geared to foreign countries and in many cases for programs that have absolutely nothing to do with the virus.
Speaking to the press, an angry President Trump said the bill was a disgrace and pointed to some of its programs to make his point. Among them:
Unauthorized immigrants not only will receive stimulus checks but will become eligible retroactively for the $1,200 checks given to citizens in the first stimulus bill.
Israel will get $3.3 billion in grants, but it is far from the only foreign country that will receive assistance. The Ukraine would receive $453 million. Egypt and the Egyptian military will get $1.3 billion and “use it almost exclusively to buy Russian-made military equipment,” said Pres. Trump. $25 million is earmarked for democracy and gender programs in Pakistan.
$700 million is on the way to Sudan. $134 million is earmarked for Burma, $85.5 million for Cambodia, and another $1.4 billion for an “Asia Reassurance Initiative Act.” Nepal is getting $130 million.
Even some of the programs slated to spend money in America are raising eyebrows. For example, the $1 billion earmarked for The Smithsonian and $154 million for the National Gallery of Art are curious, because both of these institutions are closed now. The Kennedy Center in Washington will receive $40 million although that too is closed.
$2.5 million will be used to count the number of amberjack fish in the Gulf of Mexico, and many millions more are to be spent on other fish-related programs.
$208 million will enable the Census Bureau to upgrade its computer systems although there is no urgency for this – the next census count will be made in 2030 and by that time the computers purchased now will likely be obsolete.
Still other funds will be used to educate consumers “about the dangers associated with using or storing portable fuel containers for flammable liquids near an open flame.”
A Penny Here, A Penny There
Democrat Congresswoman Tulsi Gabbard did not pull any punches in expressing her opinion; she called the bill “a slap in the face” and voted against it. Gabbard added that the bill has nearly 5,600 pages and Congress was given just six hours to read the final version.
Rand Paul, Republican Senator from Kentucky, railed against Republicans who supported it. “If free money were the answer, why not give more free money?” he asked rhetorically. “And why not give it out all the time?”
Ted Cruz, Republican Senator from Texas, also voiced criticism. “It’s absurd to have a (total package of) $2.5 trillion-plus negotiated in secret and then hours later demand an up or down vote on a bill no one has had time to read,” he Tweeted.
Other critics of the stimulus bill say the incredible amount of government spending is taking the US down a path of hyperinflation. Regardless of who takes the oath as President on January 20, there almost certainly will be additional stimulus programs in the months ahead.
Peter Schiff, a financial commentator and CEO of Euro Pacific Capital, said that the national debt had already increased by $4.8 trillion in 2020 alone. Schiff warned that all of the spending in the new COVID-relief bill will be paid for “by the printing press and by inflation and that means the dollar is going to collapse.” This hasn’t happened yet but the dollar is now the weakest it’s been in more than six months.
Despite all of the government’s spending, many people are angry and letting their voices be heard. It’s a good bet that if the economy dips again because of more lockdowns and quarantines, their voices will get even louder. Let’s hope it never comes to that.
As of Friday morning, Dec. 25, the stimulus bill still had not been passed, and because of political wrangling it’s still not clear when or even if it will be passed.
Sources: bankrate.com; bloomberg.com; cnn.com; wsj.com; zerohedge.com
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