Less than a week after the largest economic stimulus package in the history of the United States, more than $ 2 trillion, took effect, the US Congress began discussing the next round of economic stimulus packages.
Speaker of the US House of Representatives Pelosi, Virginia Democratic Rep. Bobby Scott and New Jersey Democratic Rep. Frank Pallone revealed the fourth round of the new US epidemic during a conference call with the media on March 30 Framework content of the Democratic version of the stimulus plan.
Congressman Scott ’s Office told the First Financial Reporter that in the next round of economic stimulus plans, the priority issues that members of the Democratic Party hope to join include: issuing more protective measures for medical workers and strengthening their safety and health management Issuing a new round of cash for the American public; adding extra budgets to hospitals and nursing homes; and ensuring that patients with new coronary pneumonia get free testing. It is worth noting that according to the information provided by Scott’s office, in addition to the above topics, the Democratic Party also hopes to emphasize infrastructure construction, especially investment in broadband and 5G, in the next round of stimulus packages.
However, for the new round of economic stimulus plans being promoted by the Democratic Party, there are currently two opinions in the Republican Party. Some Republican members believe that the United States needs additional federal government support to get out of the new crown epidemic. “It’s too early” to start discussing more spending plans before they actually start. On March 31, US President Trump stated at the White House New Crown Outbreak briefing that he hoped to add a “very generous and bold” infrastructure plan to the fourth round of economic stimulus plan-a scale of 20,000 Billion dollars, focused on employment and reconstruction of American infrastructure. But Trump also emphasized that his infrastructure investment plan and the Democrats are not a version.
Wang Yong, a professor at the School of International Relations at Peking University and director of the International Center for Political and Economic Research, emphasized to the First Financial Reporter that two successive stimulus plans amounting to US $ 2 trillion have been launched. “The United States has launched four consecutive rescue programs. According to real-time monitoring data from Johns Hopkins University, as of 21:00 on April 1, Beijing time, the number of confirmed new crown virus in the United States was 189,633 cases and 4,081 deaths. In order to reduce the impact of the economic recession caused by the epidemic, in the past month, the Trump administration has successively proposed four rounds of rescue plans totaling $ 4.1083 trillion.
Specifically, on March 6, the first round of US $ 8.3 billion in emergency grants was provided to the Ministry of Public Health to purchase materials and invest in research and development of vaccines and medical treatment. On March 19, Trump signed another 100 billion The dollar’s emergency assistance program ensures free New Crown virus testing, supports paid sick leave benefits during the outbreak, and provides unemployment insurance for millions of Americans. However, Senate Majority Leader Mitch McConnell acknowledged that the United States also desperately needs a package that can provide relief to workers.
On March 27, Trump signed the most generous US $ 2 trillion economic stimulus plan in American history, assisting large companies and troubled industries, providing assistance to SMEs, expanding unemployment protection, and issuing cash to low-paying families . But when the blockbuster bill has not lost its freshness, only four days later, on March 31, Trump launched the fourth round of rescue plan at the White House, claiming that he will invest another 2 trillion US dollars to expand employment and reconstruction. American infrastructure.
Daming, an associate professor at the School of International Relations at Renmin University of China, told First Business News: “The two trillion-dollar rescue plan recently introduced is balanced in terms of content. It takes into account the well-being of small and medium-sized enterprises, large enterprises and families. The fiscal measures that have been drawn, drawing on the experience of the 2008 financial crisis, began to stimulate the economy earlier. ”
Wang Yong also told the First Financial Reporter that this combination of bailouts is faster and more powerful than the financial crisis. It can be seen that the decision is made according to the worst situation, so the confidence in the US economy and investors Play a supporting role.
The market response seems to confirm this. For more than a month, the Dow Jones Index has plummeted from an all-time high near 30,000 points. By March 23, when the Federal Reserve announced the launch of unlimited quantitative easing, it had fallen by nearly 40%. But then it rebounded strongly. Within a week, by the close of March 31, the decline had narrowed to 25%.
“What caused the first U.S. stock market meltdown was the panic expected by the market. It stands to reason that the number of newly diagnosed cases in the United States is now increasing, but the panic is not as strong as before. I think this has been alleviated through the fiscal policy of the past month. Daming explained, “This is a more positive trend in reducing the possible impact of the epidemic on the economy.”
Why launch a infrastructure plan
Why did Trump come up with a $ 2 trillion infrastructure plan at this time? Daming analysis believes: “Trump had proposed infrastructure construction during the campaign earlier. Several versions have been launched in the past four years, but they have never landed. He actually intends to take the opportunity to promote the realization of this plan.”
In the 2016 campaign, Trump had promised to provide a $ 1 trillion infrastructure package to rebuild roads, bridges, ports, and airports. He claimed at the time that this would create hundreds of thousands of jobs. But White House officials cannot reach a consensus on how to raise funds, and the two parties have serious differences on which projects should be included in the infrastructure bill. Daming added: “But in any case, this plan will only be implemented after the epidemic. If the US epidemic can be stabilized by June and July, and the related infrastructure projects can be launched, there will be some unemployment caused by the epidemic. The effect of backfilling can also fulfill Trump’s promises with a double stroke. “Professor Wang Yong told the First Financial Reporter that this epidemic has a huge impact on the US economy. The cyclical economic stimulus measures show that there may even be a Great Depression, so infrastructure projects are necessary.
After the Great Depression of the United States in 1929, the Roosevelt New Deal stimulated the economy. One of the most important items was infrastructure construction, including the construction of highways and dams in the United States at that time. A similar strategy was introduced at this time, showing that The United States has serious concerns about the economy. “Wang Yong said,” The existing infrastructure system in the United States has a long history. It can be said that the launch of this plan in the epidemic also gave the United States the opportunity to improve its infrastructure. ”
Regarding the possibility of the implementation of the US $ 2 trillion infrastructure bill, Daming believes that the infrastructure project itself is good for the Democratic Party and the Republican Party. When implemented, every member of the congress may “share a piece of the cake” and “plus the epidemic Factors, I think this is easier to achieve. “But Daming also added that the important thing is to see how it will be implemented in the future. He said that some old problems in the implementation of infrastructure projects in the United States remain unresolved, such as the division of cakes among states. “Actually, in the infrastructure plans we have seen in the past few versions, it seems that each state has one or two projects. Therefore, whether the new infrastructure appears in bail-out mode or other versions, it is difficult to say.”
According to information released by Pelosi on March 30, outbreak prevention and control are closely related to infrastructure.
“The fourth round of stimulus package will be related to economic recovery.” Pelosi told reporters during the conference call on the day, “We hope to see some cross-party foundations in the next round of stimulus package that lead us to the future. Facility construction plan. “The new stimulus plan will include the expansion of US broadband and 5G technology to allow more Americans to work from home; provide more modern equipment for hospitals and community medical centers; and update damaged old water pipes.
What are the consequences of throwing up two consecutive $ 2 trillion stimulus plans? According to data from the US Government Accountability Office, as of the end of fiscal 2019, the total federal debt of the United States was 22.8 trillion US dollars, which was 105% of the gross domestic product (GDP) of the year, and the debt level was already at its peak after World War II.
“If a series of stimulus policies are introduced now, although it will be effective for the US economy in the short term, it will also have a huge impact on the level of US debt, especially government debt.” Wang Yong said, “This ultimately It may lead to inflation. Coupled with the peculiarity of the US dollar, it may cause imported inflation to other countries in the world and have an impact on the global economy. This is the so-called ‘wool wool’. ”
Wang Yong believes that the epidemic may also greatly change the relationship between the US government and the market. “In the past, the United States was a free market economy, and the government intervened as little as possible,” he said. “But now, to a certain extent, the US government has taken over the US economy. For example, the government bypasses financial institutions to directly buy corporate bonds, Capital injection by large enterprises, etc. “