Question

What are the arguments against additional federal fiscal spending in the next three months? Timeline is today's current economic and political climate. Thorough answer please, Thank you.

Answer 1

The US is facing a increasing epidemic of COVID-19, which took the lives of some 46,000 Americans and infected more than 828,000 people in all 50 states. In response, the U.S. has introduced a number of initiatives, including travel bans, social distances, declaration of state of emergency, closing of schools, bars and restaurants, and increased monitoring.

US$ 484 billion Paycheck Safety and Health Care Enhancement Act. The act provides I US$ 310 billion in new forgivable loans from the Small Business Administration and incentives to help small businesses retain workers; (ii) US$ 60 billion in grants from the Small Business Administration to support small businesses; (iii) US$ 75 billion for hospitals .An estimated US$2.3 trillion (around 11% of GDP) Coronavirus Aid, Relief and Economy Security Act (“CARES Act”) . The Act includes (i) US$250 billion to provide one-time tax rebates to individuals; (ii) US$250 billion to expand unemployment benefits; (iii) US$24 billion to provide a food safety net for the most vulnerable; (iv) US$510 billion to prevent corporate bankruptcy by providing loans, guarantees, and backstopping Federal Reserve 13(3) program; (v) US359 billion in forgivable Small Business Administration loans and guarantees to help small businesses that retain workers; (vi) US$100 billion for hospitals, (vii) US$150 billion in transfers to state and local governments and (viii) US$49.9 billion for international assistance (including SDR28 billion for the IMF’s New Arrangement to Borrow).

US$8.3 billion Coronavirus Preparedness and Response Supplemental Appropriations Act and US$192 billion Families First Coronavirus Response Act . They together provide around 1% of GDP for: (i) Virus testing; transfers to states for Medicaid funding; development of vaccines, therapeutics, and diagnostics; support for the Centers for Disease Control and Prevention responses. (ii) 2 weeks paid sick leave; up to 3 months emergency leave for those infected (at 2/3 pay); food assistance; transfers to states to fund expanded unemployment insurance. (iii) Expansion of Small Business Administration loan subsidies. And (iv) US$1.25 billion in international assistance. In addition, federal student loan obligations have been suspended for 60 days.

Federal funds rate were lowered by 150bp in March to 0-0.25bp. Purchase of Treasury and agency securities in the amount as needed. Expanded overnight and term repos. Lower rate of discount window lending. Reduced existing swap line costs with major central banks and expanded the duration of FX operations; expanded U.S. dollar swap lines to more central banks; provided temporary repo facilities for global and international monetary authorities. Upper-level combat. Federal banking supervisors allowed depository institutions to use their capital and liquidity reserves to lend, to work constructively with lenders impacted by COVID-19, and suggested that COVID-19 related loan adjustments should not be categorized as distressed debt restructuring. Treasury Securities and deposits at the Federal Reserve Banks could be temporarily excluded from the calculation of the supplementary leverage ratio for holding companies.  Other actions include offering regulatory reporting relief and adjusting supervisory approach to temporarily reduce scope and frequency of examinations and give additional time to resolve non-critical, existing supervisory findings. CBO's estimate of the deficit for 2020 is now $8 billion more—and its Federal debt held by the public is projected to rise over the coming  Projections of spending over the next three decades are higher than those Reasons for the Growth of Individual Income Tax Receipts in CBO's Baseline Projections.

And after accounting for the federal fiscal assistance received so far Reasons to conclude that this particular recession will have a lot more Provisions on effort — protects against cuts in Medicaid eligibility and ... This would increased revenue and raise costs in most countries over the next three months.  CBO's estimate of the deficit for 2020 is now $8 billion more—and its Federal debt held by the public is projected to rise over the coming Projections of spending over the next three decades are higher than those Reasons for the Growth of Individual Income Tax Receipts in CBO's Baseline Projections.