By Jon Dougherty
(TNS) The White House will reportedly ask Congress to approve a massive $850 billion spending package to blunt the economic damage caused by the outbreak of the coronavirus, much of which just feels self-inflicted.
As CNBC reported Tuesday, Treasury Secretary Steve Mnuchin will head to Capitol Hill later today to discuss a third coronavirus spending package with Senate Republicans as a way to reinvigorate the economy which is being ravaged by COVID-19.
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In particular, the Trump administration will ask for $850 billion in stimulus spending (boy, this sure sounds familiar, doesn’t it?), according to reports by Politico and The Washington Post. The White House’s proposal would include about $50 billion in aid to an airline industry battered by the global pandemic, according to the Post.
“Congress already passed $8.3 billion in emergency funding to help stop the coronavirus disease’s spread. A separate plan to expand paid leave benefits, boost unemployment insurance and make testing more affordable is working its way through the Capitol this week,” CNBC reported, adding:
The outbreak has wreaked havoc on the economy, as restaurants, bars and event venues close down or limit service and stores take a hit from Americans staying inside. The travel and leisure industry, such as hotels and cruise lines, has taken a beating.
Washington has scrambled to blunt a potential economic freefall. The push includes efforts to protect workers who lose their jobs or wages because of the crisis.
The Federal Reserve, meanwhile, has cut interest rates to zero again and began infusing cash into the system (again, this all sounds familiar).
But maybe this time around things will be different, considering it’s President Trump in the White House and not Barack Obama, who used a massive stimulus bill passed by Democrats in 2009 as a result of the Great Recession to essentially pay off political allies.
John R. Lott wrote for Fox News in March 2012:
When President Obama signed his economic stimulus plan into law on February 17, 2009, he promised it “includes help for those hardest hit by our economic crisis,” and “As a whole, this plan will help poor and working Americans.”
But the newest data on how the stimulus money was given out across the 50 states and the District of Columbia shows a perverse pattern: The states hardest hit by the recession received the least money. States with higher bankruptcy, foreclosure, and unemployment rates got less money. And lower-income states also received less.
Rather than helping out those in the toughest shape, it looks like Democrats ended up helping their supporters, including unions and many very wealthy supporters.
According to the Obama administration’s Recovery.gov, a total of $504 billion of federal contracts, grants, and loans to states and territories were awarded between February 17, 2009, and December 31, 2011. The amounts vary a lot across states, with the very lowest at $978 per capita in Virginia and the highest at $2,495 per capita in Alaska. The District of Columbia is the real winner at a whopping $7,603.
The transfers to the states having the least economic problems were large.
Also, by any measure, Obama’s trillion-dollar stimulus didn’t hit the mark. Writing at US News in December 2012, James R. Harrigan and Antony Davies noted:
Real economic growth has stagnated at 2 percent, while official unemployment hovers near 8 percent and actual unemployment remains in the double-digits. Adding insult to injury, the only growth the stimulus spending has actually produced is a ballooning of the deficit to 8.5 percent of GDP. Only in Washington, D.C. could the idea of overspending our way out of a financial hole be taken seriously. It is almost as if, in addition to checking common sense when crossing the D.C. beltway, no one in government learns from past mistakes.
Which brings us to what happens next. The president is now talking about continued “stimulus spending,” apparently oblivious to how poorly it worked last time.
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Hopefully this time around, if the president gets his spending package, it’ll actually go towards blunting the economic fallout of the virus — like, perhaps, towards infrastructure upgrades Trump has long sought.
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