DIFFERENCES IN SECOND STIMULUS PLANS
September 29, 2020 - Douglas Myser
Differences in second stimulus plans. The size of the already passed stimulus package is massive. The $2.4 trillion exceeds some of the world's largest economies, including the $21 trillion economy of Italy, the $1.9 trillion economy of Brazil, and the $1.7 trillion economy of Canada. Only six other countries (China, Japan, Germany, United Kingdom, France, and India) have GDPs larger than the $2.4 trillion dollar figure. It is also bigger than any single federal program in the 2019 budget, by far. The Congressional Budget Office estimated on March 6th, that 2020s federal government spending would approach $4.7 trillion-almost two weeks before the $192 billion Families First Coronavirus Response Act was signed. That funding combined with $2.2 trillion approved in the ensuing weeks has stretched U.S. spending to new heights. Differences in second stimulus plans.
Even before the pandemic reached the U.S., the federal government was on track to add another $1.1 trillion dollars to the national debt by the end of September. Now, the coronavirus stimulus is expected to more than triple the original 2020 projected budget deficit to $3.5 trillion, based on estimates compiled by the Congressional Budget Office. The Federal Government routinely spends more than it collects, adding billions-even a trillion-to the national debt each year thanks to the accumulation of budget deficits. But this addition to the debt will stand out just like those that need Tax Resolution. Another way economists look at the nation's debt is as a percentage of gross domestic product--the sum of all goods and services produced in the U.S.
Many exclude debt held in other government accounts in their analysis. We've included it here to coincide with more widely reported total debt numbers. Regardless of the percentages, the shape of the curve (even if we think GDP will grow 2% this year) puts us on a footing with World War 2. As long as investors trust in the credit of the U.S. its not a problem.
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