Summary
With one out of every four Americans being told to stay home (except for essential workers), there has been an influx of workers being laid off across a multitude of industries, and requests for unemployment insurance have greatly increased. Because many businesses deemed "nonessential" have been forced to shut down, many have also been entreating for a government bailout in order to stay afloat during these dire and unprecedented times. In order to prevent a recession equal to or surpassing the scale of the 2008 recession, the government has been called upon to create a stimulus package that protects Americans and businesses who have been affected by the shelter in place ordered by over 21 states. Republicans initially drafted the stimulus bill with a $500 billion corporate bailout fund, which would be "guided" by the Federal Reserve and Steve Mnuchin, and would not provide transparency for who the funds went to until six months later. Many felt that this echoed one of the biggest flaws of the 2008 recession bank bailout, where Americans lost at the expense of rich corporations profit. Democrats opposed the bill because of this component; the bill has subsequently been amended to include an oversight committee for this fund, and no stock buyback for up to a year for companies who participate. Within the bill, there are also increases made to unemployment insurance, hospitals and small businesses would receive vital financial aid, and taxpayers would also receive a check in the mail for $1,200 if their annual income is below $75,000 (an additional $600 for every child dependent). The bill is now set to be voted on tonight, where it will then move on to the House. Democrats in the House had proposed a competing bill Monday night before amendments were made to the Senate bill, but House Speaker Nancy Pelosi recently expressed she was "pleased" with the Senate bill after it was modified.
Reaction
While this has been a very polarizing bill, I am incredibly glad that it has gotten to the voting stage relatively quickly, as Americans are in dire need of government action. The bill has many promising components, and many of its questionable parts have since been amended due to negotiation. Before they amended the corporate bailout fund, some were concerned that Trump's administration had too much control over it, as they were able to delegate which businesses got what without any oversight or transparency. Some also expressed concern that Trump would be able to help his own businesses with the bill, but Democrats recently secured an amendment ensuring that high-level senior officials could not directly benefit from the corporate bailout fund. This eliminates the possibility that someone could disproportionately benefit because of their position, and it is also reassuring that there is now oversight for the $500 billion fund. While it is unprecedented that individual Americans are receiving direct aid from the government, there should also be additional provisions in place that make it illegal to cut off utilities or internet to those who cannot afford it, which could then be subsidized by the government as well. However, overall, I believe this bill will do a lot to help dampen the effects of a possible recession.
Questions
1. Do you believe that this stimulus bill could help prevent a large-scale recession?
2. With the House majority Democrat, do you believe this bill is enough of a compromise between the two parties for the bill to be passed in the House?
3. Do you think the corporate bailout fund was comparable to the 2008 bank bailout?
While I do think that this stimulus bill will help to try to prevent a recession, I don’t think it will completely do so. I think it’ll definitely help decrease the severity of the recession we experience, but I don’t think it'll stop a recession especially given the worldwide effects of COVID-19. $2 billion is a lot of money and a lot of debt to take on, but to not take on this enormous amount of debt as soon as possible would put our economy on track to just take massive dives. I think (and hope) the House will pass this bill because the country desperately needs all of the aid it provides. People are unable to work and are getting laid off because the companies are unable to operate and make money, so they can’t pay their employees. Even with this stimulus bill, some smaller companies and businesses aren’t going to make it through, still dragging down the economy, which is why this bill is purely damage mitigation and nowhere near a solution.
ReplyDeleteWhile over 21 states in the US are greatly affected by COVID-19 and are resulting in shelter in place, I do think that this stimulus bill could help prevent a recession. While $2 trillion seems like a lot of money, I think it will be difficult for all of America to recover from this pandemic. A lot of people are not working, and some have lost jobs. I don't think that $3 trillion will help everyone out. I think this bill will be passed by the House because of how big of a deal this pandemic has gotten over the past few months. I would think that the House would agree to pass this bill so that the money can somewhat relieve the possible recession. It is hard to say whether the corporate bailout fund was comparable to the 2008 bank bailout because this deals with everyone who has jobs. I would say that as of now, it is almost comparable, but if this pandemic gets worse in the US, I think it would be comparable. Although, the bank bailout was $700 billion, this corporate bailout is $2 trillion corporate bailout. It would seem that this might be worse than the Great Recession in 2008.
ReplyDelete1. Certainly it will help. Not to say that throwing money at a problem always fixes it, but giving businesses an alternative to simply closing their doors will help many, especially service-based industries that have been experiencing a decrease in demand, and in some places however much of that that trickles down to the individual recipient won't make too much of a change. Still, something is better than nothing.
ReplyDelete2. At the end of the day, I imagine that present need will trump politics. Nobody wants to be known as the person who said yes to a pandemic.
3. I don't know enough about either to answer that question.
I agree with Nathan’s view on this stimulus bill and do believe that a recession seems quite inevitable at this point. With so many things coming to a halt due to the widespread orders to social distance all over the nation, many businesses are bound to begin to fail. Even with the unemployment numbers that have been released recently, the market is actually looking much better than I had envisioned. In fact, this week has had quite a few green days in the market (but my stock portfolio is quite red haha), so this stimulus bill or news of this stimulus bill may be doing some things to lessen the impact of COVID-19. I do think that this is just a temporary period of ups and I predict that the market may be faced with more drops in the near future.
ReplyDeleteI think the government’s stimulus bill will only be a temporary relief to an outpouring issue. The problem with this unprecedented time is that no one knows how long the virus will affect us. It could be a week or it could be a year. Whatever duration it is though, the unknowing nature of it is a significant challenge that needs to be worked around. Thankfully the stimulus bill might be able to protect Americans for a good period of time until the economy can get its bearings and maybe get accustomed to this way of life. I think the House Democrats will agree on the bill without much concern mainly because the bill needs to get out and start laying out its effects immediately. There is not much time before we enter a recession like the one of 2008. In this case, it is imperative that the bill start helping Americans and attempt to lift up the economy before it goes to a point of no return. I am not sure how this bill will compare to the 2008 bank bailout fund as they both had different intentions. Let’s all hope that this bill can actually do some good and get the country back on its feet.
ReplyDeleteThis is only a temporary fix for the problem of POVERTY. I'm happy that our government finally woke up and realized giving money to people is a good idea, but I don't think this is going far enough. The solution to poverty is simple, abolish it directly with a universal basic income. We have the money. It's unfortunate it takes a crisis like this for legislation that improves the lives of average Americans to actually pass. It won't prevent a recession, that's for sure.
ReplyDeleteI think the stimulus bill could definitely go a ways towards helping patch up the effects of the virus, but I feel like the oversight committee might just end up ridiculously overwhelmed due to the nature of the decisions they have to make about who gets money and who doesn't. Ideally, it would be spread to those who need it, but I can see how some people might be opposed to this, just as people have been opposed to welfare in the past. As a bailout fund, it's pretty similar, but I can see how it's meant to be different. Large corporations hopefully shouldn't be the only ones benefiting, as small businesses, hospitals, and even individuals are supposed to be receiving aid. It might be a little too early to tell how exactly this aid will work, and how well it will work, but I think there's definitely potential.
ReplyDeleteI think the bill is only going to help for a bit with the recession. The government is helping a bit, but it is not enough to help in the long term. The country will be able to succeed more for a bit with this bill. However, there are more many issues that are plaguing the united states currently that need focus as well.
ReplyDeleteI think the stimulus bill can help reduce the severity of the recession caused by COVID-19. Thousands of people do not have work anymore and lost their jobs because of the virus which would definitely result in a recession. Unless the government is going to do something about that, then the money from the stimulus bill will only be a short term solution for the economy.
ReplyDeleteI do believe that in many ways this is comparable to the 2008 bank bailout. This is also using an extremely large amount of money in an attempt to stimulate the economy, as a response to a massive crash in the stock market. What I find to be the most substantial similarity, however, is what it doesn't do. Much like the 2008 bailout did not hold the big banks accountable for their actions, this stimulus bill does not provide adequate support to those who need it most, rather, it is for corporations to take advantage of.
ReplyDeleteAs previously stated, I think that the stimulus bill will help prevent a large-scale recession but not eradicate it completely. COVID-19 has led to a lot of drastic changes in the way society is run, causing major damages to the stock market, businesses (especially small), and to people in general. In this way, I think that a recession is inevitable. For the second question, I'm not sure if this bill is enough of a compromise between the two. Although it would be nice too see people in office focus on the issue of the virus affecting the nation together as a whole, with many losing their jobs and unsure of whether they can get by, some people have chosen to focus on their own interests.
ReplyDeleteWhile very, very expensive, I do believe that this stimulus bill will be beneficial in terms of helping to reduce recession. Like you, I am glad that our government is able to move quickly when being hustled. I like that the Democratic Party is taking measures to make sure to try to prevent any corruption that may arise from this bill, and it is also nice to see that terms are cooperative and approving between the two parties. It's just one less thing to worry about in a time of national crisis like such. Although not of the same causes, I do find the current economical circumstance somewhat similar to the recession in 2008, simply because of the heavily fluctuating downward-trended market and the public disorder that is causing.
ReplyDelete