Economists opine that the Congress should continue to provide financial help to struggling communities and people of colour in the US, in order to prevent them to turn to credit cards, borrowing, or spending down their savings.
Dean Baker, professor of economics and urban policy, retweeted an article on how the Senators called on the Biden administration to make Covid relief payments recurring until the economy recovers from the pandemic. Economists further stated that the Congress should continue to assist people through regular cheques until the job market recovers and unemployment is high in the country.
Early data has revealed that the massive stimulus provided by the government, especially under the CARES Act, supported households and families in 2020, and also prevented the economic crisis from becoming worse. In fact, one of the most effective federal aid was the direct payments issued to individuals, which helped families sustain and buy essential goods and services.
Covid-19 has exposed the inequities that already existed in the US economic structure, with unemployment rates having peaked for Black and Latinx workers more than their white counterparts. Data further revealed that a large section of these people worked in jobs that heightened their risk of exposure to the coronavirus. Experts believe that the government cheques have been successful in supporting these communities, and those who have had no other form of relief during the pandemic, but the scale of the pandemic requires them to be supported further.
There has been enough evidence to suggest that combining cheques along with targeted programmes have been extremely effective. For example, the Urban Institute and the Economic Policy Institute found that combining payments along with expanded unemployment benefits in the summer of 2020 helped nearly 12 million people from falling into poverty in the US.
This week, Senators called on President Biden to make relief checks recurring until the economy recovers. A new op-ed from economists @DarrickHamilton & @D_W_Wilcox makes the same case — #OneMoreCheckIsNotEnough https://t.co/t8IuJio2Dy
— Children's HealthWatch (@ChildrensHW) March 4, 2021
Fabio Ghironi, an economist, retweeted an article on the gross domestic product (GDP) having rebounded sharply in countries that have been successfully in containing Covid-19. In addition, countries with widespread vaccination programmes have also been able to reduce coronavirus cases and deaths, and subsequently revive their economies.
Real world evidence further suggests that countries such as the UK and Israel have been able to blunt the severity of the disease and symptomatic infections because of the planned vaccination rollouts. The US, on the other hand, expects to have enough vaccines for every adult by the end of May 2021, with the $1.9tn stimulus package moving closer to becoming a law. While Israel leads the pack with more than half of its population having received the first jab of the Covid vaccine, the US and UK fair better than other advanced economies.
Recent studies also suggest that coronavirus vaccines have been effective in reducing infections, with both Israel and the UK reporting falling number of hospitalisations among the older age groups. Given a scenario that a vaccine-resistant strain does not become dominant, experts believe that the rapid rollout of Covid vaccines will help in reducing deaths and hospitalisations, and transmissions altogether.
However, some countries such as Australia, New Zealand, China, and Taiwan have been able to curb the virus and revive their economies without vaccines. It is being hoped that other countries follow a similar path to curb the virus via vaccination efforts.
GDP has rebounded sharply in countries that have successfully contained #COVID19 – similar can be expected in places with widespread vaccination programmes #FathomRecoveryWatch https://t.co/ZlqQWtjfo0
— Fathom Consulting (@fathommacro) March 3, 2021
Joe Michell, an associate professor of economics, retweeted a discussion on how some experts believe that raising taxes in the UK to pay down the deficit caused by the pandemic is a political decision as it’s not an economic necessity.
They further opine that government finances are nothing like household budgets, and a key part of this is that the Bank of England has stepped in to help the government in a massive way, with 92% of the borrowing coming from the BoE at zero percent rates.
Therefore, the choice to increase the taxes or cut the budget, to pay for the deficit caused by the coronavirus pandemic is a political choice that has not learnt the lesson of ten years of austerity.
“It’s a wrong political choice that has not learnt the lesson of ten years of austerity”
— BBC Question Time (@bbcquestiontime) March 4, 2021