Senators worked through the night to agree on a huge economic rescue plan, but will it be enough? / © AFP
The US Congress is poised to push through an emergency spending measure unlike any ever seen to help ease the economic damage inflicted by the coronavirus pandemic, but analysts warn it is only a first step.
The massive $2 trillion bill is expensive and covers huge swaths of US society. It includes cash payments to most Americans, expanded unemployment insurance and food benefits, loans to small businesses, funds to support overwhelmed hospitals and help for distressed industries like airlines.
But even Senate Majority Leader Mitch McConnell seems to acknowledge that it might not be enough to get the economy running again.
"This is not even a stimulus package. It is emergency relief," McConnell said in a statement to the Senate.
But with some forecasters predicting a shocking 14 percent contraction of the US economy in the second quarter, as well as a severe global recession this year, economists urge lawmakers to prepare to do more to help cushion the blow for millions who have lost their jobs as huge areas of the economy are forced to shut down.
"No, it's not enough, there will be more. This is a moving target," Diane Swonk of Grant Thornton told AFP.
Senate Majority Leader Mitch McConnell called the $2 trillion package needed because the US is on "wartime footing" / © AFP
"But the good news is, it's much more broad based, much more multifaceted," she said of the package. "That's what we need. And it's a really good start."
With more than half of the country's residents under some form of lockdown and the death toll over 800 with at least 60,000 confirmed cases, the world's largest economy is on life support and emergency treatment is critical if it is to emerge from the crisis.
But it is even more important because unlike other advanced economies, Americans do not have a national healthcare system or national unemployment benefits available to everyone.
Those gaps make administering aid a challenge.
- Avoiding a deeper crisis -
Democrats and Republicans in the Senate worked through the night to reach an agreement, and are expected to vote on it later Wednesday, after which it must go to the House of Representatives for final approval before President Donald Trump can sign it into law.
"It is a good bill. Does it have everything we need? No," the Senate's top Democrat Chuck Schumer said. "America needed huge help quickly and I think we have risen to that occasion."
He pointed to what he called "unemployment insurance on steroids," the expansion of benefits for those who have lost their jobs that increases payments by $600 a week, extends aid by a month to four months, and eliminates a one-week waiting period before benefits begin.
And, more critically, it will open the benefits to workers who previously did not qualify, including people who are self-employed and workers in the gig economy.
Compared to the $1,200 per-person check from the Treasury, the expanded benefits could provide nearly $11,000 over four months, on top of other payments.
Workers build a makeshift morgue outside of Bellevue Hospital to handle an expected surge in coronavirus victims in New York, the current epicenter of the outbreak in the US / © AFP
But with as many as two million workers filing for jobless benefits for the first time last week, the picture is grim. Economists at the Conference Board warned the US unemployment rate could soar to as high as 15 percent later in the year -- far beyond the 10 percent peak hit in October 2009 during the global financial crisis.
"The plan itself is essential to avoid a deeper crisis than what we are going through," Gregory Daco of Oxford Economics told AFP.
"Rather than an economic recovery plan, it is rather a stabilization plan" especially to shore up small and medium businesses, he said. "This plan absolutely had to be put in place to avoid both a major loss of activity but also the historic job losses."
- Falling through the cracks -
And even with the expanded jobless benefits, economists worry that millions may fall through the cracks.
David Wilcox, a former top advisor to the past three Federal Reserve chiefs, worries the logistics are beyond the scope of the government to manage.
The payments, while important, "are not going to reach a bunch of very low income individuals" who do not earn enough to file a tax return and yet make too much too much to receive Social Security benefits, said Wilcox, now at the Peterson Institute for International Economics.
The package also provides $150 billion for state and local governments to help cover the costs of the virus response -- but Swonk pointed out just three states, including the current US outbreak epicenter New York, have requested $100 billion.
The draft would provide $3.8 billion for New York state and $1.3 billion for the city, which Governor Andrew Cuomo dismissed as "a drop in the bucket," noting lost tax revenue alone is expected to total $15 billion.