Former U.S. Treasury Secretary issued a document against Biden’s stimulus plan under pressure-Finance News

Former U.S. Treasury Secretary issued a document against Biden’s stimulus plan under pressure

Author: elegant

　　[ 根据美国劳工部刚刚发布的数据，整个1月份新增工作岗位数只有4.9万，失业率达6.3%。 ]

The US Senate and House of Representatives voted to pass the 2021 budget resolution, which cleared the way for US President Biden to launch his $1.9 trillion economic stimulus bill in the next few weeks.

The vote allowed Democrats to push Biden’s plan through Congress with the approval of only Democrats, which also meant that Biden’s efforts to seek bipartisan cooperation ended in failure. “If I have to choose between helping Americans who have been seriously injured and getting into lengthy negotiations,” Biden said in a speech at the White House, “I will act, and I will act quickly.”

But at the same time, former U.S. Secretary of the Treasury and former Harvard University President Larry Summers, former Republican Senator and economist Phil Gramm, and others believe that Biden’s $1.9 trillion bill is too much. Redundancy, the current idea of ​​focusing on stimulating consumer demand with expenditure is wrong, and its risks may outweigh the benefits.

For this view, Zhou Shijian, a senior researcher at the Center for China-US Relations at Tsinghua University, expressed disagreement with the CBN reporter. He said: “This time a large number of Americans have lost their jobs because of the epidemic, especially in the tertiary industry. According to the data just released by the US Department of Labor, the number of new jobs in January was only 49,000, and the unemployment rate was 6.3%. Generally speaking. It is said that the unemployment rate in the United States exceeds 4%, which is considered a high unemployment rate. Consumption in American society accounts for 80% of the gross domestic product (GDP). Without consumption, the economy cannot develop, and ordinary people cannot consume without money. “

The debate on the size of the stimulus bill: too big or too small?

Following the unexpected drop of 140,000 in non-agricultural employment in the United States in December last year, according to the latest report of the U.S. Department of Labor, there were only 49,000 new jobs in January, of which only 6,000 were in the private sector. The result was far below expectations. Compared to this time a year ago, the labor market still lost 9.9 million jobs.

Biden’s long-term economic adviser, Jared Bernstein, also pointed out at a recent press conference that the latest “employment report reveals that the engine of job creation in the United States is stagnant and emphasizes how unstable the US economy is.” He said: “The lack of employment growth is the result of our failure to take appropriate actions in response to this huge crisis. Our economy and family cannot afford our inaction again.”

But on the other hand, Summers recently published a signed article in the “Washington Post”, questioning that Biden’s huge stimulus plan may be too “excessive.” “We must ensure that its promulgation will neither threaten future inflation and financial stability, nor will it threaten our ability to rebuild better through public investment,” Summers wrote. In other words, an overly large relief package will “set off inflationary pressures that our generation has never seen before” and cause a larger government deficit, which will affect the possibility of reducing other expenditure legislation in the future, such as investment in infrastructure construction.

The Biden administration responded by saying that it did not turn a blind eye to inflation risks, but was more worried about other risks. Recently, Fed Chairman Jerome Powell and the newly appointed Treasury Secretary Yellen also expressed similar views. “I am even more worried that because there is no complete recovery, people will not be able to return to work in time and lose their hard-working careers and lives.” Powell said, “I am more worried about this and the resulting damage. Not only for their lives, but also for the damage to the US economy.”

“In my opinion, Biden’s stimulus plan can be said to be’sending charcoal in the snow, to buy people’s hearts.’ Because the Democratic Party’s support rate is mainly in the middle and lower classes, Reuters said that the survey showed that the poor population (in the United States) increased by 2.4 in the second half of 2020. Percentage points, which is 8.1 million people. The bill needs to subsidize these people.” Zhou Shijian explained, “Such a large-scale rescue measure will only be introduced this time. This is to save the emergency, not the poor, and is to save the economic recession. And the move for it.”

“I know some people in Congress think that we have done enough to deal with the crisis in the United States… But this is not what I see, I see the great pain in this country. There are many people who are unemployed, many people are Go hungry.” Faced with criticism that this bailout bill is too redundant, Biden said, “One of the lessons we learned (from 2009) is that we will not be too late, we will only do too little. “

Summers admitted that if the Obama administration increased fiscal stimulus in 2009, the economy would be better. However, economists who criticized the scale of the relief program believe that the current situation is much more optimistic than the 2009 economic crisis. Statistics show that in the last economic crisis, the US economy did not end its recession until June 2009, and the unemployment rate continued to rise, reaching a peak of 10% in October 2009. However, in this new crown pandemic, the US economy has resumed positive growth since the third quarter of 2020.

Zhou Shijian retorted: “The US GDP fell by 2.5% in 2009 and 3.5% in 2020, the most since the end of the Second World War in 74 years. The financial crisis on Wall Street was mainly affected by the financial crisis. This time it is the service industry with a wider scope. In April 2020, the unemployment rate even surpassed 14.7%.”

In addition, according to US media reports, after the “CARES” stimulus bill was promulgated in March last year, the US personal savings rate soared to 33.7% in April 2020. Before the US$900 billion in aid was issued at the end of December last year, this figure remained at 13.7%. In the context of labor shortages, wages in most industries are increasing. As of December 2020, the total salary of employees has exceeded the level of February of that year.

“The savings rate has indeed risen, but how did it come about? This is because the epidemic has spread so severely that luxury consumption such as tourism has been greatly compressed. The money that could have been spent is now nowhere to be spent, so it is saved. Banks. But for the poor, the money is used for emergency relief and will not be used for deposits.” Zhou Shijian said that in addition to subsidizing the poor, Biden also subsidized the aviation industry and other industries with poor business. Money will never be issued by flooding, it must be targeted.” Recently, the Biden administration even expressed its willingness to further tighten the threshold for issuing a $1,400 check.

A research report released by the Brookings Institution estimates that if the Biden $1.9 trillion bill is passed, it will boost US economic activity by about 4% by the end of this year. The society estimates that without financial support, the economy will remain below its pre-coronavirus level within a few years. However, “a risk worth noting is that the restoration of GDP to the maximum sustainable level may cause economic difficulties after 2021. Although our estimates show that there will be a temporary shallow decline in GDP after the fourth quarter of 2021. , But the slowdown may be more sudden and painful than our predictions indicate.” The report reads.

Zhou Shijian told a reporter from China Business News: “When the epidemic is under control, the economy begins to recover, and business activities resume, it is predicted that the US economy will grow by 6% in 2021. Then, by the end of this year or early next year, the Biden administration will Consider increasing taxes. Increasing taxes to reduce deficits is the traditional concept of the Democratic Party.”

Timeline of Biden’s $1.9 trillion plan

Despite the unanimous opposition of the Republicans in the Senate and the House of Representatives, with the efforts of the Democrats, on February 5 local time, the Senate and the House of Representatives still approved 51 to 50 and 219 to 209, respectively, to approve the stimulus including $1.9 trillion. The planned budget blueprint. Beginning the week of February 8, congressional committees will begin to draft legislation on the specific content of this relief plan, and strive to accelerate the passage of the House of Representatives by the end of the month.

According to US media reports, the majority party (Democratic Party) will face obstacles in issuing economic stimulus policies. Democrats still need to discuss the specific details of the bill, including how to determine who is eligible for the $1,400 direct payment, and whether to try to raise the federal minimum hourly wage to $15 by 2025. On Thursday evening, when the Senate voted to approve non-binding amendments to the budget, disapprove of issuing checks to “high-income” individuals, and raising the minimum wage during the COVID-19 pandemic, the signs of this debate emerged.

The House Ways and Means Committee (Ways and Means Committee) may spend three days dealing with amendments submitted by both parties. The chairman of the committee, Richard Neal, said he plans to vote on the committee on economic stimulus, unemployment and tax provisions from Wednesday to Friday (February 10-12). At the same time, the Senate will be mainly busy with the impeachment of former President Trump.

Before February 16, the 12 House committees and 11 Senate committees that jointly deal with the economic stimulus bill must submit their responsibilities to the House and Senate budget committees. Subsequently, the Senate Budget Committee will summarize the final bill and seek evaluation from the Congressional Budget Office.

House Majority Leader Steny Hoyer said that the House of Representatives plans to vote on the final plan in the week of February 22 and submit the bill to the Senate. If the Senate completes the impeachment trial by then, it may start voting on the bill later in the week. According to US media estimates, once the Senate makes any changes to the bill, the House of Representatives will need to vote again on the revised bill. The Senate and House of Representatives can resolve their differences through formal conference committees or back and forth voting until the two houses reach an agreement.

House Speaker Nancy Pelosi is optimistic that Congress can approve the stimulus bill before the unemployment benefits in the stimulus plan passed at the end of December expire on March 14.