SIOUX FALLS, S.D. (KELO) — The U.S. Department of Treasury would like to send checks to Americans who are hurt financially by Coronavirus.
The Treasury Department has said in memorandum Wednesday that it wants to issue two $250 billion cash infusions to individuals/households. A first set of checks would be issued starting April 6, with a second wave in mid-May. The amounts would depend on income and family size, a report from the Associated Press said.
President Donald Trump has proposed an economic package that would provide financial assistance to individuals and to industries such as airlines and to small business. Trump had a proposed a payroll tax cut but it doesn’t appear to be part of the most recent stimulus discussion.
The Senate today passed a coronavirus package that nearly mirrors a package passed in the House. The Senate called it phase two, CBS News said. Like the House bill it offers free coronavirus testing and paid leave for certain workers.
Additional measures, such as payments to Americans, were not included in this package passed today, but CBS News said, the Treasury Department’s stimulus proposals were being discussed.
The amount proposed by the national Treasury to individual and businesses could reach $1 trillion.
Federal officials consider school measures because of possible recession, said Kathryn Birkeland. Birkeland is the chairwoman of Economics and Decisions Science the University of South Dakota’s Beacom School of Business.
“The economic thought behind fiscal stimulus comes from John Maynard Keynes,” Birkeland said. “His premise was that recessions are caused by a drop in consumer spending. If the government can make up for the spending until consumers recover, then the recession is smaller or shorter.”
Federal officials implemented tax rebates in 2008 and 2009 to individuals to stave off the negative impact of the Great Recession.
Birkeland said there are some key differences between a tax rebate and the Treasury Department suggested direct payment.
“Direct payments to households has different incentives than tax rebates because of the timing,” Birkeland said. “Tax rebates do not change spending now, rather when the return is paid.”
If the federal officials decide to spend $250 billion on payments to Americans, it doesn’t guarantee $250 billion in spending by recipients, Birkeland said.
The COVID-19 situation means the U.S. does not want people out shopping or dining, Birkeland said.
“More money will help those who are laid off pay the rent and buy food, but the check will not stimulate those businesses that need to remain closed for public health concerns,” Birkeland said.
Businesses that closed because of public health reasons may still be closed when Americans receive a proposed relief check.
The size the proposed package ($1 trillion) is the largest in terms of dollars, Birkeland said.
When the proposed $1 trillion is compared to the Gross Domestic Product, the American Recovery and Reinvestment Act of 2009 was a larger percentage portion of the GDP, Birkeland said.
“The American Recovery and Reinvestment Act of 2009 was the most recent stimulus package at $787 billion when our U.S. GDP was $14.449 trillion, which meant the package was 5.44% of total U.S. annual output,” Birkeland said.
“Current data from the Bureau of Economic Analysis indicates U.S. GDP for 2019 to be $21.427 trillion,” Birkeland said. “If the stimulus is $1 trillion, then the package is 4.67% of total US annual output. “