Pandemic aid spending averages $ 43,000 per second
BALTIMORE – To pay for his coronavirus relief program, President Joe Biden must spend an average of $ 3.7 billion a day for the rest of the year. This works out to $ 43,000 per second of each day until the midnight chime in 2022.
During the time it took readers to come up with this sentence, Biden has to shell out nearly $ 800,000 to stay on track.
That’s according to Congressional Budget Office estimates, and even so, the Biden administration would still have plenty of the $ 1.9 trillion to spend in the following years as a vaccinated country struggles to regain its economic health. .
The president signed the aid package into law on Thursday without a comprehensive plan in place to distribute all funds, which will be a central focus of the administration in the coming weeks.
The level of spending is testament to the complexity of tackling a disease that has spread so widely across the country in less than a year, and the economic pain it has caused.
“It’s taxpayer dollars that you want to spend fairly, but you also want to spend it quickly,” said Jack Smalligan, senior policy researcher at the Urban Institute and former White House budget official.
Some expenses, such as cash transfers, can be done quickly.
The Biden administration has previously announced that it will send the $ 1,400 in direct checks – a total of around $ 400 billion – starting this weekend. The administration will also pursue increased unemployment assistance for the 20.1 million Americans who receive some form of benefits. Direct checks and unemployment assistance were among previous COVID assistance programs that totaled around $ 4 trillion, meaning the government has systems in place to distribute the money.
But other elements are more delicate.
There is $ 130 billion for K-12 schools to hire teachers, upgrade ventilation systems and make other improvements so in-person classes can resume. Universities are entitled to $ 40 billion. In addition, $ 30 billion in housing assistance is available. And there is about $ 120 billion for vaccine distribution and coronavirus testing, among other public health spending.
The White House has said billions for schools will “start” to be distributed this month by the Department of Education.
But some funds might take a long time to distribute, as government agencies, with their normal expenses, can take six to nine months to release funds through competitive grants or an application process. Schools and state and local governments could also spread spending long after most of the country is immunized.
“A fair process can inherently take longer because of checks and balances and internal reviews,” Smalligan said. “The fact that the money flows quickly and that state and local governments spend the money over the next two fiscal years is probably responsible for them. You want to hire a teacher not for a month but for years. “
The Treasury Department is considering how best to distribute around $ 350 billion in state and local aid. But he has not finalized a plan and is consulting with governors, mayors and other officials.
“Our Treasury team will work to get this help as quickly as possible – and the one that has the greatest impact,” Treasury Secretary Janet Yellen said in a speech Tuesday for the National League of Cities. “To do this, we will need your input and advice.”
The Biden package also introduces around $ 140 billion in temporary tax credits. This includes an expanded child tax credit that would be paid monthly, rather than once a year. Parents with incomes of less than $ 150,000 could receive at least $ 250 per month per child starting in July.
“The real problems are going to show up in these new tax credit programs: Can the IRS administer this new monthly payment to tens of millions of American families?” said Douglas Holtz-Eakin, president of the center-right American Action Forum and former director of the Congressional Budget Office.
Holtz-Eakin said error rates on these tax credit programs tend to be high as people move to new addresses, incomes change, and the IRS may not be of the correct age for it. the children. He pointed out that about a quarter of the payments for the existing earned income tax credit that go to working parents are in error.
However, he also noted that Biden posed little economic risk in terms of releasing the money, as the economy was already poised to grow rapidly at the highest rate in at least two decades.
Holtz-Eakin said the successful distribution of funds would really influence two goals he sees as incidental to pandemic relief. The first is the reduction of child poverty promoted by the Biden team through tax credits and other aid. But second, the various child tax credits will expire and this puts pressure on Republican lawmakers not to block their extension before the 2022 election.
This pressure could help Democrats in their efforts to expand narrow majorities in the House and Senate.
“It’s a clear political trap that they are trying to set,” said Holtz-Eakin.
But spending on the Biden package also reflects how locked down the country was a year ago. At the time, quick help was needed because of massive layoffs due to business closures. Now it takes money to speed up the recovery because vaccines are available.
“There’s a light at the end of the tunnel,” said Kathleen McKiernan, professor of economics at Vanderbilt University. “Biden’s plan targets areas of need, including vaccine distribution and assistance from state and local governments, which will take time but will help the economy rebound once the virus is brought under control.”