Report: Stimulus plan for COVID-19 includes $2,000 payments, $300 billion for small businessesDonald Trump. Photo by Gage Skidmore, obtained via Wikimedia Commons
DeKalb County, GA – The federal government is mulling an economic stimulus package that would see $2,000 in checks sent to many Americans and include a $300 billion bailout for small businesses, the Washington Post reports.
On March 18, the U.S. Senate passed a bill to ensure paid leave benefits to workers.
It’s all part of a $1 trillion rescue plan that would include funds to help the airline industry.
It’s a fluid situation. To read the Washington Post story, click here.
Economic experts at Emory University’s Goizueta Business School have differing takes on the effects of these stimulus ideas and what the prognosis for the economic health of the United States could be longterm.
Thomas Smith, a professor at Emory University’s Goizueta Business School, told Decaturish the United States could potentially experience another Great Depression, depending on how things shake out.
“I think it’s unlikely you’re going to have a huge rebound in three months. What I’m predicting is a significant decline in economic activity over the next six to nine months …,” Smith said. “If we find the social distancing works and we’re able to control the outbreak of new cases and this thing runs its course in two months, plus or minus, we could find ourselves on the uptick by the fourth quarter of this year, October or November. That’s probably the best-case scenario.”
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And the worst case?
“Worst case is the dawn of the apocalypse right?”
Isn’t that hyperbolic?
“You just asked me for the worst-case scenario,” Smith said. “Think about the absolute worst thing that could happen. Clearly we don’t have zombies and they’re not eating people alive, but what does a nonfunctioning economy look like? Everybody loses their job, everybody is in bread lines, banks foreclose on everybody’s houses, nobody has money. You resort to what? You have a mega depression. We had a depression right before World War II and it lasted years and people suffered immensely. The worst-case scenario would be a depression of that type of magnitude and that’s a realistic worst-case scenario.”
He added, “I don’t want it to get that way. There are lots of mitigating circumstances that happened during the depression. We needed the [Works Progress Administration]. People built roads and monuments and federal parks. Everybody was put to work by the federal government. People found work because the government hired everybody. If that’s what they’re talking about right now, you could avoid that trend.”
That isn’t on the table right now, based on published reports. And Smith said he keeps hearing different things about what the government might do to shore up the economy.
“Who knows exactly what they’re talking about because we keep on hearing such different pieces of information coming out of the White House,” Smith said.
Giving everyone $2,000 wouldn’t get most people very far, he said, particularly when most of the other businesses are shut down. It could keep people from missing a mortgage payment or car payment. But he said most Americans don’t have more than $500 in savings. Most of us aren’t prepared for a prolonged economic crisis, he said.
“I am concerned,” Smith said. “This is awful. This is absolutely awful. We’re playing such crazy catchup at this point.”
Emory University Goizueta Business School lecturer Ray Hill said he was surprised at his colleague’s pessimism.
“The first thing is nobody knows,” Hill said. “Can you tell me how long it’s going to last and when it will disappear? Nobody can tell what the economic effects are going to be. It’s as unknown as the effect of the virus itself.”
He said if the country recovers by early summer and everyone gets back to work, there’s no reason to think we’re headed for another Great Depression.
According to the New York Times, the United States’ virus plan anticipates an 18-month pandemic and shortages of medical supplies that could impact healthcare and shortages of consumer goods. There are concerns that cases could overwhelm a healthcare system that has 100,000 ventilators (also called respirators) to help people breathe and fewer than 70,000 adult ICU beds. The social distancing that’s affecting the local economy is intended to slow down the spread of the virus.
So far there’ve been 7,038 confirmed cases of COVID-19 in the United States, and 97 deaths. The number of cases is likely higher due to limited testing.
Hill said there’s no evidence right now that hospitals won’t have enough beds or ventilators to accommodate people.
“We have plenty of respirators now,” Hill said. “The issue is if this becomes more widespread.”
He said nothing he’s seen indicates that COVID-19 will continue to drag down the U.S. economy two years from now.
“My version of a worst-case scenario: this becomes a really bad flu, lots of people get it, thousands of mostly elderly people or people in bad health die, the rest of us get it and we go about our life, or we don’t get it at all, it works it’s way through the population, it’s bad,” Hill said. “Nobody is telling me it’s going to be around as a permanent fixture until there’s a vaccine.”
Hill said if there are 7,500 cases and 15 percent of those cases need to be hospitalized, then 1,125 people need to go to the hospital and there are still 100,000 ventilators.
“We’ve got time to make more of those before we get to 100,000 in the hospital,” Hill said. “As a nation, people are way ahead of the curve in terms of the stuff we need.”
Correction: An earlier version of this story misstated the amount of the proposed bailout for small businesses. This story has been updated with the correct information.
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