Earlier this month, President Joe Biden signed into law the American Rescue Plan Act, a massive $1.9 trillion stimulus package that passed Congress along party lines. The latest stimulus package, which includes $1,400 stimulus checks, federal unemployment aid and COVID-19 vaccine funding, comes on top of the $4 trillion in stimulus spending that was signed into law by former President Donald Trump.
After $6 trillion in total stimulus spending passed the legislature, there’s no doubt the COVID-19 pandemic has come with a massive price tag for the federal government. None of this is to say that the $6 trillion in stimulus spending that Congress has already passed has been unnecessary. Stimulus checks and unemployment benefits for struggling Americans have been critical measures. But with rising numbers of Americans getting vaccinated, lower numbers of cases and deaths and promising economic growth, Congress should largely avoid future stimulus measures.
Although no major measures have been proposed since the passage of the American Rescue Plan, it’s possible more economic stimulus may gain traction in the coming weeks or months. Biden’s $1.9 trillion bill, for instance, came right on the heels of stimulus passed in December. This was arguably too soon for experts to gauge whether these extensive measures were warranted.
The public health situation has now improved to the point that the costs of massive stimulus packages like the latest rescue plan are beginning to outweigh the benefits. Lawrence Summers, director of the National Economic Council under former President Barack Obama, argued precisely this in a piece appearing in the Washington Post. As public health and economic conditions continue to brighten, it is becoming harder and harder to justify the piling of trillions of more dollars onto our staggering national debt, which just topped $28 trillion.
Since the beginning of the COVID-19 pandemic, Congress has passed three major stimulus plans. The most recent reached Biden’s desk without a single Republican vote in either the House of Representatives or the Senate. In March 2020, as the COVID-19 crisis rapidly intensified and millions of Americans came under strict lockdown measures, Congress raced to pass the Coronavirus Aid, Relief, and Economic Security Act. This $2.2 trillion stimulus bill garnered bipartisan support in both houses of Congress and was quickly signed by Trump in late March.
The CARES Act was an indisputably crucial measure that shielded the United States from grave economic damage, and it was followed by two more major rescue packages. The Consolidated Appropriations Act, signed into law by Trump on Dec. 28, allocated an additional $900 billion toward stimulus spending. Less than three months later, the 2021 American Rescue Plan was passed and signed into law by Biden.
At the moment, although passing future stimulus measures may be tempting, especially given the fact they are widely popular amongst Americans, critical signals demonstrate Congress should be wary of doing so.
First, while relief packages stimulate the economy, they come at a staggering cost. From 2019 to 2020 alone, the national debt grew by nearly $4 trillion, without including the $1.9 trillion American Rescue Plan. Especially without a sound plan to address this deepening financial crisis, giving the green light to even more stimulus spending is fiscally irresponsible.
Next, while relief packages have obvious economic benefits, they can also backfire, threatening to hinder economic recovery. For instance, the unemployment aid embedded in stimulus bills supports Americans who are out of work, but it also simultaneously reduces the incentive to go back to work. Often, the enhanced unemployment benefits are so generous that workers make more with them than they did at their jobs. In fact, this was the case for more than two-thirds of unemployed Americans, according to a University of Chicago study released earlier in the pandemic. Sen. Joe Manchin, D-W.Va., raised this concern while debating the most recent relief package.
Unfortunately, concerns such as these could threaten to undermine the robust economic growth that experts forecast in the near future. According to the Congressional Budget Office, U.S. gross domestic product is expected to hit pre-pandemic levels by the middle of this year. The Federal Reserve Bank of Atlanta predicted early this month that the first quarter of 2021 alone would see a 10% rise in total GDP. With promising economic growth on the horizon, Congress should refrain from injecting any more stimulus into the economy and instead let the existing packages do their job.
The economic situation makes a clear case against supporting further relief measures, but the public health case is just as strong.
Multiple effective vaccines are being administered across the country. According to the Centers for Disease Control and Prevention, over 111 million COVID-19 vaccine doses have been administered. This comes with a downward trend in both cases and deaths across the nation over the last 30 days. Although some variants of the virus, such as those first discovered in the United Kingdom and South Africa, could create new hotspots, it’s clear the public health situation is now much less dire as vaccines become more widely available and hospitals are less overwhelmed.
Over time, all of this progress will increasingly supplement the economic growth we’ve already seen. Businesses are now opening their doors, and students are heading back to the classroom. Right here in Ann Arbor, University of Michigan President Mark Schlissel announced a plan for mostly in-person classes this fall. With more reasons than ever before to be optimistic, another major stimulus package is largely unnecessary at this point.
On the whole, our elected representatives and senators have expertly navigated the COVID-19 pandemic, an unprecedented event that has taken our country into stormy, uncharted waters. But as conditions rapidly improve and the dark clouds recede, Congress should steer clear of future relief measures for the time being.
Evan Stern can be reached at erstern@umich.edu.