A new analysis of President Joe Biden’s $ 1.9 trillion stimulus plan found that the $ 400 billion in aid allocated to financially vulnerable families provides the biggest boost to Gross Domestic Product (GDP).
The Brookings Institution researchers divided the package into four categories based on the likelihood that recipients will spend the relief: a third $ 1,400 stimulus check; COVID-19 containment and vaccination, aid to state and local governments and increased federal spending; additional $ 400 per week in unemployment benefits and the extension of pandemic unemployment programs; and help to companies.
Aid to financially vulnerable families – the category that includes the greatest unemployment benefits, housing assistance, health insurance subsidies and program extension – is estimated to have the greatest effect on GDP, increasing it by almost 10 cents per aid dollar in the second quarter of this year, according to the study. The effects of the measure are expected to peak in the first quarter of 2022, at around 25 cents per dollar of aid.
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Aid to businesses – the category that includes loans to small businesses and sick leave paid – is estimated to have the least effect on GDP.
Overall, Brookings estimates that the aid package proposed by Biden will increase GDP by about four percent by the end of this year and two percent by the end of 2022.
Biden indicated this week that he is open to negotiations aiming at more payment targets, such as changing the required income limits to direct payments of $ 1,400, after conservative Republicans fiscally opposed the package because it was too expensive.
“There is a legitimate reason for people to say, ‘Did you draw the limits in the right way? Should I go to someone who makes more than X dollars? I am open to negotiating these things,'” said the president on Monday.
However, Biden also noted that “time is of the essence” and said he would rather pass a broad stimulus bill than “handpick” individual proposals.
As the opposition continued throughout the week, Biden indicated on Friday that Democrats could move on without Republican support. In a meeting with government economic advisers, the president said: “The risk is not to overdo it.”
“You have to act now. There is no time to delay,” he said. “I support the approval of the COVID exemption with the support of Republicans, if we can. But the COVID exemption has to be approved. Without ifs, ands or buts.”
Senate majority leader Chuck Schumer said on Thursday that the upper house “as early as next week will begin the process of considering a very strong Covid relief bill.”
Newsweek contacted the White House for comment.