A Tale of Stimulus Bills

Written by Ishaan Maheshwari

In March 2020, COVID-19 was in its peak leaving one of the craziest months in financial and industrial history.

To aid small businesses who were struggling with the loss of customers and workers who were dealing with unemployment, a $2 trillion stimulus package was passed.

This package featured major unemployment benefits, $500 billion in business loans, $100 billion to hospitals, $58 billion to the airline industry, and several other distributions.

On the 21st of April, a new $480 billion stimulus package passed through the Senate.

Where did the stimulus package concept even come from?

Originating from Keynesian Economics, a stimulus package is a group of economic measures that are created by the government to balance a struggling economy.

John Maynard Keynes developed this economic theory in the 1930s during the Great Depression.

He believed in increased government spending so the economy could reach equilibrium. Having the government inject money into the country would certainly boost aggregate demand.

He also saw that at some point the U.S. government would implement tax-cutting into a stimulus package.

Unfortunately, this could not be accounted for due to rising complications in the governmental system.

The U.S. passed a stimulus bill in 2009 due to the Great Recession, only this value was $15 billion compared to the whopping $2 trillion passed in April.

However, the goal of recent stimulus activity is to not boost demand at all. The government does not want people to come out on the streets to buy products.

The economy is in a crucially fragile position. The goal is to keep our economy on its feet while investing money in ways to fight COVID-19.

The main purpose of this new stimulus bill is to continue to aid and fund the small businesses heavily affected by the Coronavirus.

Earlier in April, there was a shortage of funding for this bill. Businesses were dependant on this bill to survive and there were scares of it never even passing due to a lack of funding.

Hospitals who are running out of materials and rationing out medicines due to a shortage are waiting for this bill which allocates almost 16% of all money towards them.

Additionally, $25 billion of this package will be sent towards COVID-19 testing facilities and measures.

Major questions arose during the process of creating the stimulus package as to whether testing for COVID-19 would go national.

As of now, $11 billion will be given to states to conduct their own testing and procedures.

The rest of the money will go towards government procedures, federal agencies, and investment in new technology to fight the pandemic.

When this new bill comes around, we can expect a large rally in the stock market. Currently, the market is very green so we can expect red coming before this bill passes.

As an economy, we can see a future of several stimulus bills being passed by the government due to the constant impact of COVID-19 in the work and business industries.

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