Editorial | US$1.9 trillion virus relief plan welcome news for world economy
- While some economists have rightly warned about the return of inflation with Biden’s plan, all nations – including China – may at least enjoy a short break from the gloom of last year
For sheer scale, US government spending under the plan will be equivalent to a whopping 8.5 per cent of national income. Its passage was enabled by Democrat dominance of both houses of Congress and the White House. And despite unified Republican opposition, polls show a clear majority of the US public favours the bill.
Gone is the previous Republican focus, under Donald Trump, on aid for corporations and tax cuts to stimulate the economy. Instead, there is now a laundry list of Democrats’ priorities that would have been described as social-democratic had it been enacted in Europe.
Under the plan, there will be a significant expansion of the social safety net, another round of direct payments for millions, extended jobless benefits and billions in direct funds and relief measures for schools, small businesses, states and tribal administrations.
Urgent funding will be used to speed up vaccine roll-out. Perhaps most significantly, the Democratic Party’s long cherished goal of poverty reduction has become a centrepiece of the plan. The relief measures – such as tax credits, food aid and rental and mortgage assistance – aim to reduce overall poverty by a third and child poverty by half. No wonder Republicans are angry, accusing the Democrats of exploiting the pandemic to advance their own policy agenda. But they can hardly complain after four years of Trump and the Republican Party doing exactly that.