Today Chairman of the Federal Reserve, Jerome Powell will testify before the House Committee on Financial Services, tomorrow he will deliver the same remarks before the Senate Committee on Banking, Housing, and Urban Affairs.
The testimony is on the occasion of the one-year anniversary of the signing of the CARES Act. Then-President Trump signed into law on March 27 of
- This was a $2 trillion dollar stimulus package, designed to support individuals, families, businesses, and industries.
It was by far the largest single expenditure ever made by the US Government. In raw numbers, this represents an infusion of nearly 10% of the nation's Gross Domestic Product. The principal measure of the economy.
So in other words, fully 10% of last year’s economy came not, from the regular sum of goods and services. But coming from a one-time lump sum contribution by the Federal Government and the Federal Reserve.
This is not economic activity, but financial infusion writ large. What's more, we're going to do it again this year, with the newly enacted Biden Stimulus Package of another $1.9 Trillion dollars.
Although the two Aid Packages are similar in the total dollars spent, Trump at $2 Trillion, Biden at $1.9 trillion, they are very different in which sectors of the economy actually receive the Aid.
For Trump, there was a big emphasis on getting business back up and running. A true capitalist Trump clearly crafted a program aimed at supporting business. So, in the CARES Act, you see $500 billion earmarked for Corporations, and another $375 billion specifically aimed at small businesses.
Most of that is gone in the Biden Stimulus Plan. For Biden, large corporations are virtually eliminated, except to the extent that they are part of another specific sector, such as health care.
And Small Business is cut by nearly 90%.
On the other hand, State and Local Governments make out very well indeed. Under Trump, they were given $150 billion, while under Biden that was bumped up to $350 Billion. Making a cool half trillion going to State and Municipal Governments over these 2 years.
Schools and Universities are clear beneficiaries under Biden, with $170 Billion headed their way. This on top of the $1 in student loans Biden has already forgiven in his short tenure. Clearly, the education establishment is in the Biden camp.
Health care about the same for both Packages. Trump's package gave over $100 billion to Health care, and so did Biden. Although the later package was a little more specifically directed to particular programs such as Vaccines, testing, and the ACA, otherwise known as Obamacare.
So for Trump with nearly 45% of his stimulus plan going to private enterprise, the small business, and corporations of the country. The clear aim was to restart the economy.
For Biden on the other hand the bulk of his stimulus program, about a third of the program, is aimed directly at the public sector. State and local governments as well as schools and universities.
That's about as large a difference between the two programs as you'll ever see.
Finally the headline news in all this: the Biden New Plan will provide eligible recipients another $1400 on top of the $600 provided last year by the Trump plan.
That's a total of $2000 per recipient. And it's also a primary reason that most economists are projecting a very good year this year. With the economy expected to “grow” at nearly a 2 1/2% rate for 2021.
So at 10 am this morning, Jerome Powell will answer the House Member's questions on the Anniversary of the CARES. The first major stimulus package designed to mitigate the effects of the Covid Pandemic.