Cash payment, unemployment benefit tax exemption, etc.
Amendment to 50 in favor and 49 in opposition
No proposal to raise the minimum wage of 15 弗
‘Last Link’ employment is also recovering
Market “I’m not sure of temporary inflation”
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The U.S. Senate passed an additional $1.9 trillion (about 2,140 trillion won) stimulus for the novel coronavirus infection (Corona 19). After pulling out a stimulus plan worth about $4 trillion last year, it is on the verge of implementing an extra-large stimulus plan again. The economic and employment recovery will accelerate due to astronomical fiscal spending, but inflation concerns are growing.
According to the US economic broadcaster CNBC on the 6th (local time), the Senate voted on a $1.9 trillion stimulus package that day after an overnight meeting that continued from the previous day, and passed the bill with 50 votes in favor and 49 votes against.
The bill passed by the Senate was △$1,400 cash payment per adult △$300 increase in unemployment benefit per week until September △Expansion of child tax credit for one year △Support for distribution and diagnosis of Corona 19 vaccine △Support for school reopening △14 billion dollars in airline salaries Support, etc. are the skeleton.
The Senate bill revised some of the previously passed House bills. Cash payments were narrowed down to less than $80,000 per year for individual income and $160,000 for double-income. The House bill was based on $100,000 for individuals and $200,000 for couples.
In addition, the unemployment benefit was not taxed up to $10,200. The proposal to raise the minimum wage by $15 per hour passed by the House along with stimulus measures was also eliminated by the Senate. For unemployment benefits, the payment deadline was extended from August 29 to September 6, instead of lowering the additional payment from $400 to $300. President Joe Biden said, “I have promised that help is coming to the American people, and I have taken a big step to keep that promise. This bill was very desperate and urgently needed.” It will also speed up the production and distribution of the COVID-19 vaccine.”
As the Senate passed the bill with some revisions, the House decided to vote again on the stimulus package on the 9th. There are some retreats within the Democratic House of Representatives, including the increase in the minimum wage, but the White House and the Democratic Party are satisfied with the big frame. Democratic House Speaker Nancy Pelosi made it clear that he would pass the Senate bill, saying it was “a tremendous step forward to defeat the virus.” The Democratic Party plans to have President Biden sign the bill and bring it into effect until the 14th.
However, there are voices in the market that a large-scale stimulus package may raise concerns about inflation as the economic recovery is accelerating. The already unstable government bond market can also shake.
In fact, as the vaccine vaccination for Corona 19 has expanded and economic activities resumed, employment, which was the last unresolved link, is reviving. In the United States, employment in the non-agricultural sector in February increased by 379,000, far exceeding the market estimate of 210,000. In January, employment was also raised from an increase of 49,000 to an increase of 166,000. The unemployment rate fell 0.1 percentage point to 6.2%. President Biden has said that if the Corona 19 stimulus package passes, full employment can be achieved next year.
Cash payments, which many experts, including former finance minister Larry Summers, have criticized for causing inflation, are also expected to receive money, even though some of them have been reduced. According to the White House, 85% of American households will be paid cash, and households with two children with an annual income of less than $100,000 will receive $5,600.
Tax cuts on unemployment benefits also have the effect of paying in cash. The Wall Street Journal (WSJ) believes that low-income people won’t benefit much, but middle-income earners can save more than $1,000. Republican Senator Rob Portman, Ohio, pointed out that “the economy is recovering and the Democrats are providing benefits they don’t need.”
What’s important is that additional stimulus packages may come out. President Biden has already announced that he will come up with a large-scale infrastructure and research and development (R&D) investment plan. The estimated size alone is 3 trillion dollars. In addition, the Democratic Party is in a position that it will deal with another stimulus bill if there is a difficult area due to Corona 19. Brooks McDonald’s Chief Investment Officer Edward Park said, “There is a lot of uncertainty about whether inflation will be temporary or persistent (as the Federal Reserve says).”
/New York = Correspondent Kim Young-pil [email protected]
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