Biden Plans $1.9 Trillion Coronavirus Rescue Program

United States Capitol
Workers drape a flag from the facade of the United States Capitol in Washington DC for Joe Biden’s inauguration ceremony, January 9 (Victoria Pickering)

Joe Biden is planning to ask Congress for $1.9 trillion in the first weeks of his presidency to cope with the effects of the coronavirus pandemic in the United States.

Matthew Yglesias and Punchbowl News, a new Capitol Hill-focused newsletter, have the details:

  • $400 billion for health, including $50 billion for testing, $30 billion for protective gear and $20 billion for vaccinations.
  • Hire 100,000 public health workers.
  • A mandatory paid sick leave program.
  • $1,400 cheques to all Americans on top of the $600 cheques sent in December.
  • Extend federal unemployment benefits at $400 per week.
  • Extend the eviction moratorium.
  • $30 billion in rental assistance.
  • Raise the federal minimum wage to $15 per hour.
  • Raise the child tax credit to as much $3,600 per year for families with young children.
  • $350 billion in financial relief for local, tribal and state governments. Read more “Biden Plans $1.9 Trillion Coronavirus Rescue Program”

EU “Government Shutdown” Looms

European Council
The European Council meets in Brussels, November 25, 2018 (Bundesregierung)

The EU could face its own version of a government shutdown in January if Hungary and Poland veto the bloc’s seven-year budget and coronavirus recovery fund, worth a combined €1.8 trillion, at this week’s European Council.

The far-right governments of the two countries oppose the introduction of a rule-of-law conditionality for EU subsidies. Hungarian and Polish voters, and other European countries, favor the proposal.

If leaders don’t find a solution this Thursday and Friday, the European Parliament would not have time to ratify the spending plans before the new year. The council isn’t due to meet again until March. Read more “EU “Government Shutdown” Looms”

Spain Proposes Major Tax Increases to Fund 2021 Budget

Pedro Sánchez
Spanish prime minister Pedro Sánchez addresses Congress in Madrid, July 17, 2018 (La Moncloa)

Spain’s left-wing government has proposed raising public spending by 10 percent next year to cope with the effects of coronavirus. If approved — the ruling parties do not have a stable majority in Congress — it would be the biggest budget in Spanish history.

Health spending would rise 150 percent, or €3.1 billion. In addition, €2.4 billion would be set aside to prop up primary care and buy vaccines. Another €700 million, drawn from the EU’s €750 billion coronavirus recovery fund, would go to elderly care.

Spain qualifies for around €70 billion in EU grants and €70 billion in loans. It is not expected to make use of the loans, given that it can still borrow affordably on its own.

To pay for the extra spending, the coalition government also plans to raise taxes. Read more “Spain Proposes Major Tax Increases to Fund 2021 Budget”

Dutch King Announces Borrowing, Investments to Weather COVID-19

Willem-Alexander of the Netherlands
King Willem-Alexander of the Netherlands reads out his annual speech from the throne in the Grote Kerk in The Hague, September 15 (Rijksoverheid)

The Netherlands’ ruling center-right coalition unveiled an expansionary budget on Tuesday, when King Willem-Alexander read out his annual speech from the throne to set out the government’s priorities for the next fiscal year.

Whereas the Dutch government, then also led by Mark Rutte, raised taxes and cut public spending during the last economic crisis to keep its budget deficit under the EU’s 3-percent ceiling, it now argues against austerity and is borrowing the equivalent of 7.2 percent of GDP (down from an earlier estimate of 8.7 percent).

Rutte argues the savings made in previous years allow the government to avoid cuts this time.

The Dutch economy is projected to shrink 5 percent this year as a result of COVID-19 and grow 3.5 percent next year, when unemployment would reach 545,000, or almost 6 percent. Debt as a share of GDP is projected to rise from 49 to 61 percent. Read more “Dutch King Announces Borrowing, Investments to Weather COVID-19”

What’s in France’s €100 Billion Stimulus

Emmanuel Macron
French president Emmanuel Macron answers a question from a reporter in Helsinki, Finland, August 30, 2018 (Office of the President of the Republic of Finland/Juhani Kandell)

France has unveiled a $100 billion stimulus program, worth 4 percent of GDP over two years, to help its economy recover from the effects of COVID-19.

The money is split almost equally between support for businesses, investments in the green economy, and health and social programs. It comes on top of the €460 billion France has spent on exemptions from social charges, furlough subsidies and soft loans to keep businesses afloat.

France is counting on the EU to provide 40 percent of the money from its €750 billion recovery fund. Read more “What’s in France’s €100 Billion Stimulus”

Dutch Extend COVID Aid for Businesses

The Hague Netherlands
Dutch government offices and parliament buildings in The Hague (iStock/Fotolupa)

The Dutch government has extended support for companies and self-employed workers struggling as a result of COVID-19 until July 2021, although some policies are becoming less generous.

The thinking, reports the national broadcaster NOS, is that firms shouldn’t be subsidized if they aren’t viable long term and workers in sectors with job losses should be coaxed into reskilling.

The measures will cost almost €39 billion this year. The Dutch economy is projected to shrink 6.4 percent. Read more “Dutch Extend COVID Aid for Businesses”

Singapore-on-Thames Is Unlikely

London England
The sun rises over London, England (Uncoated)

With the Brexit transition period ending in just four months, concern is rising that the United Kingdom might crash out of the EU’s common market and customs regime without a deal.

Not everyone is worried. Prime Minister Boris Johnson’s predecessor, Theresa May, argued it “wouldn’t be the end of the world” if Britain left without a deal. Right-wing economists are looking forward to setting “attractive tax rates” once the United Kingdom is free of the EU’s grasp. The UK, they believe, could become a “Singapore-on-Thames”, gain a “competitive advantage” over the EU and draw businesses and investment away from continental Europe.

That is unlikely. Read more “Singapore-on-Thames Is Unlikely”

Germany’s Surplus Obsession Hurts the Eurozone

Angela Merkel
German chancellor Angela Merkel attends the G7 summit in Biarritz, France, August 25, 2019 (Bundesregierung)

If the German economy does poorly, so will the eurozone’s. A mere .2 percent growth is projected for the first quarter of 2020. This should be a wakeup call to German policymakers.

There are the usual suspects: underdeveloped infrastructure, underinvestment in education, export dependency.

They all stem from Germany’s obsession with surpluses. Revenues generated by exports are not reinjected into the economy. Rather, they sit comfortably in savings accounts. This is the reason for negative interest rates.

Not spending money is one way to get rich. But to grow its economy, or prevent a slowdown, Germany must put its money to work: invest in education, infrastructure and public goods.

Its reluctance to do so affects everyone in the euro area. Germany accounts for nearly 30 percent of the eurozone’s GDP. If Germany spent more at home, it would reduce its current account surplus and increase demand for the products and services of other European nations. Read more “Germany’s Surplus Obsession Hurts the Eurozone”

Germany Under Pressure to Spend

Angela Merkel Mark Rutte
German chancellor Angela Merkel receives Dutch prime minister Mark Rutte in Berlin, May 16 (Bundesregierung)

In the face of weakening economic growth, outgoing European Central Bank president Mario Draghi has called on the fiscally conservative governments of Germany and the Netherlands to spend more.

The Dutch are heeding his advice with plans for a long-term economic investment fund. Will the Germans follow suit? Read more “Germany Under Pressure to Spend”