The Influence of Biden’s $1.9 Trillion

Under the pandemic, countries around the world face different degree of economic recession. Same for the United State, the economy is seriously damaged. The president of the United State Joe Biden has signed a US$1.9 trillion economic plan to stimulate the coronavirus-hit economy. The total package amounts to about 9% of the economy’s GDP. But What exactly does this American Rescue Plan mean for households and businesses?

Source: Statista

1. Extending Unemployment Benefits

The federal government will expand the allowance to US$300 per week for the unemployed until the 6th of September. This is an additional benefit on top of the unemployment insurance programs provided by the states. Besides, this economic plan subsidizes 100% of the Consolidated Omnibus Budget Reconciliation Act (COBRA) health insurance premiums to ensure that the repatriated workers can receive the health insurance protection of the original employer before the end of September. 

 

2. Cash Payment

Each eligible taxpayer will receive US$1400. Those with an annual income of less than US$75000 will receive a full check while those with an annual income exceeds US$80000 will not be able to get this cash payment.

3. Subsidizing Schools and Businesses

It provides an additional US$120 billion to schools to assist students from kindergarten to grade 12 by reducing class sizes, installing ventilation etc. Colleges and universities will also receive about US$40 billion to pay for expenses related to the epidemic or any emergency assistance.

Restaurants, bars and physical stores affected by the pandemic can receive a maximum of US$5 million. This plan also provides US$7.25 billion for the Paycheck Protection Program.

4. Nationwide Vaccine Program

It provides about US$50 billion to expand screening for COVID-19, improve laboratory performance, and set up mobile screening stations. Also, more than US$15 billion will be invested to accelerate the distribution and delivery of vaccines nationwide; another US$10 billion will be used to strengthen the supply of medical equipment.

 

5. Others

It provides more tax relief for households. Taxpayers can enjoy a tax allowance of US$3000 for every child between the ages of 6 and 17, and US$3600 for every child under the age of 6. It also significantly expanded the Earned Income Tax Credit benefiting people without children. For low- and middle-income adults, subsidies range from US$543 to US$1502 according to income and qualifications.

Besides, it provides more than US$30 billion to help low-income families and the homeless with their rents. An additional US$10 billion is provided to help people who cannot pay property loans, and other housing expenses derived from the epidemic.

Not only does this economic plan will influence US economy, US citizens’ large demand on imported goods indicate that the economic plan will also affect other countries economy.

However, for every plus there is a minus. With more money flow into the market, the purchasing power of money will decline if there is not enough production to hedge the new flow of money. It may cause currency depreciation and inflation. The Wall Street Journal mentioned that Biden will release an economic stimulus plan for infrastructure, education, climate change etc. The total expenditure may reach up to US$2.3 trillion.

In the period of inflation, the preservation of currency is the main concern of many people. Buying assets to maintain the money value is one of the ways to keep the purchasing power of the currency. Real estate happens to be the most familiar asset to the public. Coupled with the characteristics of real estate that can be used, it naturally becomes a haven during currency devaluation.