Fiscal policy U. S.

Summary of the U. S. COVID-19 economic relief packages

There are two streams of economic reliefs: fiscal policies by the U. S. government, and monetary policies by the Fed. This note summarizes the fiscal relief packages:

Package #1: passed in early March. Total $8.3B to provide federal aid to government health officials and vaccine research and development.

Package #2: passed in middle March. Total $100B that includes provisions for emergency paid leave for workers and free testing.

Package #3: passed in late March. Total $2T, 10% of the U. S. GDP in size. Key elements are $250B for direct payments to individuals and families, $350B in small business loans (so called Paycheck Protection Program), $250B in unemployment insurance benefits, $500B in loans for distressed companies, $130B for hospitals and $150B for state and local governments.

Package #4: expected to pass this week. Total $384B. Mainly to add money of $310B to Paycheck Protection Program. This package will also allocate $60B for small lenders, $75B in hospital relief and $25B for coronavirus testing.

Package #5 is in conceptual phase, I believe it will be for infrastructure build and will take years to implement as a part of economic recovery initiatives post COVID-19. The dollar value could be in a scale of $2T.

Beside that, depending on the evolution of the virus in the U. S. and around the world, more packages could be on the table if necessary.

Total fiscal packages is expected to be $5T, about 25% of the U. S. GDP. Most of these money are obtained from issuance of U. S. treasury bond. Some of the bonds are or will be purchased by the U. S. central bank. My next note will summarize policies made by the Fed in responses to the economic cliff and liquid crunch due to coronavirus.

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