While 2020 comes to an end, top congressional leaders have finally announced a second stimulus package worth $900 billion that will prevent the US economy from declining even more.
However, it’s going to take a lot more for the recovery of the economy in the aftermath of the pandemic. However, the state and local governments, small businesses, and more than 800,000 unemployed Americans are calling for a larger relief package.
The strength and pace of the recovery of the US economy will depend on the size of the stimulus package, which in turn will be decided by Georgia’s Senate runoffs.
According to the chief global market strategist at Invesco, the runoff elections in Georgia are of the utmost importance because it will be very difficult to attain a larger relief package from Congress if one or both of the seats are won by the Republicans.
The reason for this is that Republicans are reluctant to vote for providing an even larger stimulus package because of Joe Biden taking office and the federal budget deficit increasing at an alarming rate.
A Washington policy analyst explains that usually when Congress members are in the minority, they pay special attention to debt and deficit. The pandemic has had a huge impact on US debt which will exceed the GDP in 2021 for the first time since 1946.
Even though the new stimulus package will prevent the economy from experiencing a double-dip recession, Congress will eventually need to provide more aid. This is because the unemployment benefits will only last for 11 weeks and the benefits for gig workers and people, who are unemployed for the long term, will expire in April.
Moreover, aid for local and state governments has not been provided which means there will be even more people being laid off and requiring unemployment benefits. These problems will continue until the end of the pandemic and additional aid will constantly be required before that.
Besides the possibility of additional aid, Georgia’s runoffs will also determine whether Biden will be able to implement his plan for $3 trillion in infrastructure spending. This will be extremely beneficial for the recovery of the economy.
Infrastructure will not only be a great stimulus for the US economic recovery but it will also be a great long-term investment. If Republicans win the seat, there would only be $1 trillion available and that $2 trillion difference could make a huge difference.