The Massive Dollar Cost of Covid -19

It seems like every day during the Covid pandemic we read or hear of some form of fiscal stimulus (debt) in aid/grants/loans/forgivable loan packages/give-a-ways that have been approved and are being distributed or new ones being considered, debated, or in the process of being voted on. This, even while the economy was recovering. These were happening through Congress’ fiscal policy actions and primarily funded through Federal Reserve’s monetary policy actions.

The Committee for a Responsible Federal Budget’s Covid Money Tracker is a valuable tool to see where the money went.

Here is our breakdown:

Fiscal Policy – approximately $5.9Trillion  

Congress passed five bills totally almost $5.5 trillion:

$1.9 trillion – American Rescue Plan (March 11, 2021)

$  8.3 billion  – The Coronavirus Preparedness and Response Supplemental Appropriations Act

$192 billion – Families First Coronavirus Response Act

$ 2.7 trillion – Coronavirus Aid, Relief, and Economic Security Act (“CARES”)

$450 billion – Congress for small business and other assistance.

In calendar year 2020, the US government borrowed $4.5 trillion! This added approx. 20% to the already massive national debt.

Monetary Policy – estimate $4.7 Trillion 

The Federal Reserve announced approx. trillions in support of a number of liquidity, lending, and asset purchases actions since February 2020. The Fed’s balance sheet has increased by trillions of dollars since the pandemic began and they have committed to continue purchasing $120 billion every month in US Treasuries securities.

How Stimulus Checks were Spent

The U.S. is the world’s leader in debt. Much of it is attributable to Elected Politicians’ self-interest, incompetence and gross mismanagement. Yes, people truly in need should have been helped – but that’s only a portion of the money borrowed.   The New York Federal Reserve commissioned a survey on how individuals spent the CARES Act checks. The averages were:

45% – saved

30.9% – paid down debt

13.7% – spent on essentials

6.8% spent on non-essentials

3.7% – donated.

Think about that! Only 13.7% of this emergency funding (money borrowed on your credit) was spent on essential.   Also consider the number of large, well-capitalized companies that sought and was given “aid.” Some returned the “aid” when their names appeared in headlines – others just kept it!