Stimulus price tag of $1.2T falls way short, some experts say

Stimulus price tag of $1.2T falls way short, some experts say
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Economic experts are warning that the $1.2 trillion stimulus proposal under negotiation in the Senate may fall well short of addressing the massive fallout from the coronavirus pandemic.

The plan, drafted by Senate Republicans, would include direct payments to many Americans, as well as $300 billion in loans to help struggling businesses stay afloat and a $200 billion facility for important industries such as airlines.

"Responding to this kind of protracted slowdown will require a bigger stimulus than the 6% of gross domestic product proposed by the administration," Narayana Kocherlakota, the former president of the Federal Reserve Bank of Minneapolis, wrote in a Bloomberg opinion piece. "It’s going to take a much larger fiscal infusion to make up for that shortfall -- something more on the order of $2.5 trillion rather than $1.2 trillion."

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Kocherlakota called for $10,000 cash payments to every adult, significantly more than the two payments of $1,200 included in the Senate GOP proposal.

Democrats are pushing to include an additional $150 billion in funding of federal, state and local COVID-19 response efforts, an order of magnitude larger than the $8.3 billion package President TrumpDonald John TrumpBiden slams Trump in new ad: 'The death toll is still rising.' 'The president is playing golf' Brazil surpasses Russia with second-highest coronavirus case count in the world Trump slams Sessions: 'You had no courage & ruined many lives' MORE signed into law two weeks ago and the White House's request this week for about $50 billion more in funding.

In recent days, economic analysts on different points along the political spectrum have said more needs to be done to keep the U.S. economy intact in the coming weeks and months.

The Economic Policy Institute, a left-leaning think tank, said Friday that at least $2.1 trillion would be required through the end of the year alone to provide financial relief from the coronavirus.

"The likely cost of a fiscal boost sufficient to restore economic healthy by the end of 2020 starts at $2.1 trillion — but it could be more, and fiscal policy should be set to deliver more if conditions warrant," EPI research director Josh Bivens wrote in a Friday blog post.

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The right-leaning American Enterprise Institute recommended the U.S. follow in the U.K.'s footsteps and shore up all wages at 80 percent to save small businesses. That alone would cost $1.2 trillion to $1.5 trillion in assistance, they said.

"Low-margin businesses will face great financial difficulty losing multiple months of revenue, and many if not most small businesses would rather shut down or lay off a significant fraction of their workforce than take out a loan, even with a favorable or zero interest rate," AEI scholars Glenn Hubbard and Michael R. Strain wrote.

Gordon Gray, the director of fiscal policy at the right-leaning American Action Forum, agreed that even the colossal bill under consideration by the Senate may only be a first step.

"While the costs are substantial, this is likely not the last fiscal intervention Congress will need to enact as the United States grapples with the current crisis," he said.

Some current and former lawmakers have also come around to the idea that a substantially larger stimulus package will be needed.

"The Federal government is going to underwrite 70 percent of the payroll in this country if the containment policies continue to be this aggressive," Sen. Lindsey GrahamLindsey Olin GrahamSenate confirms Ratcliffe to be Trump's spy chief Abrams announces endorsements in 7 Senate races Schumer dubs GOP 'conspiracy caucus' amid Obama-era probes MORE (R-S.C.) said Friday. "It's going to be a hell of a lot more than $1 trillion."

Former Rep. Joe CrowleyJoseph (Joe) CrowleyOcasio-Cortez, Schiff team up to boost youth voter turnout Schumer says he's focused on job when asked about possible Ocasio-Cortez primary challenge Stimulus price tag of .2T falls way short, some experts say MORE (D-N.Y.) said Friday that the third round of stimulus will fall far short of what's necessary to address the economic fallout of the pandemic, predicting Congress will likely need "several" more emergency relief proposals as the true extent of the damage becomes more clear.

"This has been coming in waves, and the waves are getting bigger and bigger and bigger," he said on a phone call hosted by the Association of Former Members of Congress.

Former Rep. Frank LoBiondoFrank Alo LoBiondoStimulus price tag of .2T falls way short, some experts say Democratic challenger on Van Drew's party switch: 'He betrayed our community' Trump announces Van Drew will become a Republican in Oval Office meeting MORE (D-N.J.) delivered a similar assessment.

"There's probably going to need to be at least several more after this," he said. "Because we're going to find out that whatever we include in this one, there are going to be people who are left out. And the people who are left out are going to be suffering as much as anybody was before their phase of it kicked in."

Goldman Sachs has predicted that initial unemployment insurance claims will spike to a record-shattering 2.25 million for the third week of March. That comes after jobless claims last week increased 70,000 to 281,000. The bank also forecasted unemployment will shoot up to 9 percent from its current level of 3.5 percent.

While Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellMemorial Day weekend deals latest economic blow to travel industry Senate Republicans call on DOJ to investigate Planned Parenthood loans On The Money: Jobless rate exceeds 20 percent in three states | Senate goes on break without passing small business loan fix | Biden pledges to not raise taxes on those making under 0K MORE (R-Ky.) has called for swift passage of the stimulus measure by early next week, the Democratic-led House has its own ideas about what the economic response should look like.

"Senate Republicans’ latest bill does not go nearly far enough to help working people and our most vulnerable," Rep. Rosa DeLauroRosa Luisa DeLauroFrustrations grow over incomplete racial data on COVID-19 cases, deaths The Hill's Coronavirus Report: Former Rep. Harman says Russia is trying to exploit America; Mylan's Heather Bresch says US should make strategic reserve in medicines; Trump unveils leaders of 'Warp Speed' Behind every gun law is a mom marching for her children MORE (D-Conn.), an influential appropriator, said Friday. "At a time of crisis, we must be concerned for the solvency of major industries that need assistance, but working people, families, and our most vulnerable must be our top priority."