Much is riding on Biden's economic stimulus plan

Martin R. Kantor, BridgeTower Media Newswires

As Joe Biden begins his term as president, his economic stimulus plan couldn’t come at a needier time, especially with a recent Bankrate survey suggesting that he faces an unsteady economy with American family budgets teetering on the tip of the vaccination needle as COVID-19 spreads at will throughout the country.

Bankrate reported that only 17 percent of American households have seen their income returned to pre-pandemic levels, while 42 percent say that their incomes are below pre-pandemic levels. Additionally, of the over half of American households that lost income, 21 percent lost their jobs while another 19 had their hours reduced.

The survey found the economic pain caused by COVID-19 was inequitable in its impact. Higher wage earners, finding it easier to work from home, indicated they are twice as likely to have already made a full economic recovery as compared to the nation’s lowest wage earners. Further disparity was that jobs were recovered in the construction, financial services, transportation, warehouse, manufacturing and healthcare sectors, while the entertainment and hospitality sectors shed jobs, many of which will not be recovered.

Further evidence of a weakening economy was December 2020 in-store retail sales, which fell for the third straight month with on-line sales also falling after increasing for the year. Both critical, since consumerism is responsible for 70 percent of the economy, and illustrated by 85 percent of survey respondents who remain concerned that their household incomes will be adversely impacted by the pandemic. Biden is right to put money in households by increasing the $600 stimulus checks already approved by Congress by $1,400 for a total of $2,000.

Biden is also right to focus on getting Americans back to work, especially in households who require childcare so both parents in a two-person working household can return to work. Providing $25 billion to help childcare centers in danger of closing, and by covering one-half of childcare costs up to $4,000 for one child and $8,000 for two or more families earning less than $125,000 is targeting the need.

With unemployment increasing for the first time since the pandemic began almost a year ago in March, and with many Americans unable to pay their rent, you can’t argue with Biden wanting to extend unemployment benefits and the eviction and foreclosure moratorium through September of this year. This is essential for those who can’t work remotely, because their jobs require them to show up to work in industries such as restaurants, bars, hotels, theaters, sports arenas and concert venues.

There is every reason to believe that with the latest round of the SBA Paycheck Protection Program designed to assist struggling businesses with keeping employees on the payroll, and with more funds allocated to payroll in restaurants, Americans working in these sectors may find economic relief for their household income.

However, the economic recovery will take some time, especially with 51 percent in the Bankrate survey expecting a full recovery to take at least six months or longer, with another 6 percent believing that their income will never recover to pre pandemic levels.

American households have a long way to recovery, and with Biden’s plan expected to increase the national debt to over $30 trillion, over $9 trillion more than the gross national product of $21 trillion, President Biden must get this right.

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Martin R. Cantor is director of the Long Island Center for Socio-Economic Policy and a former Suffolk County economic development commissioner. He can be reached at EcoDev1@aol.com.