Republicans have been wary about adding to the ballooning federal deficit, so they’ve been pushing for a smaller $1 trillion coronavirus relief package. More recently, the GOP-led Senate is planning on voting on an even smaller $500 billion relief package containing no coronavirus stimulus checks.
The $500 billion bill has virtually no chance of passing the Democrat-led House of Representatives. But is $1 trillion even enough for a coronavirus relief package, let alone $500 billion?
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The Chicago Tribune highlighted just how serious the nation's budget problems have gotten during the coronavirus pandemic and ensuing recession. The federal deficit is expected to reach a new record of $3.3 trillion this year as the government rolls out stimulus measures.
Battling the pandemic's effects and propping up the economy have added over $2 trillion to the federal deficit, according to the Congressional Budget Office. As a result of that increase, the nation's debt will surpass next year's gross domestic product.
That milestone will place the U.S. where it was following World War II when the debt it racked up was greater than the size of the economy. The $3.3 trillion deficit is more than triple last year's shortfall and more than double the levels seen after the 2008-2009 financial crisis.
Plunging tax revenues
Government spending on the four coronavirus relief packages has stacked up to $6.6 trillion so far, which is more than $2 trillion more than last year's spending. The recession has also caused tax revenues to decline, although the spending changes aren't as steep.
Individual income tax collections are down 11% from last year, while corporate tax collections have declined 34%. Most economists aren't worried about how much money the U.S. is borrowing because of how serious the economic recession it is.
Lawmakers didn't think much about the debt when they passed the $2 trillion CARES Act almost without opposition in March. However, it's a different story now as Democrats want to spend $3.5 trillion, although they have since dropped their demand to $2.2 trillion.
Republicans are willing to spend $1 trillion, although they have increased their suggested price tag to $1.3 trillion on the next coronavirus relief package.
Despite the disagreement, there's no denying that the nation's economy is in trouble. The number of coronavirus cases remains high, and lawmakers have debated spending more money on contact tracing and testing.
The Center on Budget and Policy Priorities considered whether a $1 trillion coronavirus relief package would be enough to help the ailing economy. The $1.1 trillion HEALS Act leaves out state and local government aid and food and rental assistance.
It also reduces the amount of extra unemployment benefits per week, but it leaves out several provisions that President Donald Trump or a number of Republican senators have said they support. Adding those extra provisions would bring the coronavirus relief package from $1 trillion to $2 trillion, which is what House Speaker Nancy Pelosi is demanding.