Americans should have got their second stimulus check by now had things gone as expected. However, there are no signs of stimulus checks yet, thanks to differences between the Democrats and Republicans. One of the reasons for the differences between the two sides and the fact that there aren’t any more coronavirus stimulus checks yet is the rising U.S. debt.
U.S. debt at record levels
A report from the Congressional Budget Office (CBO) earlier this month noted that the U.S. debt is estimated to grow bigger than the size of the U.S. economy. The coronavirus relief spending is partly responsible for this.
According to the CBO, the federal deficit could hit $3.3 trillion this year, which is three times more than it was in 2019 and the largest since 1945 (World War II). The report notes that the deficit would push the nation’s debt to 98% of GDP, compared to 79% in 2019 and 35% in 2007.
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Further, the report forecasts that by next year, the debt will grow to 100% of GDP and to 107% in 2023. The same level of debt to GDP ratio was last seen in 1946 “following the large deficits incurred during World War II,” the report said.
A significant portion of this debt is attributed to the economic disruption caused by the coronavirus pandemic and the stimulus measures. The U.S government has already spent trillions of dollars in stimulus measures to help people and economy survive the economic crisis.
These measures include the $2.2 trillion CARES Act, which was passed in March, and several other measures in response to the coronavirus pandemic.
Although many on Capitol Hill are not worried about such debt levels, some are taking it seriously, and this is likely holding up the coronavirus stimulus checks.
One major reason for the lack of a deal so far is the difference over the price tag of the next relief package. Democrats originally wanted more than $3 trillion (now $2.2 trillion) for the next relief package, but Republicans clearly don’t want to spend that much. Senate Republicans initially came up with a proposal (HEALS Act) costing $1 trillion, but Democrats rejected it, calling it inadequate.
This resulted in a stalemate that is continuing even now. There have been reports that many Republicans don’t even favor another round of coronavirus stimulus checks over concerns of rising debt. Such concern is probably keeping Republicans from offering a bigger package.
“I think we should be focused on reopening the economy, not simply shoveling trillions of dollars out of Washington. I think this bill is the wrong approach,” Sen. Ted Cruz told reporters last month.
Senate Majority Leader Mitch McConnell has admitted that they don’t have 100% support for the next stimulus deal. In fact, Republicans recently proposed a smaller package than before. On Tuesday, Senate Republicans introduced a stimulus package costing $500 billion. The bill was up for a vote on Thursday in the Senate, but it failed to get the needed votes.