At a time when discussions are ongoing over the second relief package, one billionaire investor has raised questions about the first relief package. Chamath Palihapitiya, venture-capital investor and Social Capital CEO, believes parts of the first relief package, which included coronavirus stimulus checks, were a waste.
Did Congress waste money on the first relief package?
Palihapitiya told CNBC recently that Congress wasted money with the first stimulus package. The billionaire did not say that the coronavirus stimulus checks were a waste, but rather, the money send to companies.
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Palihapitiya believes companies did not properly utilize the relief money they received from the coronavirus relief package. The billionaire investor noted that many firms resorted to layoffs even after getting the relief funds.
“That first phase of stimulus … was quite honestly wasted,” he said.
Palihapitiya called out the relief package for benefiting "zombie" companies, which are those that are unable to pay their debt on their own. He believes the best way forward for future stimulus plans is to give money directly to consumers.
"It's consumption that drives growth in the United States," he said.
The Social Capital CEO believes that spending by Americans would help improve employment and capital allocation. Palihapitiya is in favor of sending coronavirus stimulus checks, and quickly, saying that the more money that's wasted on zombie companies, “we’re just going to push the can down the road and it’s all unnecessary.”
Another billionaire who does not think coronavirus stimulus checks are a waste is Mark Cuban. In fact, Cuban supports sending regular stimulus checks. Last week, Cuban promoted the idea of sending $1,000 to all American households every two weeks for the next two months.
Cuban told CNBC that the money could come with a condition, and that is, the recipients would have to spend the full amount in ten days. If they fail to do so, they will lose money.
Cuban wants to send money to all, irrespective of any income threshold. The owner of the NBA's Dallas Mavericks believes this would have positive ripple effects on all parts of the economy.
"Once businesses start having demand, even if they're closed and working online, then there is a reason for them to be able to bring back employees and retain those employees if demand is sustained,” he said.
This was not the first time Cuban has proposed such a plan, and he is not the first to propose such an idea. In fact, several bills calling for monthly stimulus checks have been presented to Congress, but none garnered enough support to make it to a vote.