An article by Mr. Lutfi Hassan, CEO & Chairman of Apex Group of Companies
In these unprecedented times, it is safe to say that no country has escaped the volatilities of an economic downturn as a result of the pandemic and that of course does not exclude the United States. Under a new president, Americans are hopeful for a better future that will lead them out of the financial hardships that many have suffered over the past year.
It is for that reason that the house and senate have passed the American Rescue Plan, a new $1.9T relief bill that seeks to strengthen the economy and provide much-needed support for middle-class Americans. This bill introduces a number of new measures including a $1,400 stimulus check as well as funds to manage the pandemic, help small businesses, agriculture, the health sector, unemployment programs, and a lot more. Just as a comparison, this is the largest bill in U.S. history, and it will undoubtedly have an underlying impact on the economy and its efforts to recover from the impacts of the pandemic.
Biden’s Vision & Utilization of the $1.9T Relief Bill
This bill has been in the works since last November and is passed at a time when the country faces a recession in addition to a fear of inflation. Economists and experts from the Biden administration agreed on making a few changes that aims to specifically impact the American middle class. For starters, a Biden-Sanders plan for the economy looks at the needed 12-week family paid leave, universal, pre-kindergarten, and Fed-backed payment platforms for the low-income earners run by the federal reserve. Biden has also spoken about undoing the plans that the Trump administration has done over the past 4 years by expanding the public health care option. However, the Biden administration is enforcing a policy that Trump initiated which is encouraging the production of goods nationally for American production and reducing reliance on importing goods and services from overseas. The White House hopes that this will help create 5 million new jobs for Americans.
The Biden administration has already started with advancing the $1.9T relief bill which includes funding for a lot of sectors that have been hit the most including the average American worker. The funding will go for:
- Americans: $410 billion dollars for stimulus checks
- Unemployment: $246 billion
- Government: $310 billion
- Education: $176 billion
- Covid: $123 billion
- Health: $105 billion
- Small businesses: $59 billion
- Transportation: $56 billion
- Agriculture: $16 billion
This stimulus relief package is certainly in the right direction as it seeks to help Americans who have been struggling due to unemployment. What is more impressive is that President Biden continues to make the right moves economically which is especially important after he inherited an economy that has been battered to the ground while grappling with the global pandemic. While tackling the economic crisis, President Biden seeks to help Americans first with a $1,400 check on top of a $400 per week unemployment insurance, which has been extended through September, which also meets a new deadline for evictions. Additionally, the Senate passed a $3,000 tax credit for children under the age of 18 and extended it to $3,600 for families that have children under the age of 6, something that will immediately help those struggling to make ends meet.
It is also to be noted that this relief package did not forget business and states as it includes support for small businesses for payroll and other expenses with $50 billion including grants and loans. This all coincides with when states begin to reach herd immunity as the White House is expecting vaccinations to put a stop to the pandemic by September, which also marks when the economy is expected to be back at full force.
Unlike the 2008 crisis that left millions of families behind with very little growth, the new legislation is cementing in-laws that guarantee a better quality of life during an economic recovery. Getting the economy back to firing on all cylinders was one of the lessons the US learned in the previous global financial crisis and going big will prove to the right step when it comes to reigniting the American economy.
Also Read: Lutfi Hassan Becomes President of Gandhi Mandela Foundation -Americas
The Minimum Wage and Economic Growth:
The minimum wage now stands at a steady $7.25, but the Biden administration plans to double that amount and more to $15 an hour. This will make for the biggest minimum wage jump in the history of the United States. For reference, the minimum wage back in 1981 was $3.35 and it took more than 27 years to double it. The administration’s plans, promoted by Vermont’s Senator, Bernie Sanders, proposes small increments over a five-year period in order to control the effects on businesses and on the dollar itself. As housing prices rise along with all other necessities, the American worker is left hustling with the stress and anxiety of living paycheck to paycheck. This is the perfect time to increase the minimum wage for American workers since inflation has already started to show its effects on the economy. The federal minimum wage will include all states although some counties and states like California have already been working with over fifteen dollars an hour for years.
While many see this as a negative in Biden’s plan pointing at the inflation damage, what people underestimate is that the economy is undergoing a radical change that will benefit everyone. The decision for raising the minimum wage has some people conflicted as it is estimated that it will cause more jobs to be lost, but this line of thinking does not take into consideration the 5 million new jobs which will be added thanks to the new mandate that has put on businesses to hire goods and services locally. Not to mention, it would lift 900,000 Americans out of poverty, increase wages for other mid-income workers, and allow Americans to keep up with the costs of living.
In contrast, the money that goes into people’s pockets will be used to create more jobs in return. It is easy to understand that a worker who is paid $15 dollars an hour will likely spend more on goods and services thus creating more cash flow for the economy. While the $15-dollar minimum wage may cause temporary disruption to small businesses or modest increases in prices to consumers, this is hardly the truth as Janet Yellen, secretary of the United States Treasury argues, businesses will shift their strategy when it comes to employee productivity. As workers get paid more money, they are also more likely to put more effort which is going to help businesses grow. Furthermore, the increased pay will also increase spending which is helpful for economic growth and will ultimately reduce the need for government assistance.
As it stands, $7.25 is simply not enough to live by even with 44 hours per week as more people than ever in the United States have to have side jobs just to get by. In fact, more than 57 million Americans are working in some sort of freelancing side job to meet their financial obligations. This number has grown exponentially over the past few years because costs of living has continued to rise without any increase in compensation.
Biden’s vision for the short and long term:
As previously mentioned, Covid will mark the end of the pandemic which also marks the rebooting of the economy as it has gone stagnant for a while. Therefore, speeding up the vaccination process is key for all this to come true. Luckily, President Biden and his team have allocated funding for mass vaccination events. The funding will also go to the logistics of getting the vaccine from the manufacturer to the facilities responsible for vaccinations and to the people.
What critics have been keen on is how Biden’s strategy is only focused on the individual and government but not businesses. The argument is that all of these efforts are there to soothe Americans in the short term but leave them hanging in the long run. Nevertheless, that could not have been farther from the truth as the Biden administration has outlined many strategies to implement for the long run to help maintain the economic boost. For starters, Biden is looking at improving American goods and services by keeping American corporations American. One of the biggest issues that America has faced is outsourcing goods and services from abroad in order to cut costs. However, with the new vision that Biden has, the government will incentivize American corporations and businesses, and this comes in the form of a $700 billion dollar plan that will improve manufacturing and technology: $400 billion on local goods and services, $300 billion investment in research and development on technologies like electric motors, lightweight materials, 5G, and AI.
Biden’s vision for the economy is shaping up to be a creative and progressive approach that specifically helps middle-class America. The effects caused by the COVID-19 have lingered for far too long causing the whole country. Millions of Americans were without a job and had to endure times of hardship with little assistance from the government. However, this hardship looks to be coming to an end with a new dawn that brings with it progressive policies that seek to empower the American people.
About Mr. Lutfi Hassan
Mr. Hassan is a resident of Houston, Texas for the past 40 years and currently serves on the advisory board for several multinational companies in the U.S. and Asia. Mr. Hassan is the founder of the Apex Group of Companies and brings with him a wealth of knowledge in international relations through his experience in consulting in both in the United States and abroad.