The US Helicopter Drop

Congress approves the biggest bailout in the country’s history with a rescue package of $2 trillion.

Early yesterday morning, the U.S. Congress finally struck a deal regarding the biggest rescue package in the nation’s history. The package consists of almost $2 trillion in financial aid for businesses and citizens in an attempt to alleviate the havoc that the coronavirus pandemic has wreaked on the world’s biggest economy. However, the time it took Congress to reach an agreement could prove disastrous since this is a situation in which every hour counts.* This is especially true given that, unlike the situation in Europe, more than 30 million people in the U.S. lack health insurance because of the spiteful reversal of former President Barack Obama’s health care law. This heralds socio-medical problems of a very serious nature and the intensification of the evolving recession.

The original proposal, which was presented by the Republicans and championed by President Donald Trump, contained ambiguities with regard to the distribution of the aid that were incompatible with the transparency required of a democracy, particularly in times of serious crisis. The treasury secretary and Trump’s right-hand man, Steven Mnuchin, would not have released information identifying who would receive the aid for six months, and companies would have received money without having to guarantee anything in return, such as the preservation of jobs. Now, an inspector general will be appointed to oversee decisions taken regarding the amounts of money that will be allocated.

The fact that the U.S. has activated its economic machine to aid the fight against the consequences of the pandemic, including the social impact, is undoubtedly good news. The initiative to give most Americans direct check payments of around $1,500 per adult and $500 per child stands out among the measures that show how critical the situation it. It is the enactment of Milton Friedman’s helicopter drop. The United States’ reserves are preparing to suffer one of the biggest fiscal blows in their history. Credit-rating agencies are predicting an economic downturn of anywhere from 14% to 30%.

The fact that the approval of the relief package was delayed may seem insignificant, but in this instance, it is the latest case in a cascade of delayed responses in the fight against the coronavirus that have characterized the U.S. strategy. Until recently, Trump claimed that the number of infections in the U.S. would fall to zero “within a coupe of days.” However, within just 20 days, there has been an alarming upward curve in the number of cases, making the U.S. now the third most infected country. If Trump had paid attention to the seriousness of the situation in February, automobile giant Ford and electrical company General Electric could have made respirators available to U.S. doctors by the middle of April. Now, the CEO of Ford, Jim Hackett, has warned that they will not be ready until June.

*Editor’s note: On March 27, President Donald Trump signed the $2 trillion coronavirus relief bill.