New COVID Wave Does Not Justify Further Borrowing
As the Omicron variant of COVID-19 continues to spread through the United States, press reports suggest policymakers are considering additional COVID relief spending. In particular, lawmakers are considering further relief for businesses and additional pandemic-related public health funding.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
The Omicron variant represents a real public health and economic threat, and policymakers should take it seriously. It is unclear if new federal dollars will be needed, but if they are, any new funds should be limited to where they are truly needed, and fully paid for so they don’t add more to the debt or exacerbate inflation.
Between the $900 billion of COVID relief allocated to state and local governments and the $4 trillion of additional COVID relief, there are still substantial resources available to respond to the pandemic. Before the federal policymakers allocate another dollar, they should show how much has been spent already, what remains, what could be repurposed, and why new funding is justified. Any new spending should be well-targeted to specific needs.
Any new COVID spending should be fully paid for – either by repurposing prior spending or with new revenue or spending reductions. While borrowing was needed to help the economy during the recession, economic conditions are very different now, and more borrowing would make the debt and inflation worse. With inflation at the highest level in three decades and the unemployment rate below 4 percent, there is no justification for further fiscal stimulus.
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