How the Biden Administration’s Two Trillion Dollar Stimulus Package Affects the US and Global Economy
United States President Joe Biden signed a $1.9 trillion fiscal stimulus package in March 2021, called the American Rescue Plan, with the aim of combating the effects of the Covid-19 pandemic on the economy and society. country’s health. The plan provides for the payment of direct aid to citizens, an increase in unemployment insurance, financing for vaccination and disease testing, support for states and municipalities, the expansion of social programs and aid to sectors affected by the crisis, such as public transport and small businesses.
The stimulus package is the third approved by the US Congress since the beginning of the pandemic, adding to the 2.2 trillion dollars from the CARES Act, from March 2020, and the 900 billion dollars from the Consolidated Appropriations Act, from December 2020. 2020. Together, the three plans represent around 27% of the US Gross Domestic Product (GDP) in 2020, an unprecedented volume in the country’s history.
The impact of the stimulus package on the US economy is expected to be significant and positive. According to projections from the International Monetary Fund (IMF), American GDP is expected to grow 6.4% in 2021 and 3.5% in 2022, above previous estimates of 5.1% and 2.5%, respectively. The IMF attributes the upward revision mainly to the effect of Biden’s fiscal plan, which is expected to boost domestic demand, employment and income. Furthermore, the package should reduce poverty and inequalities in the country, which have worsened with the pandemic.
The stimulus package also has repercussions on the global economy, both direct and indirect. In the direct aspect, the plan foresees an allocation of 650 billion dollars in Special Drawing Rights (SDRs) by the IMF, which are a type of international currency that can be used by member countries to supplement their reserves and obtain liquidity. Of this amount, around 42% would go to developed countries and 58% to developing and emerging countries. This measure can help the most vulnerable countries face the challenges of the pandemic and economic recovery.
In the indirect aspect, the US stimulus package could benefit other countries by increasing American imports, which should grow by stimulating domestic demand. This could favor exporting countries, especially those that have more intense trade relations with the USA, such as Canada and Mexico. On the other hand, the package could also generate some risks for the global economy, such as an increase in inflation and interest rates in the USA, which could cause a flight of capital from emerging countries and an appreciation of the dollar. Furthermore, the package could increase the US fiscal deficit and public debt in the long term, compromising the sustainability of public accounts.
In short, the Biden administration’s fiscal stimulus package is an ambitious and necessary response to the crisis caused by the Covid-19 pandemic in the USA. The plan is expected to have a positive impact on the American and global economy, but it also involves some challenges and uncertainties. Therefore, it is important that countries coordinate their macroeconomic policies and cooperate to ensure a sustainable and inclusive recovery.
