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WASHINGTON D.C. (ChurchMilitant.com) - With lockdowns continuing across the United States, the federal government is rushing to solve the growing economic crisis. The Democrats' solution — free money for everyone.
On Tuesday, U.S. House Speaker Nancy Pelosi and House Democrats proposed a 347,000-word stimulus plan that adds another $3 trillion to the national debt, and the bill even has moderate Democrats feeling uneasy.
The historic record-spending bill is apportioned as follows:
The bill comes as economists from the Becker Friedman Institute at the University of Chicago estimate 40% of the jobs lost during lockdowns will be permanent.
Pelosi is touting the plan as an aid bill for the Wuhan virus, but it offers little to solve the current health crisis. Instead, it encourages American reliance on public assistance amid the pandemic, as the majority of funds go to increases in entitlement spending, bailout money for states and welfare for the American people.
On Wednesday, Fox News host Sean Hannity broke down the particulars even further, revealing, "roughly $10,000 per U.S. citizen will now be used to pay off mostly New York, California, New Jersey, Illinois and all their waste, fraud and abuse." Hannity views the aid bill as a disguised bailout plan for poorly run Democratic states.
Tucker Carlson of Fox News investigated the bill as well, finding that the stimulus checks Democrats plan to issue will also go to illegal immigrants and will contain an amnesty provision for essential workers that are illegal aliens for the duration of the crisis. The bill also extends guest-worker visas and raises the ceiling for more.
The so-called relief package's questionable encouragement of foreign labor comes as U.S. jobless claims increase to 36.5 million as of May 14, likely placing America's unemployment rate at over 15% once final numbers are out for the week. Capital Economics' Chief Economist Paul Ashworth said he predicts the rate will continue to rise to 23–24%. For reference, the unemployment rate peaked during the Great Depression at 25%.
According to Federal Reserve Economic Data (FRED) reports, since the pandemic effects took hold on Feb. 19, the 10-year Breakeven Inflation Rate, a traditional model for measuring expected inflation, went from 1.65% to 0.5% on March 19 — more than a 1% drop in less than one month.
When inflation rates drop, saving is encouraged and banks become less willing to loan money. This leaves businesses struggling to recover from lockdowns with no options, leading to increased unemployment.
In response, The Federal Reserve took emergency action on March 15 to help the economy withstand the pandemic's effects by slashing its interest rate to 0.5%, while also purchasing $700 billion in Treasury and mortgage bonds to artificially inflate the economy.
Despite the move bouncing the inflation rate up to 1.26% in mid-April, it quickly dropped back down to 1.07% in May, and economists suspect the drop will continue if lockdowns don't end in the coming months.
The purpose of the Democrat plan is to force more inflation and encourage investment amid mandatory business closures. All while buying votes in 2020 with promises of free money for illegal aliens and/or voters.
If House Democrats artificially inflate the economy using government stimulus, the national debt will not only grow by another $3 trillion, it will also encourage bankers to make high-risk investments once lockdowns actually end.
Too much stimulus is worse for the economy than none, according to most economic models. Adding the House Democrats' $3 trillion bill to the Federal CARES Act from March — which cost over $2 trillion — likely puts the economy at risk of severe strain or even collapse.
Some have compared the current situation to that of Weimar Germany hyperinflating its currency to pay off war debts in the 1920s.