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Economy

What the COVID relief package means for Michigan's economy

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It’s a big week for many Americans. While we may not be able to go out in search of a pot of gold for St. Patrick’s Day, many adults will receive a nice $1,400 stimulus check.

It’s part of the recently passed $1.9 trillion COVID-19 relief bill, the third of its kind since the pandemic began just over a year ago. A hefty sum, more than $10 billion, is coming Michigan’s way. Here’s a bit of how it breaks down, according to Detroit News reporter Melissa Nann Burke:

Over half the money, $5.6 billion, will go directly to the Great Lakes state government. The rest will be distributed around the state to cities and municipalities. Detroit, which has been a leader in vaccine distribution, will receive around $880 million. Flint is supposed to get $99 million, as well as other large cities like Grand Rapids and Lansing receiving large amounts.

While there are a few restrictions around what the money can be used for, it’s largely up to the government leaders. Burke points out that these counties and municipalities’ revenue sources were hit hard by COVID, yet they continued to provide necessary services. Some of the money will be used as “backfill” to make up for that lost revenue, but it's still up in the air where most of it will go.

Charles Ballard, an economics professor at Michigan State University, said he hopes a lot of the money goes towards infrastructure, which is a contentious issue with huge implications. Governor Gretchen Whitmer has zeroed in on it with her “fix the damn roads” mantra. Infrastructure jobs, like fixing roads and water systems, employ the types of people who have been hardest hit by the pandemic. These projects would provide jobs for those who work in industries like construction, where it’s impossible to work from home.

Putting it in context

If it’s hard to wrap your head around the massive amounts of money moving around, you’re not alone. Ballard put it in context like this:

“In our daily lives, we don’t use trillions a lot. That’s an awful lot of zeros,” Ballard said. “Just for context, the U.S. economy is about $21 trillion of output per year. That’s the gross domestic product. And Michigan’s economy is about half a trillion. So, against those backdrops, maybe those numbers won’t seem so huge.”

It takes a lot of money to run a huge economy like the United States. And it took a global pandemic to cause such a massive stall, thereby necessitating $1.9 trillion in relief, Ballard said.

And while vaccine efforts are ramping up and people are sighing - hopefully masked - in relief, the fight against the pandemic is still not over. This stimulus bill helps quell its impact the fight on the economic front and moves toward focusing efforts on protecting and healing from COVID-19.

You’re probably still wondering about the $1,400 relief checks set to go out to around 85% of Americans. They’re on their way, depending on taxes and things of that ilk. Many people are expected to get them this week. Another direct action comes in the form of child tax credits, where parents of children ages six to 17 recieve $3,000 a year per child and $3,600 for children under six, Burke said. Ballard says this will be huge for the fight against childhood poverty.

“The estimate is that that could cut child poverty in half. If so, it could be one of the few steps we’ve taken in the past 50 years toward really solving the problem,” Ballard said. “It used to be that the elderly were the group in the United States that was most likely to be in poverty. But for decades now, it’s been children.”

Biden's Plans

On March 10, President Biden tweeted that “help is here” as he signed the massive 1.9 trillion dollar COVID relief bill into law.

While some polling indicates that as many as seven in 10 Americans support the bill, Biden is still intent on selling the bill to Americans. While it may seem odd, since the bill already passed late last week, Burke says it’s Biden’s way to avoid repeating the past.

“I think Biden is looking back to the 2009 stimulus that was passed under President Obama. I read reports that he has believed it was a mistake that Obama didn’t go out and try to sell this to the public after he passed it,” Burke said. “He thinks that they didn’t get enough credit for that stimulus or for the work they did in 2009 with the previous recession.”

This could be important to holding on to Democratic majorities in the House and Senate in the upcoming midterm elections and also to let Americans know that they were given help in this time of severe need.

Ballard pointed out that it’s important to temper expectations even while touting success.

“One bill will not solve these problems,” Ballard says. “The United States economy is twice as big as it was back in the 70s, and yet there are lots of workers whose take home pay is less than it was in 1973, especially those who do not have a college education. And so I think, if we were serious about making what I would consider a more just and equitable society and about fighting poverty, we have to do a lot more than this.”

This article was written by Stateside production assistant Olive Scott

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