At more than $2 trillion, the cost of the March 2020 CARES (Coronavirus Aid, Relief, and Economic Security) Act was double what we spent on Social Security in 2019. As a pandemic relief package, CARES Act checks were directed toward elevating lower individual incomes, the unemployed, and businesses. It was a gargantuan (and necessary) addition to the U.S. budget.
Recently, a Bloomberg Opinion writer suggested there is an inverse relationship between the size of current coronavirus relief and past social spending. Let’s take a look.
Coronavirus Relief Spending
There is a social spending pattern in the following graph. The U.S., U.K., Japan, and Canada are rather different from France, Italy, Denmark, Sweden, and Germany:
Somewhat similarly, McKinsey & Co. ranked low, medium, and high social spenders by comparing the change for 2019 and 2020. Again, the low spenders had the biggest 2020 change:
Below, you can see some social spending history where, like a big jigsaw puzzle, the pieces (pretty much) fit together with our previous graphs. France, Sweden, and Italy are at the top while Canada, Australia, and the U.S. fall way below:
And finally, we see the borrowing that increased last year for some of the bigger spenders. The ranking though does not entirely parallel what we might expect from some of the previous graphs:
Our Bottom Line: Fiscal Policy
To grasp the magnitude of coronavirus relief spending, we can place it in a fiscal framework. By fiscal, we are referring to the spending, taxing, and borrowing policy decisions from the president and the congress. Those decisions wind up as the federal budget.
This is the spending half of the U.S. federal budget from 2019 (published by the CBO in April, 2020):
Our coronavirus spending is approaching total outlays from 2019.
My sources and more: Perfect complements, the springboard for today’s post was initially a Bloomberg Opinion article and then this McKinsey Report. Then, as our last step, CBO has wonderful budget graphics. I also have found Our World in Data a handy resource.