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Treasury expects to borrow $3 trillion over next 3 months

David Brancaccio, Nancy Marshall-Genzer, and Alex Schroeder May 5, 2020
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The Treasury needs the money to pay for all of the new stimulus spending to keep the economy afloat during the COVID-19 crisis. Mandel Ngan/AFP via Getty Images
COVID-19

Treasury expects to borrow $3 trillion over next 3 months

David Brancaccio, Nancy Marshall-Genzer, and Alex Schroeder May 5, 2020
Heard on:
The Treasury needs the money to pay for all of the new stimulus spending to keep the economy afloat during the COVID-19 crisis. Mandel Ngan/AFP via Getty Images
HTML EMBED:
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The Treasury Department says it’s going to borrow about $3 trillion over the next three months. That’s almost triple what the Treasury borrowed for all of the 2019 accounting year.

So, why do we need to borrow so much right now?

The Treasury needs the money to pay for all of the new stimulus spending to keep the economy afloat during the COVID-19 crisis. So far, Congress has authorized more than $3 trillion in relief spending. Some of that money is being used for direct payments to Americans below certain income thresholds, and the expansion of unemployment.

The money is also being spent on small business loans and aid to hospitals. Plus, the Treasury is backstopping the Federal Reserve’s efforts to shore up the economy.

The only way to pay for this is more borrowing because the deficit was already expanding before the coronavirus crisis hit — to pay for things like the 2017 tax cut.

Plus, the federal government postponed the tax deadline to July, so it’s not getting its usual April tax payments. Congress is also considering another financial aid package.

On Monday, the Treasury said it expects to borrow another $677 billion this summer.

COVID-19 Economy FAQs

So what’s up with “Zoom fatigue”?

It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.

How are Americans spending their money these days?

Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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