In the United States, calls for more cash gifts along the lines of the $ 1,200 checks that were approved in March and then distributed are getting louder. The US self-made billionaire and owner of the professional basketball team Dallas Mavericks, Mark Cuban, asked the government in an interview to give all US citizens a generous check for $ 1,000 – every two weeks and over two Months. That makes a whopping $ 4,000 for everyone. An agreement in Congress on a second stimulus package is currently not in sight. But “we need it now just as we did then,” demanded Cuban in an interview with the US broadcaster CNBC.
The 62-year-old American is the founder of the video platform Broadcast.com. With an estimated fortune of 4.3 billion US dollars, he made it to place 414 in this year’s Forbes billionaire ranking. For years he has been a contentious opponent of Trump, in 2016 he even considered voting in the 2020 elections to run against the incumbent president.
There are “two economies” in the US, Cuban told CNBC. There are those who can stay afloat and those who cannot. They should be helped. If the demand for products and services increased, “hopefully most companies would stay alive”. To this end, he also calls for monetary gifts to benefit not only certain groups but all US households. The only condition from his point of view: the money must be spent within ten days, otherwise the amount should expire. “The only goal is for the money to flow into the economy every two weeks,” said the billionaire. Cuban refers above all to the changed saving behavior of the Americans. “People are not sure of their future. Instead of spending money, they save, ”CNBC quotes him.
Official figures confirm this. Mass unemployment and corona-related business closings have caused US consumption to collapse at a record pace. The American savings rate hit a record high in April. The slump in consumption caused the world’s largest economy to shrink more sharply in the second quarter than it has since the Great Depression in the 1930s. A dangerous cocktail: after all, consumption accounts for more than two-thirds of the gross domestic product (GDP) in the United States.
At the end of March, the corona checks were the largest rescue package in US history. Nevertheless, the situation remains tense. The United States is hardest hit by the pandemic in the world. There are over five million people infected – more than in any other country in the world. Around 30 million people are unemployed, a wave of bankruptcies is rolling through the country. For many, financial abysses open up. At the same time, many of the measures from the aid package have now expired – for example, the additional weekly aid for the unemployed of 600 dollars.
Is US politics failing the economy?
Politically the situation is at the same time troubled. The US Congress is at a dead end. Democrats and Republicans have not yet been able to agree on a second aid package. The raging election campaign is to blame. From the point of view of economists, the situation harbors an enormous risk. Support from fiscal policy is one of the “key elements” to get the economy and labor market back on track, said the head of the Federal Reserve Bank of Chicago, Charles Evans, a few days ago.
Economists are skeptical about helicopter money, as such monetary gifts are called. The main criticism is that the corona crisis is not a crisis on the demand side, but one on the supply side. The problem is not sales, but the supply chains that are being paralyzed by the pandemic. From the point of view of the experts, liquidity aids and tax deferrals for companies, as well as temporary sales tax cuts, are more helpful in such crises.
The purchase of securities by central banks is also considered an appropriate measure. Cuban’s call for new helicopter money still meets with open ears. “What is important is that (Cuban) reflects the urgency of the situation,” CNBC quoted the Federal Tax Policy Director for the Center for Budget and Policy Priorities, Chuck Marr. In the opinion of the tax expert, however, these aids should not be poured out with a watering can, but rather distributed to those in need. Marr does not consider an expiration date to be practical.
Nevertheless, a new economic stimulus package, which could also contain corona checks in some form, is facing major political hurdles. The new aid payment would have to be approved by Congress. There, however, the government and Republicans are also dependent on the approval of the Democrats. The Republicans were unable to push a bill earlier this month. There is agreement that a new package is needed.
However, it is disputed how much money the government should take in hand this time. The Democrats are asking for three times as much as the Republicans. There are also very different ideas in terms of content. In a hearing on Tuesday, the Democrats welcomed consideration of a second round of stimulus of $ 1,200 checks. Tax expert Marr does not believe in their implementation. The chair has been vacant since the death of the Supreme Court judge Ruth Bader Ginsburg. Resolutions are therefore almost impossible.
The article first appeared on ntv.de.