What happens after July $600 unemployment ends?

First the numbers. From Forbes (Link)

The stakes are high. As many as 20 million unemployed Americans are receiving the federal unemployment benefit. It provides for an additional $600 per week over and above the unemployment benefit paid at the state level.​

Think about that: 20 million people times $600 comes to $12,000,000,000 ($12 billion of stimulus) per week being injected into the economy to keep consumption, rent payments, debt payments, etc. alive. Over a 10 week period, that translates to $120 billion? Those payments are set to expire at the end of July.

It appears the new strategy will be to stimulate the economy by removing the payroll deduction from paychecks. The $600 federal UE supplement also worked as an incentive for low paying workers to stay home and out of the workplace (ostensibly to level the curve on the infection and hospitalization rates). Now, even at a time when infection and hospitalization rates are on the rise again, the rationale will change.

I don't know how much of an injection to the economy will result from removing the payroll deduction. I suppose it will somewhat less than the unemployment supplement. How would it work? For example, an individual who grosses $1,000 per week (approximately what someone making $50,000 annually would gross), would see around $70 more each week in pay. A person making $500 per week would see $35 more. So whereas the UE compensation favored the lower paid working class, the payroll tax reduction would more favorably reward higher earners.

If, say 100 Million workers averaged a $50 per week increase in pay, that would amount to an injection of $5 billion a week; somewhat comparable to what we are getting currently, probably somewhat less. The major difference is that the bulk of the money would go into different hands, largely the middle class and higher instead of the working poor. Either way, the deficit will keep exploding higher. But who cares?

No legislation has passed as of now, but this is what is expected based on what I've read.

Thoughts?

 

Reading further down the Forbes article, there is at least one proposal to extend the federal unemployment benefits, but at a lesser rate. In typical bureaucracy/complexity speak:

Forbes

Current Proposals to Keep Federal Unemployment Checks Coming

Another proposal – and one more likely to gather bipartisan support – is the Worker Relief and Security Act. Proposed by Don Beyer (D-Virginia), it’s a more complex proposal, offering tiered benefit provisions.

Though the proposal itself is set to expire on July 31, it provides for an extension that would be automatic if the President were to declare a new pandemic emergency anytime afterward. It also sets tier levels for each state, based on the prevailing rate of unemployment. That can be anywhere from below 5.5% for Tier I states, to above 9.5% for Tier VI states.

Depending on what Tier your state is classified as, you’ll be able to receive extended federal unemployment benefits for between 13 and 65 weeks. Workers in states in the first three tiers will receive $350 in federal unemployment benefits, in addition to their regular state benefits, for 13 weeks. After that, they’ll continue to receive $200 per week for the duration of the national unemployment emergency.

Workers in Tiers IV, V, and VI states will receive $450 in federal unemployment benefits, in addition to their regular state benefits, for 13 weeks. After that, they’ll continue to receive $300 per week for as long as their states remain in their respective tiers.

The proposal has been embraced because of its flexibility in increasing or decreasing benefits based on the severity of the pandemic and the level of unemployment.​

 

They will extend the unemployment benefits, and we'll just keep the presses rolling.

 

Had an awful dream last night where tanks carrying those Treasury type printing presses were rolling through streets shooting $$$ out the barrels. People were scrambling around for the bills. Scene flashed around the world same thing was happening. Officers on the tanks looked German and girls would run up and kiss them. But people were poor in appearance and I was telling grandkids “this is what happens when Govt controls you”. End of dream.

 

If there is another run on toilet paper, there will be plenty of dollars available as a substitute.

 

It's tough to find the silver lining to inflation, but you've found it.

 

Ever been to Zimbabwe or Lebanon? They could tell us what happens next.
Greece, UK, Nigeria, Venezuela, France, Argentina, most of Africa, Iran, Turkey. Inflation will get here eventually.

 

Bitcoin cut its supply in half May 11 as it does every 4 years.

 

That just kills economic growth though. If you want a perpetual recession then have at it.

 

I think it's all dumb.