Breaking Down the U.S.'s Covid-19 Government Spending

By: Kolby Johnson

As life returns to some sort of normalcy—a year and a half after the initial Covid-19 shutdowns in March 2020—we have begun reflecting on the choices we made during that period of uncertainty. The pandemic sent shockwaves throughout our society, particularly affecting the economy: the U.S. economy, for instance, reached its worst health since the Great Depression. However, the economy experienced an almost miraculous rebound, though at great cost. I contend the benefits of achieving a rapid recovery of a post-shutdown economy could have been realized without such a high price tag.

The economic rebound following the initial shutdowns far exceeded most expectations by economists and other experts. In fact, even the poverty rate, a figure which usually skyrockets during an economic recession of such scale, declined throughout the duration of the pandemic. The quick rebound can be explained by the fact the major contributing factor to the economic downturn was the government-mandated shutdowns of most public places. Once these shutdowns were partially or fully lifted, the economy naturally recovered. However, keeping the economy afloat during the shutdown required large amount of government spending; I contend that some of this spending did little to actually maintain economic health, instead only increasing publicly held debt.

The most obvious cost to the government throughout the pandemic was the direct payments to citizens in the form of stimulus checks. In over three rounds of these direct payments, the government spent $667 billion: $292 billion in the first round (CARES Act), $164 billion in the second round (Consolidated Appropriations Act), and $411 billion in the third round (American Rescue Plan).

The government also provided unemployment payments for workers displaced due to the pandemic shutdowns through the Federal Pandemic Unemployment Compensation (FPUC) via weekly payments of $600. For a number of individuals (the exact figure is unknown), this figure was greater than the individual’s income when they were working.

Perhaps the greatest waste of federal relief spending was in the form of the Paycheck Protection Program (PPP). Emily Stewart calls this “plan to save small business” as being “flawed from the beginning.” It is estimated that 90% of the businesses that received assistance from the program, would have survived the pandemic without the extra benefits. Additionally, the program ultimately favored the biggest of companies deemed to be “small businesses.” Thus, truly small businesses ended up being negatively impacted by the implementation of the program. $521 billion was distributed by the government through the program, and because of the lack of transparency, we may never know which businesses all of the funds went to.

Gulcin Ozkan highlights two key factors which contribute to a nation’s post-pandemic economic recovery: (1) “strength of its Covid-19 Policy response” and (2) “success of its vaccination program.” In my view, the United States overkilled the first factor, while not waiting to realize the benefits of the second.

Initially, the wait for the vaccine proved excruciating, yet once the vaccine became available, vaccination effortsin the United States were initially lackluster. However, administration of the vaccine improved and Biden’s initial goal of 100 million vaccines in his first 100 days was overshadowed by the reality: 200 million vaccines administered by Day 92. NPR reports, “Administration rates peaked in early April - with the United States giving out more than 3 million Covid-19 shots per day.” Even during the surge of the Delta variant in August 2021, Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, said, “I don’t think we’re going to see lockdowns. I think we have enough of the percentage of people in the country—not enough to crush the outbreak—but I believe enough to not allow us to get into the situation we were in last winter [with extensive lockdowns].”

Ultimately, government assistance throughout the duration of the shutdowns was essential to maintain a somewhat healthy economy. However, there is a balance which would yield the greatest benefits for Americans. The government overstepped this balance and allocated too many funds during the government shutdowns and now faces the consequences: publicly held debt increased from 79% of GDP to 98% of GDP. Currently, on Capitol Hill, lawmakers argue across the aisle on whether to raise the debt ceiling. The debt ceiling will almost undoubtedly be raised, as it has been many times before. However, there needs to be a moment in this country where we become uncomfortable with the amount of debt carried by our government. Looking back at the Covid-19 pandemic, it is hard to say that all of the government’s expenditure was the correct path.