America spent $5 trillion to fight pandemic. This is where the money went

Stimulus bills approved by Congress beginning in 2020 unleashed the largest flood of federal money into the US economy ever recorded. Roughly $5 trillion went to households, mom and pop shops, restaurants, airlines, hospitals, local governments, schools and other institutions around the country grappling with the blow inflicted by Covid-19.Economists largely credit these financial jolts with helping the US economy recover more quickly than it otherwise would have from the largest downturn since the Great Depression: The pandemic recession was the shortest on record, lasting only three months.“What the money did was to basically make sure that when we could reopen, people had money to spend, their credit rating wasn’t ruined, they weren’t evicted, and kids weren’t going hungry,” said Louise Sheiner, an economist with the Brookings Institution. “It is a lesson that if you don’t want a recession to have really long-lasting bad effects, you spend a bunch of money, and you prevent it.”Yet as the anniversary of the American Rescue Plan approaches, and nearly two years after the government effort began with the coronavirus relief bill, the full effect of the spending remains unclear. Some of the money has yet to be distributed. Some of the aid has been criticised as wasteful or has resulted in fraud. And some economists, along with a lot of Republican lawmakers, say the flood of cash has helped fuel inflation.Here is a snapshot of where all the federal money has gone so far, according to the Committee for a Responsible Federal Budget, a nonpartisan think tank in Washington that has maintained the most comprehensive tally of pandemic financial support. Using government sources, the tally factors in spending as well as loans, tax breaks and payment deferrals.Individuals and families, $1.8 trillion medium90201979Between March and July 2020, at the height of the deadly first wave of the outbreak, unemployed workers were able to get $600 per week on top of what their state provided in jobless aid. Self-employed and gig workers, who typically would not qualify for unemployment benefits, also were eligible to receive support.Another big chunk went to families: More than 150 million households received stimulus checks. And about $62 billion was ultimately spent expanding the food stamp program known as the Supplemental Nutrition Assistance Program.What was the impact?The nearly $2 trillion that went to these groups helped avoid the kind of economic collapse that many had feared, and it aided the recovery by giving consumers money to spend on food, electronics, home furnishings and other goods.It also helped prevent millions of people from falling into poverty. A University of Michigan analysis of Census Bureau surveys found the largest benefits went to the poorest households and those with children.In addition to complaints that President Joe Biden’s stimulus money contributed to inflation, Republican lawmakers and governors blamed the more generous jobless benefits for discouraging people from returning to the workforce and prompting a labor shortage. Several states ended the program ahead of its Sept. 5 expiration last year, saying that would propel people back into the workforce.A handful of studies have found that the extra benefits played a minor, if any, role in prolonging workers’ return to the labor market. The US economy has regained more than 90% of the 22 million jobs that were lost during the early weeks of the pandemic.Businesses, $1.7 trillion medium90202027More than 9 million small businesses — generally those with 500 employees or fewer — collected loans through the Paycheck Protection Program. The program provided loans that could be forgiven if businesses used the money for certain expenses, essentially turning the loans into grants.When the program began in April 2020, it was largely a worker-retention tool. But as the pandemic dragged on, Congress weakened those requirements, allowing companies to keep the cash even if they made deep staffing cuts.The government also adapted its long-standing disaster loan program to provide low-interest loans to almost 4 million businesses totaling $349 billion — far more than the program had lent out during its entire nearly 70-year history. Because those loans must be paid back, with interest, the program’s cost to taxpayers is far less than the total lent out.Was it successful?So far, the verdict is mixed.A recent analysis by economist Michael Dalton found that every $1 in wages that would have been lost without the Paycheck Protection Program cost $4.13 in relief money. Because the program wasn’t narrowly targeted — virtually every small business in the country was eligible — it benefited some companies that didn’t need the money, and loose fraud controls allowed scammers to skim off billions.But for hundreds of thousands of businesses it was a life preserver. Dalton’s research found that companies that got PPP loans had modestly higher employment and higher wages, and were less likely to close, than comparable businesses that didn’t. The effects were especially pronounced for the smallest businesses and for those in areas with higher poverty rates.State and local aid, $745 billion medium90202056At the outset of the pandemic, governments used the funds largely to cover virus-related costs.As the months dragged on, they found themselves covering unexpected shortfalls created by the pandemic, including lost revenue from parking garages and museums where attendance dropped off. They also funded long-standing priorities like upgrading sewer systems and other infrastructure projects.K-12 schools used early funds to transition to remote learning, and they received $122 billion from the American Rescue Plan that was intended to help them pay salaries, facilitate vaccinations and upgrade buildings and ventilation systems to reduce the virus’s spread. At least 20% must be spent on helping students recover academically from the pandemic.What was the impact?The aim of the money was to prevent the kind of painful budget cuts that state and local governments were forced to make in the wake of the Great Recession, when revenues plunged and costs soared, a recipe that prolonged America’s sluggish recovery and hampered some local economies for years.Economists largely agree that the money helped local governments shoulder significant pandemic-related costs, and many governments avoided deep budget cuts. Many states have even reported surpluses.But federal rules prevented local governments from using coronavirus relief bill funds to fill budget shortfalls, and state and local governments wound up slashing hundreds of thousands of public-sector jobs anyway. Several states have sued the Biden administration over restrictions it imposed on the use of funds.What hasn’t been spent?A significant portion has yet to be spent, in part because more than $100 billion remains to be distributed by the Treasury Department. Only 19 states, plus Washington, D.C., received their entire allotments of American Rescue Plan funds in 2021. A second batch will be distributed this year.Governments have until 2026 to spend the funds, and disagreements over where the money should go and who has authority to spend it have slowed planning in some communities.School districts have until January 2025 to spend the money allocated to them. But even with several years left, schools have voiced concerns about meeting that deadline as many districts struggle with labor shortages and supply-chain delays.Health care, $482 billion medium90202094Grants to health providers were intended to help hospitals and other facilities stay afloat as they lost revenue, in part because elective procedures were not being performed and patients avoided seeking other routine care. Funds were also used to accelerate the deployment of vaccines, expand testing and advance Covid-19 treatments.The American Rescue Plan broadened health insurance subsidies available under the Affordable Care Act for two years, one of the most substantial changes to the law since its passage nearly 12 years ago. And billions were set aside to ensure that people enrolled in Medicaid throughout the pandemic were not at risk of losing coverage.What was the impact?Even though coronavirus tests were in short supply during different waves of the outbreak, leaving many Americans to wait hours in line over the holidays last year, the nation most likely would have been even less equipped to handle the spike in demand for testing without the stimulus packages, experts say.The distribution of grants to health providers, however, has been fraught with challenges. Some of the funds have been given to wealthier hospitals while smaller, poorer hospitals have received significantly less federal aid in comparison. Some larger hospital chains also used federal aid as they bought up weakened competitors during the pandemic.The stimulus funds spent on expanded ACA subsidies have played a large part in the record-high enrollment for health plans through marketplaces, said Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation. There is no guarantee, however, that the additional assistance will continue after the two-year program expires.