Over the past couple weeks, we’ve learned with greater clarity just how much it costs to prop up an economy.
In June alone, the federal budget deficit grew to a whopping $864 billion, according to government auditors. Already at $1 trillion in 2019 before the pandemic even hit, the budget deficit has exploded to nearly $3 trillion in the first nine months of the 2020 fiscal year.
These numbers are so astronomical they’re hard to fathom. But last week, we got a glimpse, at the local level, at just what some of the cost has been to hold up the economy here in the Quad-Cities in the face of the coronavirus pandemic.
Barb Ickes reported on Wednesday that, in Davenport and Bettendorf, nearly 350 businesses took out up to $389 million in forgivable loans under the Paycheck Protection Program, which is part of the federal legislative package approved in March in response to the pandemic.
Later, this newspaper will report on the loans that businesses in other communities in our area took out, including the Illinois Quad-Cities.
We already know it is substantial.
In Rock Island, Moline and East Moline, nearly 180 businesses took out loans of greater than $150,000, securing up to $175 million in federal funds from the Paycheck Protection Program.
The loans are forgivable if the businesses demonstrate they have spent the funds on such things as payroll, rent and utilities. That was the goal of the program, to incentivize businesses to keep workers employed by offering this financing.
The idea that a half billion dollars flowed into our economy from just this program in a matter of weeks is astounding. And this doesn’t even account for the other elements of the federal government’s coronavirus response — the $1,200 per person stimulus payment, enhanced unemployment benefits and aid to states.
To give it a little perspective, the entire value of goods and services produced in Scott and Rock Island counties for all of 2018 was about $19 billion, according to the federal government.
This one program alone, in just a matter of a few weeks, accounted for perhaps a half billion dollars.
Yes, it's a lot of money. Yet, even with this unprecedented level of investment, the jobless rate in the Quad-Cities in May still stood at 14%. That’s the latest data we have for this area, though we learned Friday the jobless rate did fall in Iowa to 8%, and in Illinois to 14.6%.
That said, the jobless rate is still roughly three times what it was this time last year. And that doesn't even count those who are underemployed or who have dropped out of the labor force.
This week, we may get a look at the Republican proposal for a new round of economic assistance. The Democrat-controlled House of Representatives already approved a $3 trillion package in May. Republicans are talking about a figure that is smaller but still over $1 trillion.
All this deficit spending is unsettling to some.
We, too, have wrung our hands over the size of the nation’s debt, but we also know that our economy still is in a precarious condition and it could grow more so. With the coronavirus surging in some southern and western states, governors are beginning to again put limits on commerce. In California, Gov. Gavin Newsom ordered all counties to close bars and indoor operations at businesses.
Other hard-hit states also are putting greater restrictions in place.
The number of cases are going up here, too, but not so much that we have seen Iowa or Illinois move back to their springtime mitigation measures. We would note that, on Tuesday, Illinois Gov. J.B. Pritzker warned he "will not hesitate" to roll back the state's reopening plans if the number of cases rises too much.
We in the Quad-Cities know all to well the impact these measures have had on our economy, especially in Illinois. And with the new data on how much federal money is flowing into our area to try to counter the impact, we are gaining a greater understanding about how much it costs.
It will be a great day when we aren’t tallying the amounts of forgivable loans, stimulus payments and unemployment checks that our local businesses and workers are getting just to stay afloat. But that day will probably only arrive when the fight against the coronavirus is won.
That day isn't here yet.
Until it is, Congress must continue to support the American worker and the nation's employers.
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