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Economic Policy

The policies that shape a nation’s economic landscape are a crucial determinant of its global success. This pivotal role of economic policies becomes vividly apparent in landmark legislations such as the Consolidated Appropriations Act (CAA), 2021. The CAA Act, unprecedented on numerous fronts in contemporary society, illustrates the complexity, importance, and indispensability of economic policies, especially in the face of extraordinary, natural and socioeconomic factors. It underscores the role of appropriation bills in not only in responding to immediate crises, such as the global pandemic, but also in orchestrating a resilient and adaptive framework for sustained national prosperity. Still, it remains incumbent to examine the CAA Act using key evaluative criteria to ensure the legitimacy of the policy in its aftermath, focusing on its effectiveness, efficiency, ethics, political feasibility, social feasibility, fairness, and maintainability.

The

H.R. 133 – Consolidated Appropriations Act
, 2021, extended several provisions of the CARES Act while introducing new more comprehensive set of economic programs designed to mitigate the impact of the COVID-19 pandemic on American industries, small businesses, workers, and families (National Credit Union Administration, 2023). Notable provisions within the Act included direct economic impact payments to individuals, extended unemployment benefits, and funding for the Paycheck Protection Program (PPP) to support small businesses (Barnes et al., 2021). These measures were implemented to cater to and safeguard against the multifaceted economic challenges posed by the pandemic. The significance of the $2.3 trillion economic stimulus bill becomes particularly apparent when considering the pandemic’s impact on the economy within its initial year. The

Wall Street Journal
reported a record 200,000 additional business closures, highlighting the profound economic challenges (Simon, 2021). Moreover, according to an article by Bartik et al. (2020) in the

PNAS
, the median American business facing monthly expenses slightly exceeding $10,000, had only two weeks of cash in hand. Suffice it to say that this this financial strain and economic downturn resulted in widespread business closures and mass layoffs.

Efficiency and Effectiveness

Given the severity of the pandemic, the Consolidated Appropriations Act (CAA), which extended many of the relief measures initially provided by the CARES Act, including the Paycheck Protection Program, effectively fulfilled its purpose (Barnes, 2021). It played a crucial role in alleviating economic hardships, particularly for low-income households grappling with pronounced liquidity constraints. This targeted approach acknowledged and addressed those most severely impacted by the pandemic, reinforcing the Act’s overall efficiency and effectiveness.

Ethics

However, the time taken before the CAA Act was passed, brought about by division over certain provisions of the bill, marred the ethics of the Act as it exacerbated the adverse effects of the pandemic that millions of Americans were facing. For instance, the Long’s (2020) coverage of the Act,

Stimulus deal is a needed lifeline for the economy, but more help will likely be needed in 2021 – The Washington Post
notes that the months of inaction spent by Congress debating various provisions caused numerous small businesses to permanently shut down which undermined the ethical standing of the Act.

Political and Social feasibility

Given its importance in providing the stimulus relief needed to revitalize the economy and prevent a government shutdown passing the necessary appropriations bills to fund the federal government, the CAA act received a majority bipartisan support including from the party leaders. Similarly, the fact that the bill addressed the immediate needs of the US populace, mitigated economic hardship, and gathered almost unanimous public support showcases its social feasibility.

Fairness

While serving as a crucial lifeline for many Americans, the omission of various provisions, the smaller size of the package compared to the CARES Act, and the short deadline of some of the aid measures which Long (2020) noted would leave numerous businesses, localities, and individuals without much-needed assistance while the pandemic still raged undercut the fairness of the policy.

Maintainability

The scope of the CAA Act encompassed a substantial financial commitment, with its combined proposed spending of $2.3 trillion making it one of the largest spending bills enacted by Congress (Elis, 2020). This massive cost in light of growing political division in both houses, budgetary constraints, prevailing economic conditions, and funding mechanisms predicated on bipartisan support, point to potential issues in the Act’s maintainability.

References

Barnes, N. M., DeMatties, D., Maffett-Nickelman, J. L., Mason, T., Alexander, A., & Kim, A. J. (2021). The Consolidated Appropriations Act, 2021: Implications for Business: Covid-19 Update.
Journal of Taxation of Investments,
38(3).

Bartik, A. W., Bertrand, M., Cullen, Z., Glaeser, E. L., Luca, M., & Stanton, C. (2020). The impact of COVID-19 on small business outcomes and expectations.
Proceedings of the national academy of sciences,
117(30), 17656-17666.

Elis, N. (2020, December 12). Congress unveils $2.3 trillion government spending and virus relief package. The Hill.
https://thehill.com/policy/finance/531164-congress-unveils-23-trillion-government-spending-and-virus-relief-package/

Long, H. (2020, December 21). $900 billion stimulus is second-biggest in U.S. history, but it won’t last long enough. The Washington Post.
https://www.washingtonpost.com/business/2020/12/21/stimulus-bill-economy/

National Credit Union Administration. (2023, January 12). Summary of the Consolidated Appropriations Act, 2021. Retrieved from

https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/summary-consolidated-appropriations-act-2021

Simon, R. (2021). Covid-19’s toll on US business? 200,000 extra closures in pandemic’s first year.
The Wall Street Journal.