If signed into law, President Biden’s $1.9 trillion Covid relief package will be “the second-largest injection of federal cash in U.S. history,” second only to the $2.2 trillion Cares Act last March, Bloomberg reported Tuesday. The chart below shows increases in deficit-financed federal spending going back to the 1930s and up to last year’s bill, measured as a percentage of the economy.
Mark Zandi, chief economists at Moody's Analytics, commented last week on the remarkable scale of federal Covid-related spending, saying that if Biden’s proposal passes, “the total amount of discretionary deficit-financed fiscal support provided to the economy during the pandemic will come to well over $5 trillion, equal to almost 25% of the nation’s pre-pandemic GDP.”
As the chart below indicates, the U.S. response to the pandemic would be the largest in the world, with only a handful of countries spending more than 10% of GDP to address their Covid health and economic crises. Zandi also notes that the total U.S. fiscal response to Covid would dwarf the response to the Great Recession, since the 2009 American Recovery and Reinvestment Act “amounted to substantially less than 10% of the nation’s pre-crisis GDP.”