Congress Readies to Pass $2.3 Trillion Spending and Virus Relief Package, Including $740 Billion for National Defense

Congress is expected to pass a $1.4 billion omnibus bill that includes $740 billion in defense spending, plus an additional $900 billion in COVID-19 relief.

The bill is 5600 pages long…legislators will not have time to read the document before voting.

Investigative reporter Derrick Broze has prepared a more detailed evaluation of what is in the 2021 National Defense Authorization Act (NDAA). Of concern, the NDDA includes authorization to hold U.S. citizens indefinitely without a right to trial, and will make it more difficult to implement planned troop drawdowns overseas.

Keep in mind that the spending bill is dependent on the Federal Reserve’s agreement to provide support via money printing. My rough guess is that at least $1 trillion of the spending package will be funded by the Fed through government bond purchases. Without such support, the government would have to raise interest rates to attract bond buyers, which in turn would lead to an increase in government interest payments as well as reduce the value of investment portfolios and pension funds that hold government securities. The financial system needs money printing in order to sustain itself…for how long can we continue such an approach?

Published by markskidmore

Mark Skidmore is Professor of Economics at Michigan State University where he holds the Morris Chair in State and Local Government Finance and Policy. His research focuses on topics in public finance, regional economics, and the economics of natural disasters. Mark created the Lighthouse Economics website and blog to share economic research and information relevant for navigating tumultuous times.

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