Where does the stimulus money come from?

[catherine]

Short answer requested...

My son, who will be a beneficiary of the Federal bump in unemployment benefits, wants to know: "Who pays for this??" (And by "this" he means the whole stimulus package, not just UE benefits)

Can someone give me a brief, non-snarky, response for me to pass on? My whole family is more right brained than left and not very knowledgeable about high finance and economics at the federal level. I'm the financial nerd in the family, but as they say, "In the land of the blind, the one-eyed man is king."

So, how do I educate my non-money-oriented, VERY right-brained singer-songwriter son who really wants to know?

[razz]

FWIW, I just read a few articles where it appears to be understood that the budgets of every country, state/province or municipality are being impacted and the longterm effects will be calculated in time.

Our municipality has low $$ reserves so a higher tax rate was set for 2020 property taxes resulting in a significant increase. At the virtual council meeting held this week, the CAO advised that the established 2020 budget is now shot full of holes but with staff furloughs and cutbacks on activities, some of the excess expenses may be reduced. He said it is impossible to calculate at this time. I suspect that this is true for all other budgets. The final cost will be carried forward for our children and their successors, I imagine.

All government funds come from taxes so the taxpayer will carry the burden but some of the funding is on payback basis. Again, no sure way to calculate who will pay at this time regardless of which country is considered.

[iris lilies]

Catherine, your son may be under the mistaken impression that our Congress allocates only the money it collects each year and no more.

That is wrong. Congress authorizes spending far more than it earns. This stimulus allocations is no different. Our country has been living beyond its means for a long time.

It is like a household that earns $30,000 a year and spends $40,000 a year. That is deficit spending.

[bae]

They will simply print the money.

Don’t ask too many questions about what “money” is, or the whole system falls apart.

[LDAHL]

I like the way we say “print money” or “dial the phone”.

I think there’s a term for phrases we use based on obsolete technologies, but I can’t find it anywhere. Phrases like “full head of steam”, “cut and run”, “pull out all the stops” or “beat a dead horse” that stay with us after we stop doing the actual thing.

[Gardnr]

As with most money these days, it will simply get printed and distributed. It's all vapor already isn't it?

[ApatheticNoMore]

Governments can basically print money to spend to a huge degree (maybe as much as they want, maybe not) and as long as there is no real demand, and in a depression there isn't, it's not inflationary. Some countries have a lot more leeway here in all liklihood, the U.S. has a lot of leeway, it just never wants to spend much money on average people.

[ToomuchStuff]

The taxpayers.
Simple answer.

More complex answer, the budget is comprised of taxes collected, and deficit spending is future taxation.

[Yppej]

Those of us who (unlike Amazon and GE) pay taxes and our descendants.

[jp1]

I like the way we say “print money” or “dial the phone”.

I think there’s a term for phrases we use based on obsolete technologies, but I can’t find it anywhere. Phrases like “full head of steam”, “cut and run”, “pull out all the stops” or “beat a dead horse” that stay with us after we stop doing the actual thing.

Twenty five years ago I dated an organist for a few years. At that time, and still today as far as I know, organists still pulled out stops. Admittedly one would not like pull ALL the stops unless the organ was relatively small because things like the zimbelstern simply aren’t compatible with the bombast of a large organ with all the stops pulled.