In my opinion, we will avoid another Great Depression through policy measures, stimulus packages, and the fact that the challenge we face is a virus instead of a financial-related crisis. An estimated $10 trillion will be required to get us through this ordeal, the government has already approved over $3 trillion, and another $3 trillion is in the works. I believe that proper measures and additional funding could jump-start the economy and help avoid another depression.
It is interesting to look at the significant differences from a typical depression and where we are today. We are currently in a shock driven event instead of finance-driven like the Great Depression was. It is important to realize the unemployment figures do not paint a clear picture due to temporary vs. non-temporary layoffs. A benefit we have today is that our current policy measures have been shaped by our understanding of the Great Depression and other economic events.
We must remember that the government can borrow for free, which could easily be a reasonable benefit versus an economic loss. In hindsight, we can watch the economy dive or preserve businesses and promote spending. Should policy measures and stimulus allow the government to fuse money back into the economy, I believe that it would be beneficial over time rather than at once.
We have already seen a round of stimulus go towards families and can expect more in the future. What could be a substantial measure to help the stimulus positively affect the economy is to have it injected over time. Implementing over time may have a slight increase in unemployment benefits in the amount of roughly $600, as well as another injection to households in the $1000 range. There should be measures for food and housing and a hiring bonus for those businesses that accelerate the labor market. A plan like this is estimated to take about $1.2 trillion to accomplish.
For business owners, I think a zero-interest loan program could benefit those severely suffering, especially minority business owners. A zero-interest loan would give them leverage today and allow them to push expenses into the post-pandemic future. I estimated that this could lead up to $600 billion in revenue for small businesses.
For state and local governments, the pandemic has crushed income and sales taxes. Local and state benefits will inevitably suffer from budget shortfalls, and I believe relief will help avoid a dramatic impact on our health care facilities, schools, police, fire, and transportation systems. If aid were to be provided, it could relieve a significant amount of budget cuts that would have an impact on our society most would prefer not to experience. The cuts could be avoided in what is called a trigger payment. So the bill would get passed, but the money is paid out over time or through a fiscal year-end. This approach would take an estimated injection to local and state governments $500 Billion to $1 Trillion over a time frame of 2-4 years.
For the future, at about $200 billion, we would have enough to increase our awareness and dedication to the public health system. The funding would benefit research for drugs and vaccines, mass testing, equipment, hospitals, dedicated medical facilities, funding to health care workers, and contact tracing technology.
All of this, of course, is not taking into consideration the eradication of the virus. I also stress that the current system may continue to have hurdles, especially if there is a political agenda. The alternative is to pass this all at once, rather than phases and set called automatic triggers or stabilizers. So once a trigger occurs, there is an auto reauthorization of emergency spending for families, businesses, local governments, and the public health systems.
$10 Trillion may be a large number to swallow, but keep in mind the US economy was $22 Trillion before the crisis. This injection over time would be the equivalent to about 10% of the US economy should we stagger the payments over four years. Could this be a solution knowing that 1 in 5 Americans are not working? Many industries have a huge question mark over their heads, and there is certainly no clear path to normalcy at this time. We most certainly have to build a new normal, and perhaps $10 trillion will get us there.
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