The Pandemic, US Economy, The Stimulus, And The Taxes To Follow

Since the novel coronavirus outbreak was officially declared a pandemic on March 11, 2020,[i] the US economy has experienced profound setbacks but also shown surprising resilience. This article describes the current status of the US economy by examining changes in several economic indicators as well as the most recent US government stimulus bill, the American Rescue Plan Act of 2021, and US President Joe Biden’s proposal for future infrastructure spending, the American Jobs Plan. It also discusses the Made in America Tax Plan, which proposes significant changes to US corporate tax rules. Although the economy is gradually recovering, the already enacted and proposed legislation may have unexpected economic effects. 

The Pandemic US Economy

The US economy has seen incredible changes throughout the course of the pandemic. For instance, real gross domestic product (GDP), which is the inflation-adjusted value of goods and services produced by labour and property located in the United States,[ii] plummeted after March 11, 2020, but has since recovered some of those declines. In the last quarter of 2019, real GDP was US$19.253 trillion.[iii] After the onset of the pandemic, in the second quarter of 2020, real GDP had significantly decreased to US$17.302 trillion (a 10 per cent decline).[iv] By the last quarter of 2020, real GDP had partially recovered, settling at US$18.784 trillion.[v]

American stock market indices have outpaced GDP, returning to and even exceeding pre-pandemic performance. The Dow Jones Industrial Average (the Dow) peaked at 29,398.08 on February 14, 2020, before plummeting to 19,173.98 on March 20, 2020 (a 35 per cent decline).[vi]  Yet, since December 2020, not only has the Dow mostly remained above 30,000, but it has also hit new historical highs.[vii] The performance of the S&P 500[viii] and Nasdaq Composite[ix] has been similar.

As the markets were recovering, unemployment surged during the pandemic. In February 2020, the seasonally adjusted unemployment rate was only 3.5 per cent.[x] As of April 2020, once the pandemic had taken hold in the United States, the unemployment rate stood at 14.8 per cent.[xi] As of February 2021, the unemployment rate had declined to 6.2 per cent.[xii] However, the recovery in employment has not been uniform across income groups. Whereas high-income earners (those making more than US$85,000 annually) now have higher employment numbers than before the onset of the pandemic, middle-income earners (those making between US$50,000 and US$85,000 annually) still have slightly lower employment than before the pandemic; and low-income earners (those making less than US$30,000 annually) are experiencing 14 per cent lower employment than they had prior to the pandemic.[xiii]

Interestingly, household savings swelled, increasing from US$1.4 trillion in February 2020 to US$3.9 trillion in January 2021.[xiv] Although it makes some sense that the uncertainty of the pandemic may have encouraged families to stockpile cash, the magnitude of this change suggests other dynamics may be at play, as discussed below.

Other recent economic data suggests the recovery is continuing. Indeed, most businesses surveyed by the Federal Reserve are optimistic about 2021,[xv] and economists surveyed by the Wall Street Journal share that optimism.[xvi]  In the period from January to February 2021, economic activity has continued to grow.[xvii] After an almost complete cessation of air travel,[xviii] consumers are now more mobile. Although the Transportation Security Administration (TSA) checked 2,510,294 airline passengers nationally on March 28, 2019, it checked only 180,002 passengers on March 28, 2020.[xix]  One year later, the TSA checked 1,574,228 passengers (likely attributable to vaccine rollout).[xx] Consumer spending on goods in the last quarter of 2020 was up 6 per cent from the previous year.[xxi]  The Consumer Price Index has increased 1.7 per cent over the prior 12 months,^[xxii] as prices for manufacturing inputs are increasing in response to growing consumer demand.[xxiii]  Consumer spending for services, however, was down 5 per cent from the prior year.[xxiv] 

Therefore, overall, the US economy is slowly improving and signs of future growth are optimistic.

The Stimulus

On March 11, 2021, President Joe Biden signed into law the American Rescue Plan Act of 2021 (the ARPA).[xxv] The Congressional Budget Office (the CBO) scored the cost of the ARPA at US$1.9 trillion.[xxvi] By comparison, the Coronavirus Preparedness and Response Supplemental Appropriations Act (March 6, 2020)[xxvii] cost US$8 billion;[xxviii] the Families First Coronavirus Response Act (March 18, 2020)[xxix] cost US$192 billion;[xxx] the CARES Act (March 27, 2020)[xxxi] cost US$1.7 trillion;[xxxii] the Paycheck Protection and Health Care Enhancement Act (April 24, 2020)[xxxiii] cost US$483 billion;[xxxiv] and the Consolidated Appropriations Act, 2021 (December 27, 2020)[xxxv] cost US$868 billion.[xxxvi] In other words, the ARPA exceeds the cost of each of the prior stimulus bills.

The ARPA provides enormous amounts for a variety of different parts of the economy, but the lack of focus on the neediest recipients may mean that government dollars will not have their intended effect.  For example, the US$300-per-week federal unemployment insurance payments have been extended through September 6, 2021[xxxvii] and continue to be available to those who are self-employed.[xxxviii] The first US$10,200 in unemployment payments are now exempt from tax.[xxxix] Businesses can continue to receive tax credits and other payments for providing paid leave,[xl] paying for health insurance premiums,[xli] and retaining workers.[xlii] Yet, one of the most significant aspects of the ARPA is another issuance of US$1400-per-person stimulus  cheques for individuals making less than US$75,000 annually and couples making less than US$150,000 annually.[xliii]  Economists have questioned whether sending stimulus cheques to those who do not need them is an efficient use of government deficit spending.[xliv]  Whereas money provided to unemployed workers is likely to be spent on basic necessities, the stimulus cheques may instead go to savings. Indeed, apparently only 15 per cent of recipients of previous stimulus cheques actually said they would spend them.[xlv] Some of these stimulus cheques were instead invested in the stock market[xlvi] and this in part could explain why the stock market has outperformed real GDP and employment, and why Americans have amassed such a significant savings glut.  In other words, in contrast to unemployment cheques, stimulus cheques may have unwittingly stimulated the stock market without equally stimulating the broader economy.

Some of the institutional aid money also may be poorly directed.  Around US$90 billion has been allocated to vaccine and testing programmes, as well as other health initiatives.[xlvii] Another US$170 billion will go to help schools re-open, the majority of which is allocated to elementary and secondary schools, and a little less than a quarter is appropriated to higher education.[xlviii] The foregoing appropriations directly address the challenges of reopening the economy in the wake of the pandemic, including providing safe in-person schooling that can allow parents to return to work. On the other hand, US$219.8 billion has been reserved for aid to states, territories and tribal governments.[xlix] Local governments and municipalities are separately assigned US$130.2 billion in recovery funding.[l] Although early in the pandemic there were worries of catastrophic shortfalls in state budgets across the United States, only about half of the states had lower tax revenues than before the pandemic.[li] Although some states did see double digit declines in revenues, including Hawaii that saw a 42.5 per cent decrease in collections,[lii] some of the states anticipated to receive the largest allocations of aid, such as California,[liii] saw no decline at all.

Within 20 days of having signed the ARPA, President Biden also proposed his US$2 trillion American Jobs Plan for modernising US infrastructure, creating jobs, and buttressing the country against natural disasters such as fire and flooding.[liv] Biden plans to spend 1 per cent of GDP each year for the next eight years to pursue a wide variety of projects. He wants to repave 20,000 miles of highways and roads and reconstruct 10 “economically significant” bridges and 10,000 “smaller” bridges.  He also wants to extend transit and rail lines. His plan ambitiously includes the elimination of all lead pipes delivering drinking water in America. The housing industry may stand to benefit from his plan to build or renovate more than 1,000,000 affordable housing units and to build or rehabilitate more than 500,000 low-income and middle-income homes. On the other hand, broadband providers may be wary of Biden’s intention to extend high-speed broadband coverage to 100 per cent of the United States, including by promoting non-profit cooperative and local government internet providers. Throughout all of his proposals, the administration repeatedly emphasises job creation, strengthening labour unions, and promoting energy conservation and resilience to climate change.

To incentivise some of his energy goals, Biden has proposed the creation and expansion of certain tax credits. He wants to extend for 10 more years the investment tax credit[lv] and production tax credit[lvi] which have served as the economic basis for many solar, wind, and other alternative energy projects. He plans to also issue a tax credit for the construction of transmission lines to deliver sustainable energy and hopes to achieve 100 per cent carbon-free power by 2035. To “win” the electric vehicle market, Biden proposes to offer point-of-sale rebates for the purchase of American-made electric vehicles and create a national network of 500,000 electric vehicle chargers by 2030.

While the American Jobs Plan has noble intentions, its endless list of projects and lack of focus raise questions about the progress of the post-pandemic economy, as government spending may be pulled in too many directions and, like stimulus cheques that were misallocated, could produce unintended results and undesired economic consequences.

The Taxes To Pay For It All

Prior to the passage of the ARPA and the infrastructure proposals of the American Jobs Plan, the CBO forecasted a deficit of 10.3 per cent of GDP (the second largest since World War II considering the 2020 deficit of 14.9 per cent) for 2021 and that the national debt would be 102 per cent of GDP by the end of 2021 and 202 per cent of GDP by 2051.[lvii] Therefore, it is no surprise that the current administration felt compelled to pay for some of its stimulus policies. In that regard, the ARPA has already instituted tax changes that will increase the burden for certain taxpayers, and the Made in America Tax Plan recently released by the US Department of the Treasury will significantly shift tax burdens to corporate US taxpayers.

The ARPA removed a provision of the tax code that would have allowed multinational companies, starting in 2021, to electively allocate their interest expense across their worldwide operations.[lviii] It also extended until 2026 (one year later than originally legislated) restrictions on noncorporate taxpayers to deduct business losses that exceed business income by a certain threshold amount.[lix] The ARPA notably expanded the requirement on ride sharing platforms and food delivery services to report to the Internal Revenue Service payments made to participants that provide services on their platforms.[lx]

Yet, even more aggressively, pursuant to the Made in America Tax Plan, the administration intends to raise enough revenue in taxes over the next 15 years to pay for all the infrastructure projects envisioned in the American Jobs Plan, as well as to reduce the national debt in the years thereafter, by sharply increasing the corporate tax burden.[lxi] The plan will increase the corporate tax rate from 21 per cent[lxii] to 28 per cent. Corporations that report income of US$2 billion or more on their financial statements would be required to pay a minimum 15 per cent effective tax rate on such book income (which is calculated under financial accounting rules significantly differently than those used to arrive at taxable income).[lxiii] 

With regard to US international corporate tax provisions, the administration would also overhaul the global intangible low-taxed income (GILTI) regime.[lxiv] Pursuant to the current GILTI regime, US corporations that are 10 per cent or more shareholders in controlled foreign corporations[lxv] currently pay a 10.5 per cent [lxvi] tax on the qualifying income of all the controlled foreign corporations that they own, after a tax exemption for a hypothetical 10 per cent return on the tangible, depreciable assets of such controlled foreign corporations. The administration wants to increase the GILTI rate to 21 per cent, eliminate the tax-free return allowance, and calculate GILTI on a country-by-country basis in order to specifically capture income earned in tax havens.[lxvii]

In order to also promote comity with various other taxing jurisdictions, the administration intends on negotiating a global minimum corporate tax. Under the plan, payments made by US corporations to affiliates located in countries that do not institute such minimum tax would still be subject to such minimum tax pursuant to a modified version of the current base erosion and anti-abuse tax (BEAT), which will replace the current iteration of the BEAT. [lxviii] The administration also wants to expand the current anti-inversion rules by treating a foreign corporation as a domestic corporation when the foreign corporation acquires a US corporation in an inversion transaction and either 50% of its shares are owned by the former owners of the acquired US corporation or it continues to be managed and controlled from the United States.[lxix] The plan also calls for eliminating the current discounted 13.125 per cent[lxx] rate provided for the foreign-derived intangible income of domestic corporations.

Consistent with the provisions of the American Jobs Plan, tax incentives for fossil fuels would be suspended. Polluters would be required to pay taxes specifically designated for funding the cleanup of “Superfund” sites.[lxxi] More generally, the Internal Revenue Service would receive an increased budget for enforcement and audits of large corporations and wealthy individuals.

While the administration’s attempts to pay for its infrastructure plans are admirable, corporate income taxes account for only about 7 per cent of US federal tax revenues.[lxxii] On the other hand, if sweeping changes to the corporate income tax are instituted just as companies are trying to recover from the pandemic, such changes could alter the shape of the recovery as corporations simultaneously attempt to respond to a changing market while also revising their structures and operations for new tax rules. Therefore, radically changing the corporate tax code at this time may not prove the best means for generating the funds necessary for infrastructure spending and may also trigger unintended corporate behaviors.

Conclusions

The US economy is showing signs of recovery from losses sustained during the pandemic, though lower-income employment remains significantly depressed from pre-pandemic numbers. An increase in consumer prices and a shortage of factory materials may foreshadow potential inflationary risks which could be further stoked by the significant stimulus spending already legislated and also proposed.[lxxiii] It remains to be seen whether there is further political appetite for the scale of government spending proposed in the American Jobs Plan but. if enacted, the plan could lead to further unintended effects on growth and prices. The corporate tax changes proposed in the Made in America Tax Plan to pay for these projects will likely face significantly more opposition than the American Jobs Plan, though Democratic control of the Senate (by virtue of US Vice President Kamala Harris’ tie-breaking vote) may allow even these changes to be pushed through the legislative process. If passed, such corporate tax reforms may have unforeseen consequences on the behaviours of US multinational corporations.

The author wishes to thank Victor Jaramillo for valuable help in reviewing this article and sharing his expertise.        

 

Footnotes:

[i] Tedros Adhanom Ghebreyesus, “WHO Director-General’s opening remarks at the media briefing on COVID-19 – 11 March 2020,” World Health Organization, https://www.who.int/director-general/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-on-covid-19---11-march-2020.

[ii] Federal Reserve Bank of St. Louis, Real Gross Domestic Product, https://fred.stlouisfed.org/series/GDPC1.

[iii] Id.

[iv] Id.

[v] Id.

[vi] Google Finance, https://www.google.com/finance/quote/.DJI:INDEXDJX?sa=X&ved=2ahUKEwiy9Z748-7vAhUREFkFHWkbB6UQ3ecFMAB6BAgGEBo&window=5Y.

[vii] Id.

[viii] Google Finance, https://www.google.com/finance/quote/.INX:INDEXSP?sa=X&ved=2ahUKEwi-5_OWju_vAhXSF1kFHT2hCncQ3ecFMAB6BAgIEBo.

[ix] Google Finance, https://www.google.com/finance/quote/.IXIC:INDEXNASDAQ?sa=X&ved=2ahUKEwjO2abRju_vAhUYGFkFHRDLA2gQ3ecFMAB6BAgEEBo.

[x] Bureau of Labor Statistics, Employment Situation Summary (March 5, 2021) Table A-1, https://www.bls.gov/news.release/empsit.t01.htm.

[xi] Id.

[xii] Id.

[xiii]Jason Abel & Richard Deitz, “Some Workers Have Been Hit Much Harder than Others by the Pandemic,” Federal Reserve Bank of New York (February 9, 2021), https://libertystreeteconomics.newyorkfed.org/2021/02/some-workers-have-been-hit-much-harder-than-others-by-the-pandemic.html.

[xiv] Josh Mitchell, “Boost to Household Income Primes US Economy for Stronger Growth,” Wall Street Journal (February 26, 2021), https://www.wsj.com/articles/consumer-spending-personal-income-january-2021-11614293378?mod=article_inline.

[xv] Federal Reserve System, The Beige Book: February 2021 1.

[xvi] Sarah Chaney Cambon & Gwynn Guilford, “Economy Revs Up as American Increase Spending on Flights, Lodging, Dining Out,” Wall Street Journal (March 19, 2021), https://www.wsj.com/articles/economy-revs-up-as-americans-increase-spending-on-flights-lodging-dining-out-11616146202?st=xaelf19kgrsviia&reflink=share_mobilewebshare.

[xvii] Josh Mitchell, “Boost to Household Income Primes US Economy for Stronger Growth,” Wall Street Journal (February 26, 2021), https://www.wsj.com/articles/consumer-spending-personal-income-january-2021-11614293378?mod=article_inline.

[xviii] Many states had issued stay-at-home orders during the pandemic. See Amanda Moreland, Christine Herlihy, et al., “Timing of State and Territorial COVID-19 Stay-at-Home Orders and Changes in Population Movement — United States, March 1–May 31, 2020,” Centers for Disease Control and Prevention (September 4, 2020), https://www.cdc.gov/mmwr/volumes/69/wr/mm6935a2.htm.

[xix] Transportation Security Administration, TSA Checkpoint Travel Numbers (current year(s) versus prior year/same weekday), https://www.tsa.gov/coronavirus/passenger-throughput.

[xx] Id.

[xxi] Bureau of Economic Analysis, Table 2.3.5U. Personal Consumption Expenditures by Major Type of Product and by Major Function, https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri=1&nipa_table_list=2014&categories=underlying.

[xxii] Bureau of Labor Statistics, Consumer Price Index – February 2021 (March 10, 2021), https://www.bls.gov/news.release/cpi.nr0.htm.

[xxiii] Paul Hannon & Gwynn Guilford, “Hot US Economy, Fresh Supply Disruptions Pressure World’s Factories,” Wall Street Journal (March 24, 2021), https://www.wsj.com/articles/global-factories-pay-higher-prices-as-surge-strains-supplies-11616583929.

[xxiv] Bureau of Economic Analysis, Table 2.3.5U. Personal Consumption Expenditures by Major Type of Product and by Major Function, https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri=1&nipa_table_list=2014&categories=underlying.

[xxv] P.L. 117-2.

[xxvi] Congressional Budget Office, Summary Table 1.Estimated Budgetary Effects of H.R. 1319, American Rescue Plan Act of 2021 as passed by the Senate on March 6, 2021 (March 10, 2021), https://www.cbo.gov/publication/57056.

[xxvii] P.L. 116-123.

[xxviii] Congressional Budget Office, The Budgetary Effects of Laws Enacted in Response to the 2020 Coronavirus Pandemic, March and April 2020 (June 2020), https://www.cbo.gov/system/files/2020-06/56403-CBO-covid-legislation.pdf.

[xxix] P.L. 116-127.

[xxx] Congressional Budget Office, The Budgetary Effects of Laws Enacted in Response to the 2020 Coronavirus Pandemic, March and April 2020 (June 2020), https://www.cbo.gov/system/files/2020-06/56403-CBO-covid-legislation.pdf.

[xxxi] P.L. 116-136.

[xxxii] Congressional Budget Office, The Budgetary Effects of Laws Enacted in Response to the 2020 Coronavirus Pandemic, March and April 2020 (June 2020), https://www.cbo.gov/system/files/2020-06/56403-CBO-covid-legislation.pdf.

[xxxiii] P.L. 116-139.

[xxxiv] Congressional Budget Office, The Budgetary Effects of Laws Enacted in Response to the 2020 Coronavirus Pandemic, March and April 2020 (June 2020), https://www.cbo.gov/system/files/2020-06/56403-CBO-covid-legislation.pdf.

[xxxv] P.L. 116-260.

[xxxvi] Congressional Budget Office, Estimate for Division N —Additional Coronavirus Response and Relief H.R. 133, Consolidated Appropriations Act, 2021 (January 14, 2021), https://www.cbo.gov/publication/56961#:~:text=Division%20N%20of%20the%20act,period%2C%20CBO%20and%20JCT%20estimate.

[xxxvii] § 9011; Consolidated Appropriations Act, Division N, § 203(b); 15 USC § 9023(b).

[xxxviii] 15 USC § 9021(a)(3).

[xxxix] § 9042.

[xl] § 9641.

[xli] § 9651.

[xlii] § 9651.

[xliii] § 9601.

[xliv] Nelson D. Schwartz & Gillian Friedman, “Stimulus Money Should Have Gone to the Jobless, Economists Say,” New York Times (December 30, 2020), https://www.nytimes.com/2020/12/30/business/economy/600-dollar-stimulus-check.html.

[xlv] Olivier Coibion, Yuriy Gorodnichenko & Michael Weber, “How Did US Consumers Use Their Stimulus Payments,” National Bureau of Economic Research (August 2020), https://www.nber.org/papers/w27693.

[xlvi] Matt Phillips, “Recast as ‘Stimmies,’ Federal Relief Checks Drive a Stock Buying Spree,” New York Times (March 21, 2021), https://www.nytimes.com/2021/03/21/business/stimulus-check-stock-market.html.

[xlvii] §§ 2301 to 2713.

[xlviii] §§ 2001 to 2014.

[xlix] § 9901.  Several states have sued the federal government over limitations on the use of such state aid to lower their state taxes.  See Andrea Muse, “Arizona AG Sues Treasury Over Tax Cuts,” Tax Notes (March 26, 2021), https://www.taxnotes.com/tax-notes-today-federal/tax-policy/arizona-ag-sues-treasury-over-tax-cut-restriction/2021/03/26/43ptn; Kate Davidson, “States Were Told They Can’t Use US Covid-19 Aid to Cut Taxes, They Sued,” Wall Street Journal (April 14, 2021), https://www.wsj.com/articles/states-were-told-they-cant-use-u-s-covid-19-aid-to-cut-taxes-they-sued-11618392600.

[l] Id.

[li] Mary Williams Walsh, “The Virus Did Not Bring Financial Rout that Many States Feared,” New York Times (March 1, 2021), https://www.nytimes.com/2021/03/01/business/covid-state-tax-revenue.html.

[lii] Id.

[liii] Amanda Albright & Danielle Moran, “Biden’s State Rescue Steers Most to California, Texas, New York,” Bloomberg Law News (March 10, 2020), https://www.bloomberg.com/news/articles/2021-03-10/biden-s-state-rescue-steers-most-to-california-texas-new-york.

[liv] Office of the Press Secretary, FACT SHEET: The American Jobs Plan (March 31, 2021), https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/31/fact-sheet-the-american-jobs-plan.

[lv] I.R.C. § 48.

[lvi] I.R.C. § 45.

[lvii] Congressional Budget Office, The 2021 Long-Term Budget Outlook (March 4, 2021), https://www.cbo.gov/publication/56977.

[lviii] § 9671; I.R.C. § 864(f).

[lix] § 9041; I.R.C. § 461(l).

[lx] § 9674; I.R.C. § 6050W.

[lxi] Department of Treasury, The Made in America Tax Plan (April 2021), https://home.treasury.gov/system/files/136/MadeInAmericaTaxPlan_Report.pdf.

[lxii] I.R.C. § 11.

[lxiii] The plan estimates that only about 45 companies would have increased tax liability under this proposal.

[lxiv] I.R.C. § 951A.

[lxv] Controlled foreign corporations are foreign corporations whose stock is more than 50 per cent owned (by vote or value) by United States persons (including individuals and corporations) that each own at least 10 per cent (by vote or value) of such foreign corporation.  See I.R.C. §§ 951(b), 957(a), 7701(a)(30).

[lxvi] I.R.C. § 250.

[lxvii] Under the current rules, the aggregation of tested income of controlled foreign corporations in both high-tax and low-tax countries allows the former to shield the latter from US taxation.

[lxviii] I.R.C. § 59A.

[lxix] See I.R.C. § 7874 for the current rule with respect to inversions.

[lxx] I.R.C. § 250.

[lxxi] Superfund sites are the common name for areas of extreme pollution that the Environmental Protection Agency designates as substantially threatening the health of nearby residents.  Pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, federal funds are appropriated for cleaning up such sites. See Paul Stretsky & Michael Hogan, “Environmental Justice: An Analysis of Superfund Sites in Florida,” 45 Social Problems 268, 269 (1998). 

[lxxii] The Center on Budget and Policy Priorities, Policy Basics: Where Do Federal Tax Revenues Come From? (August 6, 2020), https://www.cbpp.org/research/federal-tax/where-do-federal-tax-revenues-come-from#:~:text=Corporate%20income%20taxes%20make%20up,taxes%2C%20and%20other%20revenue%20sources.

[lxxiii] Larry Summers, an economist who was Treasury Secretary from 1999 to 2001 and an economic adviser to President Barack Obama, wrote an op-ed in the Washington Post cautioning that the US$1.9 trillion stimulus was too large and would lead to inflation. Larry Summers, “The Biden Stimulus Is Admirably Ambitious, But It Brings Some Big Risks, Too,” Washington Post (February 4, 2021), https://www.washingtonpost.com/opinions/2021/02/04/larry-summers-biden-covid-stimulus. Treasury Secretary Janet Yellen has countered that weak labour markets make inflation risk remote and has also assured the public that the government has the tools to control inflation if it develops. Saleha Mohsin, “Yellen Says Stimulus Unlikely to Cause Inflation Problem,” Bloomberg Law News (March 8, 2021), https://www.bloomberg.com/news/articles/2021-03-08/yellen-says-inflation-problem-unlikely-to-result-from-stimulus. Long-term, the CBO is concerned that the growing national debt may contribute to future inflation and economic stagnation. Congressional Budget Office, The 2021 Long-Term Budget Outlook (March 4, 2021), https://www.cbo.gov/publication/56977.