Four ways we could pay for the government’s massive COVID-19 stimulus spending

The federal government has forked out at least $200 billion in the fight to keep the economy afloat during the coronavirus downturn, and there may be more to come.

The JobKeeper package alone, which was announced yesterday, will cost $130 billion.

3AW Drive host Tom Elliott, who is also a hedge fund manager, says there are four ways we can pay for the massive COVID-19 spending:

OPTION ONE: Increase taxes

“That’s not going to happen because the government is trying to stimulate the economy and if you increase taxes, well you just wind it back as quickly as you tried to stimulate it, so we can cross that one off the list,” Tom said.

OPTION TWO: Borrow from big super funds

“Big super funds do have a lot of dough, over $1 trillion dollars, and they probably could buy a lot of government bonds,” the 3AW Drive host said

“But even they are going to be a bit hamstrung because, of course, a lot of workers are now told they can take $10,000 out of their super funds to try and help pay the bills in the current times.

“So the super funds won’t have as much money as they used to.

“Also, the value of their holdings has gone down because the share market has been hammered.”

OPTION THREE: Do more overseas borrowing (probably from China)

“We could do more overseas borrowing,” Tom said.

“One of the biggest buyers of government debt overseas is China.

“It’s interesting when you think about that because the UK government is saying that China deserves some sort of reckoning for … trying to cover it [COVID-19} up and not doing anything about it.

“Borrowing from China, quite possible but probably unpalatable.”

OPTION FOUR: Printing Money

“There is this technique called quantitative easing, which is just a newfangled way of saying printing money,” the 3AW Drive host said.

“Years ago Pauline Hanson was laughed at when she suggested doing this.

“Now Pauline, I think you may have been ahead of your time!”

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