I understand that it is better for individuals to have money to spend in the market, but I don’t understand how the government get the stimulus money. If people are making less and paying less in taxes (plus tax cuts), isn’t the government low on cash too?
Bonus: how insulated are government jobs during economic turns?
In: Economics
No government that fully controls its money supply can run out of money. Essentially the US government borrows and pays back in USD which it can create out of essentially nothing. There are good reasons why no government would risk the stability of its currency (by irresponsibly managing it) because most of the social order and “real” productive capacity within its borders would fall apart should the currency be subject to hyperinflation.
There is also no particularly good reason for a government not run a reasonable deficit as long as the economy grows. (essentially borrowing to spend today what future citizens will produce and gets taxed against). In a crisis, it also makes sense for a government to issue more debt and issue funds in areas that it would typically not directly interfere with.
There is no “rule book” on how insulated government jobs are. Most government jobs are not for a profit seeking motive – law enforcement, managing the affairs of govt, postal services, maintaining critical infrastructure, air traffic control, education, social services, regulating certain companies and defending their borders. Most of these functions will need to be maintained even (and maybe especially so) during an economic downturn.
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