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Biden unveils $1.9 trillion plan to stem COVID-19 and steady economy

President-elect Joe Biden.
President-elect Joe Biden.AMR ALFIKY/NYT

WILMINGTON, Del. — President-elect Joe Biden on Thursday proposed a $1.9 trillion rescue package to combat the economic downturn and the COVID-19 crisis, outlining the type of sweeping aid that Democrats have demanded for months and signaling the shift in the federal government’s pandemic response as Biden prepares to take office.

The package includes more than $400 billion to combat the pandemic directly, including money to accelerate vaccine deployment and safely reopen most schools within 100 days. Another $350 billion would help state and local governments bridge budget shortfalls, while the plan would also include $1,400 direct payments to individuals, more generous unemployment benefits, federally mandated paid leave for workers and large subsidies for child care costs.

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“During this pandemic, millions of Americans, through no fault of their own, have lost the dignity and respect that comes with a job and a paycheck,” Biden said in a speech to the nation. “There is real pain overwhelming the real economy.”

He acknowledged the high price tag but said the nation could not afford to do anything less. “The very health of our nation is at stake,” Biden said. “We have to act, and we have to act now.”

Biden took swift action, seeking to shape the agenda at a time of national crisis and a day after President Donald Trump’s impeachment in the House. While it reflects the political shift in Washington as Democrats take control of Congress, support for Biden’s program will immediately run into logistical challenges, starting with the possibility that a Senate trial of Trump might delay its passage.

It is also unclear how easily Biden can secure enough votes for a plan of such ambition and expense, especially in the Senate. Democratic victories in two Georgia special elections last week gave Biden’s party control of the Senate — but only with a 50-50 margin after Vice President-elect Kamala Harris’ tiebreaking vote. Biden will have to compensate for any defecting moderate Democrats with Republican votes at a time of scarce bipartisanship.

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Biden suggested he would reach across party lines to get his package passed. “We need more action, more bipartisanship — and we need to move quickly,” he said.

His speech Thursday came at an incredibly challenging moment, as virus cases continue to climb, millions of workers remain sidelined, and America’s partisan divisions are threatening to tear it apart. A week after a mob stormed the Capitol to disrupt Congress’ certification of Biden’s win, Washington has come to resemble an armed camp, with steel barricades being erected across the city and armed law enforcement policing the streets.

More than 20,000 National Guardsmen are expected to flood Washington before Biden’s swearing-in Wednesday.

The economic rebound from the pandemic recession has also reeled into reverse amid a winter surge of the virus and new waves of restrictions on economic activity in cities and states.

The Labor Department reported Thursday that 1.15 million Americans filed new unemployment claims in the first full week of the new year, a 25% increase from the previous week. Another 284,000 claims were filed for Pandemic Unemployment Assistance, an emergency federal program for workers like freelancers who do not normally qualify for jobless benefits. The nation shed 140,000 jobs in December, the department reported last week.

Biden’s aides say the urgency of the moment had driven the president-elect to propose a significantly larger economic jolt than what the Obama administration pushed through upon taking office amid a recession in 2009. The Biden proposal is more than 50% larger than the Obama-Biden stimulus, after adjusting for inflation, and it comes on top of several trillions of dollars of economic aid that Congress approved last year under Trump.

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Biden aides said the package reflected the scope of the challenge facing the economy and the nation’s health system. In a briefing Thursday, one Biden official added that the existing national planning and infrastructure for mass vaccinations and testing was far less developed than the incoming White House team had anticipated.

Biden detailed his so-called American Rescue Plan in an evening speech in Delaware, effectively kicking off his presidency and placing him in the brightest spotlight since his nomination acceptance speech last summer at the Democratic National Convention.

The Biden “rescue” proposal, which would be financed entirely through increased federal borrowing, flows from the idea that the virus and the recovery are intertwined.

Economists who have pushed for more federal aid for people and businesses said this week that Biden’s advisers understood that the focus needed to be on vaccine deployment in order to get the virus under control.

“What the economy needs is a successful rollout of the vaccines and reduction in the risks of social and economic activity,” said Aaron Sojourner, a labor economist at the University of Minnesota’s Carlson School of Management who served in the White House Council of Economic Advisers under the Obama and Trump administrations. “That will go a long way toward promoting recovery. It won’t go all the way, but it will go a long way.”

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Biden, who has promised to get “100 million COVID vaccine shots into the arms of the American people” by his 100th day in office, said last week that he intended to release nearly all available coronavirus vaccine vials once he takes office, rather than holding some back as the Trump administration had been doing.

The $20 billion “national vaccine program” he announced Thursday envisions community vaccination centers around the country. In recent speeches, he has said he would like to see mass vaccination sites in high school gymnasiums, sports stadiums and the like, perhaps staffed by the National Guard or employees of the Federal Emergency Management Agency.

Biden also called for a “public health jobs program” that would address his goals of bolstering the economy and the COVID-19 response while also rebuilding the nation’s fragile public health infrastructure. The proposal would fund 100,000 public health workers to engage in vaccine outreach and contact tracing.

At the same time, Biden is keen on addressing the racial disparities in health that have been so painfully exposed by the coronavirus pandemic, which has disproportionately claimed the lives of people of color. He pledged to increase funding for community health centers and also intends to fund efforts to mitigate the pandemic in prisons and jails, where African Americans and Latinos are overrepresented.

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He proposed a wide range of efforts to help those who have suffered the most in the economic pullback that has accompanied the resurgence of hospitalizations and deaths from the virus.

His plan would provide emergency paid leave to 106 million Americans, regardless of the size of their employer, a proposal that many congressional Republicans worked to pare back in a stimulus bill passed last spring, and it would extend tax credits to many families to offset up to $8,000 in annual child care costs.

It gives billions of dollars in aid to renters struggling to keep up with mounting unpaid liabilities to landlords, and it would give grants to millions of the hardest-hit small businesses. It also temporarily increases the size of two tax credits in a manner that would effectively provide more cash from the government to low-income workers and families. Biden transition officials said an expansion of the earned income tax credit and child tax credit would halve child poverty at a time when many low-income parents have lost work and are turning to food banks for help.

Biden also called on Congress to raise the federal minimum wage to $15 an hour, a priority he outlined during his campaign and one that has been championed by many of the officials he has selected for top Cabinet posts. And he proposed extending expanded unemployment benefits through the end of September, with an extra $400 weekly supplement.

Some progressive groups called the scale and cost of the package a welcome surprise. “For a president to come out and understand not just the need for fiscal relief but the inequities in the relief we’ve had so far is really remarkable,” said Elizabeth Pancotti, a policy analyst at the liberal advocacy group Employ America.

Biden plans to unveil another, larger set of spending proposals in February, which Democrats plan to pay for in part by raising taxes on corporations and the rich. The second package is expected to be centered on job creation and infrastructure, including hundreds of billions of dollars of spending on clean-energy projects like electric vehicle charging stations, along with health care and education spending.

Biden has said he will work to build Republican support for his plans, and he will need 10 Republican votes in the Senate to overcome a filibuster. But top Democrats in the House and Senate are preparing to pivot quickly to a parliamentary process known as budget reconciliation in the event they can get only a simple majority in the Senate. Republicans used the procedure to bypass a filibuster and approve Trump’s signature tax cuts in 2017.

Republicans’ refusal to consider a stimulus package in excess of $1 trillion held down the size of the last congressional relief bill, passed in December. Biden’s aides said Thursday that they were confident that the nearly $2 trillion package he had proposed would find wide support among Democrats at a time when interest rates remain low and many economists are urging lawmakers to deficit spend in order to promote economic growth.

This article originally appeared in The New York Times.