There is something for nearly everyone in Joe Biden’s $1.9 trillion COVID-19 and economic relief plan. And that’s why it’s going to be tough to persuade enough Republicans to back the complete package.
Among the proposals the president-elect released Thursday night: an additional $1,400 per person in direct checks, extended jobless benefits at least through September, money to help schools reopen safely, aid to state and local governments, and a massive outlay for COVID-19 containment measures such as vaccines and testing.
If fully implemented, Biden’s blueprint would boost economic growth this year to almost 8 percent, up from an estimated 4 percent without new fiscal stimulus, according to Moody’s Analytics. It would help drive down the jobless rate from 6.7 percent to as low as 4 percent by the end of 2022, nearly a year sooner than if no additional rescue spending is approved, Moody’s adds.
But Biden’s rescue agenda is so expensive — more than double the $900 billion bill approved by Congress in December — that it will be hard to push it all through the Senate, where Democrats have just a one-vote majority and most legislation needs 60 votes to pass.
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The new president and his congressional allies will have to make tough decisions on what to fight for and what to give away in negotiations. Republicans, citing fiscal responsibility even though the federal budget deficit soared under Donald Trump, blasted the plan almost immediately.
“We have to get serious about how we’re spending taxpayer dollars,” Senator Rick Scott, a Florida Republican, said Friday in a statement. “We cannot simply throw massive spending at this with no accountability to the current and future American taxpayer.”
The key points of contention will include the $350 billion that Biden wants to send to state and local governments to help close budget deficits caused by a drop in tax revenue and pandemic spending. Republicans successfully kept such aid out of the December relief package.
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The GOP is also likely to fight Biden’s bid to increase the federal minimum wage to $15 an hour from $7.25, and the $1,400 stimulus checks, which would come on top of $600 payments approved last month.
Biden is making a huge ask in his first legislative push because the challenges are huge. More than 23 million Americans have been infected with COVID-19 and more than 390,000 have died, the pandemic is out of control, and the rollout of vaccines has gone much slower than promised. Some 18 million people are collecting unemployment benefits, and layoffs are on the rise as governors and mayors impose restrictions to slow the spread of the virus.
Economists have said all along that getting everyone back to work can’t happen until the pandemic is neutralized. Biden is calling for $160 billion in spending on vaccine distribution, expanded testing, personal protection equipment, and a public health jobs program.
But even under the rosiest scenarios, it won’t be until the fall that a wide swath of the country has been vaccinated. Until then, millions will remain out of work and families will struggle to pay bills.
Nearly half of the money in Biden’s plan, $911 billion, would go to helping workers and their families hang on until fall. That includes $425 billion in direct payments to adults, children, and adult dependents; $290 billion to extend state and federal jobless benefits by six months, until September, and longer if needed; $149 billion to increase the child tax credit and make it fully refundable for families who don’t have enough income to qualify for the entire benefit; and $37 billion in rental and food assistance.
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“This whole package is just a bridge to the other side, where we’ve managed to contain the virus,” said Megan Greene, an economist and senior fellow at Harvard’s Kennedy School of Government. “This package is the first one to include major funding to achieve that with significant support for vaccine distribution, testing, and state and local governments. Without that, these other measures supporting businesses and individuals just need to be reupped every time.”
If the measures pitched by Biden sound familiar, it’s because they are similar to those called for in the HEROES Act, a $3 trillion bill that passed the House in May, only to stall for months as Senate Republicans fought to scale back its scope. The much smaller compromise bill wasn’t passed until last month, and by then the accelerating pandemic was again damaging the economy.
Mark Zandi, chief economist at Moody’s Analytics, expects the eventual price tag on the Biden bill to be significantly lower after Congress hashes out a compromise.
“Given the deep political divisions in the country, the complicated politics created by the Democrats’ razor-thin majority in the Senate, and the arcane reconciliation budget rules, we expect the package that is ultimately signed into law to be no more than half the size currently proposed,” he said in a note to clients on Friday. “The politics of the split Senate, which favor centrist Democrats and Republicans who will hold the critical swing vote to get to a majority, will also impact what parts of the package become law.”
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One maneuver available to Democrats is treating Biden’s requests as part of a reconciliation budget. That’s a special legislative process whereby the Senate could pass Biden’s package as a spending bill by a simple majority rather than with 60 votes. A reconciliation budget starts in the House, where Democrats have a 10-vote margin, and can’t be stalled by filibuster in the Senate.
William Spriggs, chief economist of the AFL-CIO and a former assistant secretary at the Labor Department in the Obama administration, predicted that Democratic Senator Chuck Schumer would use the reconciliation process to push through Biden’s full package once he takes over as Senate majority leader.
“He has little inclination to compromise,” Spriggs said.