ECONOMY

Biden Nears Big Win as $1.9 Trillion Stimulus Goes to Final Vote

President Joe Biden is on the cusp of his first legislative win with the House ready to give final passage to his $1.9 trillion Covid-19 relief plan, the second-biggest economic stimulus in U.S. history.

After the Senate passed the legislation on a party-line 50-49 vote on Saturday, House Majority Leader Steny Hoyer said it will be taken up in his chamber on Tuesday. Although some liberal House members have complained about changes made by the Senate to ensure the support of moderate Democrats, progressives brushed off the concessions as minor.

“Despite the fact that we believe any weakening of the House provisions were bad policy and bad politics, the reality is that the final amendments were relatively minor concessions,” said Congressional Progressive Caucus chairwoman Pramila Jayapal.

Enactment would set the stage for work this spring on Biden’s plan for a massive infrastructure and manufacturing recovery bill. Democrats also are counting on the injection of stimulus to accelerate the economy long before they face voters in the 2022 mid-term elections.

“As tough as this moment is, there are brighter days ahead — there really are,” Biden told reporters at the White House after the Senate vote.

The bill would provide the biggest health-care expansion since the Affordable Care Act, a temporary plan aimed at slashing the child poverty rate, and send $1,400 payments to millions of Americans. In addition, state and local governments are set to get more than $350 billion in aid, and schools will get an infusion of funding, all of which Democrats hope will propel the economy forward.

“Once the plan is signed into law, I am confident that Americans will be met by a strong economy when we make it to the other side of the pandemic,” Treasury Secretary Janet Yellen said in a statement on Saturday.

The bill will also deliver $300 a week in extra unemployment assistance through Sept. 6, and make the first $10,200 of unemployment insurance benefits non-taxable for households with incomes of less than $150,000. The legislation includes $160 billion for vaccine and testing programs to help stop the spread of the coronavirus. The Senate also adopted a bipartisan amendment from Republican Lisa Murkowski of Alaska and Democrat Joe Manchin of West Virginia to direct $800 million toward alleviating youth homelessness.

Overall, the legislation is double the size of the Obama-era stimulus from the 2008-09 recession, and exceeded many earlier Wall Street estimates for how big a package Democrats could pass with the thinnest margin of control in the Senate. It’s eclipsed in size only by the $2.2 trillion pandemic aid plan passed a year ago under President Donald Trump, when large swaths of the U.S. economy were first shut down by the pandemic.

The legislation also includes two key provisions that open the door for Democrats to make major long-term progressive changes to the tax code. A one-year expansion of the child tax credit could be made permanent by Democrats later this year. The bill would give parents $3,600 for each child under six, and $3,000 for each older child, up from $2,000. The payments will be sent out in monthly installments, rather than being added to the family’s refund at tax-time, effectively setting up an experiment in universal basic income for households with children.

The legislation also makes student loan forgiveness tax free, meaning that individuals who get their debt wiped away won’t have to pay the IRS income taxes on that benefit. While the bill doesn’t include loan forgiveness itself, it paves the way for Biden or lawmakers to forgive student debt with a lower deficit cost.

Economists have boosted their forecasts for growth based on passage of the stimulus bill, along with recent evidence that the economy is already picking up pace. Gross domestic product will clock a 5.5% gain this year — the best since “morning in America”-era 1984 — according to the latest Bloomberg monthly survey of economists.

U.S. retail sales rose in January by the most in seven months, and the labor market, which has been slower to recover, added more jobs in February than economists had forecast, though employment remained well below pre-pandemic levels.

Passage in the Senate came after votes on amendments that stretched for more than 25 hours. The Democratic drive toward a final vote stalled out for nearly 12 hours on Friday after Manchin, a pivotal vote, balked at a deal to extend supplemental unemployment benefits into October.

Once that was resolved, Democrats held together to defeat Republican amendments on limiting state and local aid; restricting funding for abortions; banning aid to schools that have transgender athletes or fail to open 5 days a week; and ending aid to indebted minority farmers, among others.

Despite the stumble on unemployment insurance, passage of the stimulus was a major victory for Senate Majority Leader Chuck Schumer, who aimed to show that Democrats could wield power despite the 50-50 Senate split.

“Unity, unity, unity. That’s how we got this done,” Schumer said after the vote. “On every single important vote, every Democrat stuck together.”

The passage of the stimulus was enabled by the upset victories in January runoff elections of two Democratic senators from Georgia, which handed Democrats their razor-thin majority.

“The people of Georgia deserve great credit for what happened here today. If they had not stood up in such a powerful way on that historic election day and sent Jon Ossoff and myself to the Senate, we simply would not be here,” Senator Raphael Warnock told reporters.

Republicans were united as well. They argued that much of the measure is unnecessary given improving economic indicators, like Friday’s stronger-than-expected jobs report, and that it’s a danger to the long-term health of the economy because of the growing U.S. budget deficit. The Congressional Budget Office estimated the deficit would reach $2.3 trillion this year before the passage of the new bill adds $1.2 trillion more to that total in fiscal 2021.

Democrats rejected an effort by 11 Republicans, led by Senator Susan Collins of Maine, to offer as an amendment a plan about one-third the size of Biden’s bill — showing how critical the Georgia senate wins were to advancing the president’s agenda.

“The Senate has never spent $2 trillion in a more haphazard way,” said Senate Minority Leader Mitch McConnell. “We passed five bipartisan Covid relief bills; there is no reason we could not do a sixth,” GOP Senator Bill Cassidy of Louisiana said in a statement. “I wanted to support a bill that targeted aid to those impacted by the pandemic. Instead, Democrats rammed through a bill that wastes hundreds of billions of dollars on pet projects that have nothing to do with the pandemic, and puts our economy at risk of inflation.”

Most Related Links :
editorpen Governmental News Finance News

Source link

Back to top button