President-elect Joe Biden announced on Thursday a new $1.9 trillion stimulus plan for the American economy, which includes a direct payment of $1,400 to all Americans, raising payments to $2,000 per adult when added to the $600 already approved by Congress.
The plan also includes a 400-page payment in addition to unemployment insurance and aims to expand paid leave payments and tax credits for children in the home. Direct transfers to households total half of Biden’s proposed stimulus plan.
There will be $1 billion for federal unemployment benefit and assistance checks; $440 billion for business support to state and local governments; and an additional $400 billion to address the pandemic. The tax credits under the new stimulus plan will be extended from $2,000 to $3,000 and there will be an additional 600 per child under age 6 in the poorest households under the new rule.
Within the pandemic budget, there will be $50 billion to increase the number of coronavirus testing and transfers to support the current vaccination plan and expand the health workforce. Biden has pledged to deliver 100 million doses of the new vaccine in the first 100 days of his presidency.
Biden’s stimulus plan will have little trouble getting through Congress
The stimulus plan will most likely pass through Congress as the Democratic Party has a majority in both the House and the Senate. With both Senate seats secured in Georgia, Democrats could apply fast-track rules to expedite a bipartisan bill to pass Biden’s plan. This would require 51 votes in the Senate. In case the Democrats are tied with the Republicans, they could invoke the vote of Vice-President Kamala Harris.
To avoid any procedural delays, the Democrats must persuade at least ten Republican senators to join in supporting the stimulus plan. Some Republican legislators, such as Florida Senator Marco Rubio, have said they agree with larger stimulus checks but may be reluctant to support Biden’s proposal because of the president-elect’s insistence on a federal minimum wage of 15 an hour.
Last year, lawmakers reached an impasse when Republicans resisted aid for state and local governments and Democrats opposed a corporate accountability shield. The result was a post-election settlement of approximately $900 billion, which Democrats described as a down payment.
In addition to Biden’s stimulus plan, the president-elect will push Congress to approve an additional $160 billion to support vaccination plans, expand testing, and implement a program to create health care jobs.
Biden said the stimulus plan will be paid for through the issuance of federal debt, so the Treasury Department is expected to start putting bonds on the market as soon as Janet Yellen takes over as Treasury Secretary. With a Federal Reserve committed to an expansive monetary policy, the Biden administration will not have difficulty with this additional borrowing.
Although there may be initial support for such aggressive measures, the overall economic outlook remains highly precarious. The government’s indebtedness absorbs resources that would otherwise finance private investment. In addition, the debts must be paid, so very soon this stimulus plan will be followed by a tax reform that, as Biden has promised, will increase the tax burden on businesses and individuals.