Parts of Biden’s plan, including stimulus checks, unemployment relief and rental assistance, can be passed with just 50 votes using a special procedure for budgetary legislation. But other measures, such as state and local aid, may not qualify for so-called reconciliation, and would then require 60 votes; at least 10 Republicans would be needed to proceed.
Uneven Recovery
The Biden team views boosting gross domestic product as just one metric of success, according to an ally of the president-elect. The uneven nature of the economic recovery has meant parts of the labor market have been hit much harder than others. Friday’s employment report showed a 140,000 slump in payrolls in December — the worst monthly report since April — with restaurant jobs hit particularly hard.
Appetite for some parts of a giant new bill could yet be limited. With California reporting an unexpectedly large surplus in its state budget last week, the case for the half trillion dollars in aid that Democrats were seeking for state and local authorities before the election may be tough to make to moderate members of the party. Some GOP members had backed $160 billion, while others wanted none.
Key Democrats are already weighing in with their own proposals for the bill.
Incoming Senate Finance Committee Chairman Ron Wyden wants to link expanded unemployment benefits for gig workers and the long-term unemployed to automatic triggers that would extend the programs based on national and state unemployment rates. The idea is to remove the need to negotiate repeated extensions after the initial bill is passed.
Wyden is also interested in boosting supplemental unemployment insurance payments to the $600 level that expired in mid-2020. The December bill included $300.
Wyden’s Idea
“Tying these programs to conditions on the ground also ensures Mitch McConnell and Senate Republicans can’t hold them hostage,” said Wyden in an emailed comment, referring to the GOP leader.
Biden’s plan will likely include an expansion of the child tax credit and tax break for dependent care, according to a person familiar with the plan. It could also have an expansion of the earned income tax credit, the person said.
Wall Street banks’ expectations for the next round of stimulus fall well short of Biden’s multi-trillion dollar framework. JPMorgan Chase & Co. is at the higher end, penciling in $900 billion, while Goldman Sachs Group Inc. stands at $750 billion.
Others are even more restrained. UBS Group AG economists estimate any new Covid-19 relief package in the wake of Biden taking office at $500 billion.
“We are firmly in the camp looking for half a loaf rather than a whole loaf” on the next fiscal package, said Seth Carpenter, UBS’s chief U.S. economist, who worked at the Treasury Department in the Obama-Biden administration. Carpenter highlighted the ability of Manchin and other centrist Democrats to scale block more ambitious proposals.