Friday, 8th December, 2023
Friday, 8th December, 2023

Biden unveils $1.9 tn economic plan as US recovery buckles

President-elect Joe
Biden will propose injecting $1.9 trillion into the US economy when he takes
office next week, as evidence mounts that the recovery from the sharp
downturn caused by Covid-19 is flagging.

With his fellow Democrats narrowly controlling both houses of Congress,
Biden has a shot at passing what would be the United States’ third massive
pandemic aid package.

Dubbed the American Rescue Plan, the proposal released Thursday includes a
host of measures aimed at revitalizing the world’s largest economy.

Biden aims to raise the federal minimum wage to $15 an hour, help
struggling state and local governments, safely reopen schools, roll out a
massive Covid-19 vaccination campaign and raise the size of stimulus checks
Congress approved last month.

“The return on these investment in jobs, racial equity will prevent long-
term economic damage, and the benefits will far surpass the cost,” Biden said
during a speech in Wilmington, Delaware. “In this moment of crisis… we
cannot afford inaction.”

Top Senate Democrat Chuck Schumer and House Speaker Nancy Pelosi embraced
Biden’s plan, vowing to put it before lawmakers.

“We will get right to work to turn President-elect Biden’s vision into
legislation that will pass both chambers and be signed into law,” they said
in a joint statement.

But this is just the first step, and the officials said Biden intends to
present a second “recovery” plan to lawmakers soon after his inauguration on
Wednesday aimed at spurring hiring and fighting climate change.

“We’ll use taxpayers’ dollars to rebuild America. We’ll buy American
products, supporting millions of American manufacturing jobs, enhancing our
competitive strength in an increasingly competitive world,” Biden said.

– Uncertain path –

The government on Thursday reported a spike in new jobless claim filings in
the first week of 2021 to nearly a million, its highest level since August,
while official data last week showed the economy shed jobs in December.

Biden, 78, will take office after a tumultuous transition that saw a
violent mob invade the US Capitol, egged on by outgoing President Donald
Trump, as lawmakers were meeting to certify the Democrat’s election victory.

His stimulus proposal builds on two massive relief packages Congress
approved in 2020, both increasing and extending through September
unemployment benefits that have helped tens of millions of people pay their
bills after losing their jobs during the pandemic.

It additionally calls for devising a way to maintain those programs if
unemployment stays high, and also continues expanded government food
assistance as the country struggles with some of its highest hunger levels in
modern times.

But controversy could await the plan’s provision of $350 billion in funding
to state and local governments, which Republican lawmakers blocked throughout
last year.

Also potentially challenging is the president-elect’s move to increase the
size of stimulus checks Americans received in the December package to $2,000,
which would fulfill a campaign promise.

But with only the slimmest of majorities in Congress — including an evenly
split Senate where Vice President-elect Kamala Harris could have a tie-
breaking vote — Democrats will have to woo some Republicans if anyone in
their party breaks ranks.

One Democratic senator has already expressed hesitation over increasing the
payments, but earlier this week Republican Senator Marco Rubio told Biden he
would back the additional aid.

The proposal also calls for $160 billion to fight Covid-19, including
through a national vaccination campaign, and $170 billion for schools, with
the goal of getting most institutions with students in kindergarten through
eighth grade open in the first 100 days of his administration.

– Would it work? –

Prior to the release of the specifics, Michael Feroli of JP Morgan
predicted Congress could pare Biden’s plan down to the $900 billion range,
matching the measure approved last month.

Even the smaller amount would boost GDP growth this year to 5.3 percent and
in 2022 to 2.6 percent, he said, a “remarkable expected turnaround” aided
also by negligible inflation and the Federal Reserve’s maintenance of low
borrowing rates.

Other aspects of Biden’s plan include expanding tax credits aimed at
fighting poverty and helping working parents afford childcare, plus extending
a moratorium on evictions.

The plan offers flexible credits and grants for the small businesses that
are major employers but have struggled to survive as states imposed
restrictions to stop the virus.

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