U.S. Speaker Nancy Pelosi (D-CA) speaks to reporters at a press conference in Washington on January 7, 2021.
Erin Scott | Reuters
The House is expected to pass the $ 1.9 trillion Covid-19 stimulus package later Friday and send President Joe Biden’s aid plan to the Senate.
Both chambers aim to approve the bill and send it to Biden’s desk before March 14, when key programs to encourage millions of unemployed Americans expire. Pitfalls await in the Senate, where a single vote from democracy would sink it against the plan, and a decision banning lawmakers from charging a $ 15 minimum hourly wage has cast a key in the process.
Democrats exercising tight control of Congress decided to pass the budget in favor of a budget. The process allows them to approve the bill in the Senate without Republican votes, but also limits what lawmakers can include.
The plan includes:
- $ 400 Weekly Unemployment Insurance Supplement and Program Expansion to Provide an Additional Million U.S. Unemployment Benefits through Aug. 29
- $ 1,400 is a direct payment to the majority of Americans and the same to dependents
- $ 20 billion for the national Covid-19 vaccination program and $ 50 billion for testing
- $ 350 billion in state, local, and tribal government aid
- Payments for families, up to $ 3,600 per child, over one year
- $ 170 billion for K-12 schools and higher education institutions to cover reopening costs and student support
- Raise the federal minimum wage to $ 15 an hour by 2025
While economists tend to agree that further incentives would provide a stable safety net for workers as the economy recovers – not to mention accelerating GDP growth – they disagree on the need for a $ 1.9 trillion bill. .
The case is going big
Those who support spending argue that the U.S. economy remains in a precarious position and that millions of Americans are working, due to layoffs and forced government closures at the time of the epidemic.
While the Department of Labor’s latest report on unemployment claims has reduced the number of first-time claimants for unemployment benefits, it also revealed that as of February 6, more than 19 million Americans were still involved in some form of assistance.
Earlier this month, Finance Minister Janet Yellen told CNBC that Biden’s plan could push the economy back into full employment before the end of 2021.
He stressed the number of human casualties suffered by the virus in the past year for households that continue to struggle with food purchases and rents.
“We consider it very important to have a large package [that] it remedies the pain it has caused – 15 million Americans are falling short of rents, 24 million adults and 12 million children who don’t have enough to eat, small businesses are failing, ”Yellen said on Feb. 18.
The plan usually focuses on critical economists and the potential benefits of the bill, which are better suited to meet the needs of businesses and workers in industries that continue to suffer the most from Covid-19, such as airlines, catering and hospitality.
Most of the puzzling criticism came from Biden Democrat and former finance minister fellow Larry Summers, who warned in a Feb. 4 option that the bill could boost inflation after decades of mostly stagnant prices.
“Given the Fed’s commitments, administrative officials face the risk of inflation expectations rising sharply due to difficulties in even rejecting the possibility of inflation and mobilizing congressional support to reduce tax increases or spending,” the Washington Post wrote.
Although economy-wide inflation has missed the Federal Reserve’s 2% target for the vast majority of the past decade, investors are beginning to worry about the possibility of price spikes.
Nathan Sheets, chief economist at PGIM Fixed Income, said while he appreciates these concerns, he’s not overly concerned.
“While I see rising inflation in the summer and fall as a real risk as rising demand outstrips supply recovery, I can expect that rise to be temporary,” he wrote in a Wednesday email.
Sheets, who also worked as under-secretary for international affairs at the Treasury under former President Barack Obama, added that the potential economic benefits of further stimulus outweigh the potential risks.
“The job market is still in a deep hole,” he wrote. “Reclaiming these 10 million jobs will require sustained economic growth, especially given that roughly half of job losses are for people leaving the workforce.”
Many Republicans have questioned the need to send more aid in addition to the money needed to accelerate Covid-19 vaccination efforts and strengthen the health care system.
On Wednesday, California House Minority Leader Kevin McCarthy described much of the spending as “a waste or a wish list for the advanced.”
A group of the most centric Senate Republicans had previously offered Biden a $ 600 billion plan that included vaccine distribution funds, smaller direct payments to fewer people than Democrats were looking for, and an unemployment benefit that expired sooner than their peers wanted. The president said he would only pass the spread package with democratic votes than spend weeks debating a smaller bill with the government body.
The benefits of the rock and the minimum wage
Democrats have watched the March 14 deadline for some 19 million Americans receiving unemployment benefits lose $ 300 a week. Many unemployed people would lose their insurance if two programs expanding entitlement and increasing the number of benefit weeks ended next month.
Congress allowed similar provisions to expire last summer and only renewed them in December, helping to lift millions of people into poverty and seek food aid.
The adoption of the legislation was a problem on Thursday night. Senate MP Elizabeth MacDonough has decided that lawmakers cannot include a $ 15 hourly minimum wage in the budget conciliation proposal.
Democrats have included in their bill a provision to gradually raise the federal salary level to $ 15 by 2025. The House did not repeal it from the law after the parliamentary decision, as Speaker Nancy Pelosi said the House Democrats said “an increase in the minimum wage is needed.”
The United States last raised the minimum wage in 2009 to $ 7.25 per hour.
Keeping the pay raise on the bill means the Senate is likely to pass different legislation than the House. MEPs will then have to get back together to pass the bill a second time, probably in March.
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