Congressional Democrats are quickening their pace, planning to use budget reconciliation to pass the “American Rescue Plan” for President Biden’s approval before March 14th, the expiration date of unemployment insurance provided through current relief packages. However, though this bill appears to have exceeded expectations of bipartisanship on national polls, it is currently set to move through Congress backed solely by Democratic votes. Scrutiny from Republicans arises amidst claims of possible “intensified inflation and concerns with growing national debt,” as “falling infection rates and unspent funds from previous relief packages [serve] as a reason to wait on any further stimulus.” Democrats counter that “missing this March 14th deadline would cost 10 million people necessary assistance.”
On Monday, the House Budget Committee released details of this bill, voting for its progression to the House Rules Committee. It allocates billions towards “unemployment benefits, small businesses and stimulus checks,” specifically including “$1,400-per-person relief checks for Americans earning less than $75,000,” a point taken from former President Trump’s notes of Senator Mitch McConnell’s $900 billion relief bill (which allocated $600 per individual earning less than $75,000) in December. Other critical benefits include: “$422 billion for stimulus checks to individuals, $246 billion for supplemental unemployment insurance, $350 billion for state and local governments, $160 billion to combat virus[es], including vaccines, testing [and] tracing, $130 billion to reopen K-12 schools, [and] $7.25 billion for small business[es] via [the] Paycheck Protection Program.” The passage of this bill would up the U.S. federal government’s current spending on COVID-19 relief to about $6 trillion.
As one of the first attempts of major economic legislation under a uniform, Democrat-controlled House and Senate, the passage of this bill sets forth “implications” for future legislative challenges taken on by the Biden-Harris administration. Up until today, included within the bill’s provisions was a controversial increase of the national minimum wage to $15 an hour, which had remained a sticking point for some Democratic Senators, including West Virginia’s Joe Manchin and Arizona’s Kyrsten Sinema, whose votes are necessary to achieve the simple majority needed for this bill to pass. With a House floor vote scheduled for tomorrow, action from the Senate, based on this decision from Senate Parliamentarian Elizabeth MacDonough, who “[acts] as the nonpartisan referee in deciding whether certain provisions can be included in bills lawmakers are trying to pass under [this] special [reconciliation] process tied to the budget,” will likely call for further compromise from both sides.
This video briefly touches upon the standing of the current American economy, perhaps most notably on the sense of security Americans may be beginning to experience in spending, related to a “steady vaccine rollout and lowered virus numbers.” Christopher Smarts, Chief Global Strategist of Barings Investment Institute, emphasizes the increasing possibility of 2021 being “a year where we’re going to see both the effects of the stimulus and the effects of the vaccine coming through… with markets reacting to the data.” Smarts mentions that “last week’s retail sales number [were] a blowout… reflecting the fact that the stimulus passed in December was having an effect,” coupled by a “good earnings season.” In terms of economic growth, it seems that stimulus packages designed to bolster consumer trust and spending currently pave the way to recovery, aiming to not only boost the markets, but also to protect the economic security of many who have been unemployed or experienced job loss. As we learned in class, based on the circular flow model, if households are financially stable and spending, then firms are spending, enabling goods and services fueled by a need to hire, and resulting in a greater number of households having more money to spend. However, if households are spending less money, then firms have less revenue and need for labor. For the future, Smarts continues to emphasize that “talk of spending will continue to be very strong this year… and that a lot of momentum [can be achieved] if President Biden can push through this first stimulus package to come back again with a much more ambitious program that includes tax increases, infrastructure and the like… [adding up to] a number of about $3 trillion.”
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5 comments:
I think that if this COVID relief bill passes it will be very helpful for the millions of unemployed and financially struggling Americans. It makes sense that we would be spending the most money on COVID relief currently as it is the most pressing issues and has the highest American casualties out of any recent disaster. I do not believe that raising the minimum wage should be as controversial as it is, since it hasn't proven to cause higher unemployment and it clearly helps with the current major issues involving our lack of ethical wealth distribution in the US. I think that these economic decisions overall seem like good ones and they will help out American citizens until we have supplied enough people with the COVID vaccine(as long as these pass, which is still yet to be determined). Thank you for sharing!
I think this bill is a great form or relief for people who may have been financially affected by COVID-19. I don't think that forms of financial help should be controversial mainly because some people are struggling more than others and we can't say some people situations aren't so bad because we may not be in similar situations. Along with the COVID-19 relief bill, raising the minimum wage would also be a good idea and helpful to certain people in different areas of the US. In other states the minimum wage is significantly lower than what it is in California and the Bay Area, and for those states and areas especially raising the minimum wage could be another great form of financial relief at this moment for COVID-19 and all the issues that have followed. I know right now it may seem like a lot of money at one time, but if we don't have bills like this then our economy and citizens as a whole may not be able to financially recover from this on their own.
I think that passing this Covid relief bill will be extremely beneficially to those who are struggle from the financial effects of COVID-19. It would make the most sense currently and shouldn't be too controversial, as spending the most money to try and lessen the effects of Covid and increase the financial stability of the US. While increasing the minimum wage is pretty controversial, it would be beneficial to people who make a lot less. In certain parts of the US, minimum wage is a lot less than it is in the Bay Area or in California, and choosing to increase the minimum wage would allow them to be better financially secure. While it might be difficult to see the government spend so much money in one sitting and furthering the government's debt, trying to stabilize the economy and boost the livelihood of the people would benefit in the long term.
The Democratic COVID relief bill has definitely been in the works for a while, so it is satisfying to see it finally near the end and get finalized after much anticipation. If passed in the Senate and enacted, the bill would increase the minimum wage to $15.00 which would be phased out over the course of 4 years. However, this does pose a very divisive issue in the Senate, with Democrats demanding the minimum wage increase as necessary, but receiving opposition from the Republicans due to the seemingly drastic hike in wages, after remaining the same since 2009. Despite the party split, Speaker of the House Pelosi continues to commend the bill and remains confident that the legislation will pass.
I thought you made a really important point about the need for trust between households and firms in times of crisis especially. In order for this relief bill to work, we need the households to not try and save all of this money that the government is pumping into the economy. That type of frugal acting in self-interest isn’t the type that guides the invisible hand, but rather trusting the process of spending, supply and demand, and the efficient trade found by specializing. That will ultimately get us back on the cycle of economic growth and would make this stimulus successful. The government can play a role in this by encouraging citizens to spend by outlining in basic terms these economic goals. Be materialistic, and you can help everyone out of this crisis. And as we saw with the last stimulus, hopefully inflation will not be a detriment of this stimulus. We need to spend this increased money supply fast in order to make it worth it.
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