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January 14, 2021 at 06:01 PM
(Photo: Daniel Acker/Bloomberg)
President-elect Joe Biden will ask Congress for $1.9 trillion to fund immediate relief for the pandemic-wracked U.S. economy, a package that risks swift Republican opposition over big-ticket spending on Democratic priorities including aid to state and local governments.
The proposal unveiled Thursday will be followed in coming weeks by a second, broader jobs and economic recovery plan that will include money for longer-term development goals such as infrastructure and climate change, a senior incoming Biden administration officials told reporters.
The pandemic aid bill — spanning $400 billion for Covid-19 management, more than $1 trillion in direct relief spending and $440 billion for communities and businesses — comes in at more than double the bipartisan bill approved last month, and only slightly below the March 2020 Cares Act.
The bigger size, and inclusion of Democratic priorities such as a minimum-wage hike, sets a challenge for Biden to bring Republicans aboard.
Some measures, including aid to states and money for health care, are likely to need 60 votes in the Senate, which will have a 50-50 partisan split, with Vice President Kamala Harris’s vote conferring control to Democrats.
Jobless benefits and state aid, along with the minimum wage, could go through with a simple majority under a special rule.
The risk of doing too little is far greater than going too big, a Biden official said. The incoming president last week highlighted that historically low interest rates offer space for the U.S. to use deficit spending to strengthen the economy now.
“President-elect Biden’s $1.9 trillion American Rescue Plan is ambitious, but achievable, and will rescue the American economy and start beating the virus,” the Biden transition team said in a statement.
U.S. stocks climbed to record highs this month on expectations of another major stimulus bill in the wake of Georgia runoff elections that will give the Democrats Senate control.
Speculation the package would prove bigger than economists initially forecast have also boosted Treasury yields. Stocks dipped at the close Thursday as news of the package came out, while Treasuries remained lower.
Split Congress
House Speaker Nancy Pelosi and incoming Senate Majority Leader Chuck Schumer applauded Biden’s plan in a statement Thursday. They pledged to work quickly to put “Biden’s vision into legislation that will pass both chambers and be signed into law.” They also said they hoped for GOP support.
While the Biden team had telegraphed in recent days it wanted to forgo using so-called reconciliation — the budget maneuver that allows a party to pass a bill with a simple majority of votes in the Senate, rather than the 60 normally needed to cut off debate and move to a vote — the bigger size may make that harder.
