Incoming President Joe Biden is going big, but that doesn’t mean he’ll get big.
Biden’s new coronavirus stimulus plan calls for $1.9 trillion in new spending, on top of $4.1 trillion Congress has already approved in the four relief bills passed since last March. With Democrats controlling both houses of Congress beginning Jan. 20, Biden’s party will manage the agenda in Congress for the first time since 2010.
But Biden isn’t going to get everything he’s asking for. Democrats will have just a one-vote majority in the Senate, and there are at least three conservative Democrats unlikely to rubber stamp every spending bill. Senate Dems can pass one budget bill per year using the reconciliation process, which requires a simple majority vote. But they’ll probably save that for future legislation, meaning Biden’s stimulus bill will need 60 Senate votes to overcome a filibuster, including at least 10 Republicans.
“This package, as proposed, does not have the 60 votes necessary to pass the U.S. Senate,” investing firm Raymond James explained in a Jan. 15 research note. “An additional $1T in spending should be considered the more likely threshold.” Here’s a breakdown of what Biden’s asking for, and what Congress might agree to.
New stimulus checks. Biden and his fellow Democrats made a vocal commitment to $2,000 checks for most Americans in December, and they’re now bound to deliver on that. Since Congress approved $600 checks in the bill they passed in December, Biden wants an additional $1,400. Some Republicans are fine with this, and Democrats will have to persuade others if necessary. Consider it done.
Extended unemployment aid. The Biden plan would raise supplemental unemployment aid from $300 per week to $400. The current program will expire in March, and Biden would extend it through September. Congress probably won’t go that far. It might be more likely to keep the benefit at $300 and extend it for three months or so. It can always extend the program again if needed.
$100 billion for coronavirus testing and vaccinations. This would be a major boost in funding to help states and cities get people vaccinated and expand testing resources. The need for this is obvious, given the slow pace of the vaccine rollout, and Congress probably would have passed this sooner if President Trump had demanded it. Congress will probably approve most of this funding.
$350 billion in aid for states and cities. Republicans blocked this type of spending when they controlled the Senate, and there probably won’t be 10 votes for it now. A final package will probably include far less than this.
$170 billion for schools and universities. Also highly ambitious. Congress might provide some money but not this much.
$50 billion in new aid for small businesses. They need it and everybody loves to love “small business.” Most of this will happen.
Middle- and low-income tax credits. This is a political winner. Consider it done.
Paid sick leave. Biden’s plan would require employers to offer generous paid sick leave, with tax credits for smaller companies. This isn’t stimulus per se, and Republicans are likely to object, in their self-appointed role as the defenders of business. Don’t expect this in a final bill.
A $15 hour minimum wage. This is a Democratic wish-list item, but it’s also not a stimulus measure. The federal minimum wage has been set at $7.25 since 2009, and it needs to go up. But this isn’t a great move during an economic downturn, since it would hurt the bottom line of some companies that are barely surviving. It could also depress hiring, since it raises labor costs. This will probably also fall out of final legislation.
Whatever the final cost, this will be a huge and complex spending bill that will take weeks to iron out. The expiration of extended unemployment aid in March could serve as a natural deadline for passing a bill, but Congress could extend that aid on a standalone basis if it can’t reach a deal on Biden’s bill. The pace of negotiations on Biden’s first big bill will reveal whether Biden can expect meaningful cooperation from Republicans in Congress, or the kind of obstructionism that blocked many initiatives in President Obama’s administration. Obstruction seems more likely.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: [email protected]. Click here to get Rick’s stories by email.