Biden is already facing pressure to scale back his $1.9 trillion Covid relief plan

Politics

U.S. President-elect Joe Biden speaks about his plan to administer coronavirus disease (COVID-19) vaccines to the U.S. population during a news conference at Biden’s transition headquarters in Wilmington, Delaware, January 15, 2021.

Kevin Lamarque | Reuters

President Joe Biden‘s first Covid-19 package is already facing hurdles in Congress that threaten to force the fledgling administration to curb some of its more progressive aims just one week after the proposal’s debut.

Early critiques from Republican Sens. Lisa Murkowski of Alaska and Mitt Romney of Utah, two members of the bipartisan group of senators who crafted the framework for December’s stimulus package, challenged the $1.9 trillion plan. 

Both expressed doubts on Wednesday over the need for another bill, especially one with such a price tag, less than one month after Congress passed the $900 billion measure just before the Christmas break.

While criticisms from the GOP were expected, odds the the bill would pass unedited grew longer after a report quoted Democratic Sen. Joe Manchin of West Virginia disparaging the size of the latest round of proposed stimulus checks.

Dissent from either party carries weight for Biden, who entered the White House on Wednesday with a razor-thin majority in Congress. While both the House and Senate are under Democratic control, the upper chamber is split 50-50. Vice President Kamala Harris holds the tiebreaking vote.

Hoping to address concerns with the rescue plan, National Economic Council Director Brian Deese is scheduled to meet with a group of bipartisan senators in the coming days, according to a person familiar with the meeting. Deese is expected to advocate for the original plan, but also consider input from members of the GOP who could help pass the measure without the tedious budget reconciliation process that would allow it to get through with only Democratic votes.

Deese didn’t immediately respond to a request for comment.

Meanwhile, the Democratic-held House could move to pass components of Biden’s proposal as soon as the first week in February. House Speaker Nancy Pelosi, D-Calif., told reporters Thursday that representatives will work in committees throughout next week “so that we are completely ready to go to the floor” with a bill when the chamber returns next month. 

On a caucus call Thursday, House Majority Leader Steny Hoyer, D-Md., told Democrats that he hopes to pass a relief bill quickly and in a bipartisan way, according to a person familiar with the call. The party has not made final decisions on what parts of Biden’s plan it will include in legislation, though funds for vaccine distribution are a priority.

The White House referred CNBC to press secretary Jen Psaki’s comments on Wednesday, when she told reporters that Biden wants to pass the plan with Republican support. She did not rule out using the budgetary tool known as reconciliation.

“His clear preference is to move forward with a bipartisan bill … but we’re also not going to take any tools off the table,” she said. 

Bargaining chips

To Tony Fratto, a senior Treasury and White House aide in the George W. Bush administration, the size of further direct payments is likely Biden’s best “bargaining chip” in talks with the GOP.

“I think that they built [the plan] from the bottom up and the number ends up at $1.9 trillion,” Fratto said Thursday morning. “The big exception, though, is on checks. That was not a bottom-up thing, that was something that came out of Trump pushing for $2,000 checks.”

“There’s nothing particularly magical about $2,000 as a number,” he continued. “I do think that number, and the state and local funding, are going to involve by far the most debate and probably will be whittled down.”

Fratto said he would prefer a more targeted stimulus plan. That is, one that either extends aid to sectors in the greatest distress (like travel, hospitality and food service), or targets workers who have filed for unemployment insurance.

Biden, who became the nation’s 46th president on Wednesday, asked lawmakers last Thursday to approve the $1.9 trillion plan designed to “rescue” U.S. households and businesses over the next few months and until coronavirus vaccines are widely distributed.

The president’s call for another round of stimulus comes as Covid-19 continues to claim thousands of lives each day and efforts to roll out vaccines hit logistical snags. The U.S. on Wednesday reported a new single-day record for coronavirus fatalities with 4,131 deaths, according to an NBC News tally.

Bad economic signs

The disease’s lingering impact on the economy was also clear Thursday morning, when the Labor Department reported that 900,000 Americans filed for state unemployment benefits for the first time during the week ended Jan. 16.

The U.S. unemployment rate stood at 6.7% in December, which, before the global Covid-19 crisis, would be the highest jobless rate since March 2014. 

Deese cited the jobless claims data in pushing for Biden’s relief plan on Thursday, saying the economy is “moving in the wrong direction.” 

“It’s critical that Congress act quickly on the President’s proposals and provide relief for families in need,” he said in a statement.

The president’s plan would tick a litany of Democratic and progressive priorities such as $1,400-per-person direct payments to most households, a $400-a-week unemployment insurance benefit through September, expansion of the child tax credit and a $15 per hour minimum wage. 

It would also put $20 billion into a national Covid-19 vaccine program and $50 billion into testing. 

Asked on Friday why the U.S. government should continue to write checks to Americans who haven’t been impacted financially, Biden advisor Jared Bernstein noted that the payments to single filers start to taper for those who earn more than $75,000 annually.

“If you look at the percentage changes in after-tax income, this is a highly progressive piece of the plan, these direct payments,” Bernstein, who serves on the Council of Economic Advisers, told CNBC. “I can see why people would want an even more progressive distribution there, but I think this gets the water to the fire in a useful way.”

Busy weeks ahead

The Senate has a jam-packed schedule in the coming weeks as it attempts to hold an impeachment trial of former President Donald Trump and confirm Biden’s Cabinet. On Wednesday, Senate Majority Leader Chuck Schumer, D-N.Y., said the Democratic-led chamber “will tackle the perils of the moment,” including a “once-in-a-generation health and economic crisis.”

Spokespeople for Pelosi and Schumer did not immediately respond to requests to comment.

Biden’s plan faces obstacles in the Senate. Democrats will either have to win 10 GOP votes to get past the filibuster or use budget reconciliation, which only requires a majority vote. However, budget rules may prevent them from including pieces of the president’s proposal in a bill. 

Sen. Bernie Sanders, the Vermont independent who will soon take over the Senate Budget Committee, has urged Democrats to use reconciliation to pass economic relief. 

Republican Senator from Alaska Lisa Murkowski speaks during the US Senate Health, Education, Labor, and Pensions Committee hearing to examine COVID-19, “focusing on lessons learned to prepare for the next pandemic”, on Capitol Hill in Washington, DC on June 23, 2020.

Michael Reynolds | AFP | Getty Images

Though reconciliation would circumvent the need for Republican support, such a move could risk alienating moderates like Murkowski and Romney whose votes Biden may need for future policy priorities.

“We just passed a program with over $900 billion in it,” Romney told reporters shortly after Biden’s inauguration, according to Bloomberg News.

“The ink is just barely dry on the $900 billion, and what the president is proposing is significant — $1.9 trillion,” Murkowski said. “It’s going to require, I think, a fair amount of debate and consideration.”

Congress has limited time to renew key pieces of the $900 billion assistance package approved last month. The $300 per week federal unemployment supplement included in it expires on March 14. 

The Pandemic Unemployment Assistance program, which expands jobless benefits to self-employed and gig workers along with independent contractors, lapses on the same date. Some recipients will still get benefits through April 5. 

The Biden administration extended two relief provisions through executive action on the president’s first day in office. The Centers for Disease Control and Prevention said it would keep a federal eviction moratorium in place through March. It was set to expire at the end of the month.

The Department of Education also said it would extend a halt on federal student loan payments and interest accumulation through September. The measure would have expired at the end of January.

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