Nagging Doubts About Biden’s Covid Relief Plan

Nagging Doubts About Biden’s Covid Relief Plan

Reuters/Kevin Lamarque

Even as Senate Democrats prepare to push the $1.9 trillion Covid relief package over the finish line as soon as this weekend, some policy experts are still worried that the bill is poorly targeted, focused on the wrong issues or just plain too big.

According to The Washington Post’s Jeff Stein, Heather Long and Erica Werner Thursday, the grumblings of discontent aren’t limited to Republicans, whose opposition to the bill is both unanimous and unsurprising, and a number of economists of various political stripes. Some Democrats, including moderate senators whose support is needed to pass the legislation, have also had second thoughts.

One basic issue is the state of the economy, which continues to gather strength according to most analysts, due in large part to growing optimism about the pace of vaccinations. “The improving economy and improving outlook on the virus has dramatically changed the dynamic on Biden’s spending plans, but the bill has remained largely the same,” Bill Hoagland of the Bipartisan Policy Center told the Post.

Tinkering with the topline: Given the improving outlook, some economists say the package could be reduced. Constance Hunter, chief economist at KPMG, told the Post that $1.5 trillion would be enough, while panelists at the National Association for Business Economics put the number at about $1 trillion.

Echoing the complaints of many fellow Republicans, Senate Minority Leader Mitch McConnell (KY) said this week that he thinks the bill is too large, though without providing an alternative. “It’s of a size that might have made sense a year ago … this is not a year ago,” McConnell said Tuesday. “We’re making extraordinary progress with the rollout of the vaccines.”

How much do states and cities need? The $350 billion allotted to state and local governments in the bill is a sticking point for many Republicans, who have long opposed what they inaccurately refer to as a “blue state bailout” that would supposedly aid profligate Democratic cities and states. “This bill would reward bad actions, because states who have not managed themselves well are the ones who are going to benefit from this,” Sen. Marsha Blackburn (R-TN) said Wednesday.

Most economists say that while states and cities need help, they probably need less than the bill provides. Moody’s Analytics estimates the need at about $61 billion, according to the Post. The conservative-leaning American Enterprise Institute puts the number at about $100 billion, while the liberal-leaning Center on Budget and Policy Priorities thinks it’s closer to $225 billion.

Mark Zandi, chief economist at Moody's Analytics who has spoken in support of the Biden plan, told the Post that he would prefer to shuffle some of the money around, moving some of the money away from states and cities and toward longer-term plans. “If I were king for the day, I’d scale back a few hundred billion on state and local and use that money to help with the infrastructure program that’s coming,” Zandi said. “That’s a more effective way of using the resources to get back to full employment.”

But some liberals defend the $350 billion figure, arguing that the need is real regardless of what the budget numbers say. “There’s no economic rationale for cutting the state and local aid down,” Lindsay Owens of the left-leaning Groundwork Collaborative told the Post. “The idea we just need to get back right to January 2020, and not a dollar more, is bananas. We should try to do better than that.”

Thinking longer-term: Some critics say that the Biden bill is missing an opportunity to rework some of the country’s social safety net. For example, Senate Finance Chairman Ron Wyden (D-OR) reportedly wanted to adjust the unemployment benefit provisions so that they responded to economic conditions rather than the whims of Congress, but that tweak was dropped from the bill due in part to concerns about the cost.

Other critics have focused on the bill’s failure to provide enough money for housing assistance, child poverty and health care. For example, while the bill provides $34 billion to increase subsidies on the Affordable Care Act health insurance exchanges, it provides a relatively modest $16 billion for state Medicaid programs. “Expanding Medicaid would be a much more efficient way of getting more people insured,” Larry Levitt of the Kaiser Family Foundation told the Post.

White House sticks with the plan: For all the complaints, the Biden administration is showing no signs that it wants to redo the relief package. Although Biden signed off on tighter limits on relief payments in response to concerns from centrist Democratic senators, the administration still says it’s far more worried about doing too little rather than too much. “We’re still at the height of a pandemic,” White House Press Secretary Jen Psaki told reporters Wednesday. “We are not going to recover from this pandemic tomorrow. The economic recession will not be recovered tomorrow.”

Some supporters say they’re sticking with the bill for the simple fact that political constraints make it hard to craft an alternative that is both timely and well-targeted. “This is not a perfect bill,” Jason Furman, who chaired the Council of Economic Advisers under President Obama, told the Post. “If an economist was designing it from scratch today, they would design it differently. But nothing Congress does is perfect, and as written the American Recovery Plan will be a major booster shot that will hopefully help close the remaining gaps in the economy.”