Trump Impeachment Could Bog Down Biden's Stimulus Plans
President-elect Joe Biden’s plan to pass a multi-trillion-dollar stimulus package in the early days of his administration could get caught up with the looming impeachment of President Trump.
House Democrats signaled Monday that unless Vice President Mike Pence acts to remove the president from office by invoking the 25th Amendment, they plan to vote to impeach Trump on Wednesday for his role in inciting the deadly insurrection in Washington last week. Members of the House Judiciary Committee introduced an article of impeachment Monday, and it reportedly already has majority support in the House. (For more on the dynamics of the impeachment effort, see this piece at Politico.)
Biden plans to roll out his stimulus plan on Thursday, and it’s expected to include an increase in the value of relief checks for individuals to $2,000, substantial support for state and local governments and additional funding for vaccine distribution, among other things. But there are growing concerns that the Senate could get bogged down by the politics and logistics of the impeachment effort, delaying consideration of the new stimulus proposal or other key items on Biden’s early agenda.
Biden said Monday that he hopes the Senate could divide its workload once he takes office, spending half of its time on the impeachment and half on his agenda, including confirmation of his cabinet and taking up his stimulus package. But it’s not clear that the Senate could or would operate this way.
"My priority is to get, first and foremost, a stimulus bill passed and secondly, again to rebuild the economy," Biden said Monday. "I’ve been speaking with some of my Republican colleagues about being able to move on a second package sooner than later," he said, referring to his proposal.
Another option for Democrats would be to delay sending the article of impeachment to the Senate, providing the upper chamber with enough time to address Biden’s top priorities before turning to a trial of Trump.
Majority Whip Jim Clyburn (D-SC) said Sunday that the House could delay transmission of the article of impeachment for several months. "Let's give President-elect Biden the 100 days he needs to get his agenda off and running, and maybe we will send the articles some time after that," he told CNN.
The economic and political challenges: Even without the difficulty of holding an impeachment trial, quickly passing a massive stimulus package could prove difficult in the Senate. Democrats will need unanimous support from the 50 senators in their caucus plus at least 10 Republicans to pass most bills. At least one Democrat, Sen. Joe Manchin of West Virginia, has already signaled some doubts about bigger stimulus checks, and it’s not clear that many Republicans will support the effort.
Other Democrats are making their own proposals for inclusion in the bill. Incoming Senate Finance Committee Chairman Ron Wyden (D-OR) wants to increase the value of enhanced unemployment payments to $600 per week, the same level as provided by the Cares Act passed in March, while attaching the payments to automatic triggers that are tied to specific economic conditions.
"Tying these programs to conditions on the ground also ensures Mitch McConnell and Senate Republicans can’t hold them hostage," Wyden told Bloomberg.
Timing could be important, though. Funding from the $900 billion relief bill passed in December starts to run out in March, and some worry that the economy will need another boost before then as the country continues to struggle with record levels of coronavirus infections and deaths.
Wall Street analysts are betting that Biden will get a significantly smaller stimulus package than he wants, even without the distraction of an impeachment trial in the Senate. JPMorgan Chase analysts are projecting the passage of a $900 billion package, Goldman Sachs is calling for $750 billion, while UBS pegs the expected number at $500 billion.
"We are firmly in the camp looking for half a loaf rather than a whole loaf" on the next stimulus bill, UBS’s chief U.S. economist Seth Carpenter told Bloomberg, citing resistance from centrist Democrats as a key factor in reducing the size of the final package.
Deficit Hits $572 Billion in First Quarter of Fiscal 2021: CBO
The federal budget deficit for the first quarter of fiscal year 2021 totaled $572 billion, up $215 billion from the same period a year earlier, the Congressional Budget Office estimated on Monday. Spending was up 18%, while receipts fell 0.4%. If not for a shift in the timing of certain payments, the deficit would have been $525 billion.
The Committee for a Responsible Federal Budget estimated earlier this month that the fiscal year 2021 deficit is on pace to total $2.3 trillion, or 10.4% of gross domestic product, but that projection did not include the official cost estimate for the Covid relief and government funding package passed by Congress last month — and it doesn’t include the cost of additional coronavirus stimulus and other legislation being called for by President-elect Joe Biden. Biden said last week that his proposal will come with a price tag "in the trillions of dollars."
Why it matters: "Economists largely agree that deficit-financed spending is a good idea during an economic crisis, but their estimates of how much is necessary vary dramatically," The Hill’s Niv Elis notes. "Many warn that the accumulated debt will have to be addressed once the economy recovers."
Paycheck Protection Program Restarts
The Paycheck Protection Program reopened on Monday with $284 billion in funding authorized under the coronavirus relief package passed last month and revamped rules meant to get forgivable loans to the small businesses that need them most while also cutting the fraud and abuse seen when the emergency loans were previously offered. The program has so far provided 5.2 million loans worth $525 billion, the government says.
The relaunched program will initially be available to first-time borrowers before expanding on Wednesday to businesses looking for second loans.
The new structure some changes for returning borrowers, including a lower payroll cap of 300 employees, down from 500, and a lower maximum loan amount of $2 million, down from $10 million. Applicants for a second loan will also have to show a drop in gross receipts of at least 25% in comparable quarters from 2019 to 2020, but those looking to borrow $150,000 or less can wait to provide documentation of the hit to their business before applying for loan forgiveness. Borrowers must still spend at least 60% of their loan on payroll to qualify for full forgiveness. Returning borrowers must have used the full amount of their initial loan before getting additional money.
Only smaller community lenders will take applications for at least the first couple of days, a step meant to ensure the relaunched program is available to minorities, women and other underserved communities.
To reduce fraud, the SBA added new checks to verify application information.
The program is scheduled to be open until March 31, and officials say that, unlike the initial round of loans, they don’t expect funding to run out.
Number of the Day: $1
While the average size of Paycheck Protection Program loans distributed so far was just over $100,000, about 300 businesses got $99 or less — and some got just $1, Stacy Cowley reports in The New York Times.
"The profusion of minuscule loans is yet another illustration of how the relief program’s hastily constructed rules sometimes led to absurd outcomes," Cowley writes. "But lenders and accountants — who have spent months poring over the program’s complicated and frequently revised rules — noted that the relief effort was focused on minimizing job losses, not preserving struggling businesses."
One self-employed college admissions consultant in New Jersey got $13. "That’s supposed to help my business? It was a joke," the consultant, Stephanie Ackerman, told the Times.
Quotes of the Day
"Right now, there’s 40 million doses sitting on a shelf somewhere. So the feds say it’s with the states. The states say it’s with the feds. It really doesn’t matter to the patient who’s not getting access to the injection."
– Dr. Scott Gottlieb, the former director of the Food and Drug Administration, in an interview Sunday with CBS’s "Face the Nation." Gottlieb said that the strategy for administering Covid vaccines is "not working" and said the nation needs to "hit the reset."
"With our health system and economy in crisis, and millions of lives at stake, we cannot afford for this vaccination campaign to continue to be hindered by the lack of planning, communication, and leadership we have seen so far."
– Senate Democrats, in a letter Monday to Health and Human Services Secretary Alex Azar, as reported by Politico. The Democrats called the Trump administration vaccine rollout a failure, citing data that just 36% of distributed vaccines have been administered. They called for a "comprehensive national vaccines plan, including detailed guidance and an infusion of resources to support states."
- Why We Are Introducing an Article of Impeachment – Rep. David N. Cicilline (D-RI), New York Times
- Trump Might Be Impeached. What About Everybody Else? – Timothy L. O’Brien, Bloomberg
- Donald Trump’s Costly Legacy – Richard Haas, Project Syndicate
- Can Democrats Impeach Trump Without Hurting Biden’s Agenda? – Greg Sargent, Washington Post
- Impeachment Needn’t Be Quick to Be Effective – Jonathan Bernstein, Bloomberg
- Past Budget Fights Hold Lessons for Democrats – Paul M. Krawzak, Roll Call
- Will Powell and Yellen Test MMT in the US? – Brian Chappatta, Bloomberg
- Fighting Covid-19 Is Biden’s First and Most Urgent Job – Bloomberg Editorial Board
- Releasing More Vaccines for First Doses Could Create More Problems Than It Solves – Leana S. Wen, Washington Post
- COVID-19 Vaccine Supply Chain Can Be Fixed – Sheldon H. Jacobson, The Hill
- mRNA Vaccines Could Vanquish Covid Today, Cancer Tomorrow – Andreas Kluth, Bloomberg
- The Jobs Report Silver Linings That Are a Mirage – Courtenay Brown, Axios
- How the Proposed $2,000 Cash Payments Compare to the $600 Already Provided by Congress – Steve Wamhoff, Institute for Taxation and Economic Policy