Biden Unveils $1.9 Trillion ‘American Rescue Plan’

By Yuval Rosenberg

Biden Unveils $1.9 Trillion ‘American Rescue Plan’

President-elect Joe Biden is set to unveil an
economic relief package that calls for $1.9
trillion in aid, including money for $1,400 direct payments to most
Americans as well as $350 billion in funding for state and local
governments and billions more to promote coronavirus testing and
vaccine distribution.

Biden is proposing a $400-a-week federal boost to unemployment
insurance through September, expanded paid leave and an increase in
the child tax credit from $2,000 to $3,000 for this year, with
another $600 for children under age 6 and "new rules that would let
the poorest households get the full benefit," according to
The Wall Street Journal.

"Aid for households makes up about half of the plan’s cost, with
much of the rest going to vaccine distribution and state and local
governments," the Journal’s Richard Rubin and Eliza Collins
say.

Here’s a rundown of the elements in Biden’s plan, per
Bloomberg News:

  • Direct payments of $1,400, on top of the $600 approved in
    December
  • $400 per week in supplementary unemployment
    benefits through September
  • $350 billion for state and local governments
  • Raising the minimum wage to $15 an hour
  • $130 billion to help schools reopen
  • $160 billion in funding for a national program of
    vaccination, testing and other coronavirus containment efforts
  • $30 billion for rental and small-landlord
    support
  • $25 billion for childcare providers
  • Expanded food assistance
  • Expanded child tax credits
  • Expanded medical and family
    leave

Biden’s plan is expected to call for two phases, with an
immediate injection of coronavirus-related aid to be followed by a
proposal for longer-term economic stimulus focused on jobs and
infrastructure as a way to combat climate change.

Biden’s plan doesn’t include cost offsets, relying instead on
deficit financing, the Journal reports. "Mr. Biden’s argument is
that now isn’t the time to worry about widening budget deficits,
given the emergency and low interest rates," the Journal’s Rubin
and Collins write.

Pushing for bipartisan agreement: Biden will try to get
Republicans to back his plan — and he’ll need at least 10 Senate
Republicans to approve assuming that all 50 Senate Democrats
support his proposals.

It’s far from a sure bet, given prior Republican opposition to a
relief package of this size. The cost of Biden’s plan is more than
double that of the hard-fought bipartisan deal passed by Congress
last month and approaches the price tag on the Cares Act passed in
March. Some Republicans are also likely to resist providing $350
billion in aid to state and local governments and to the
minimum-wage hike Biden wants, among other elements, though
Democrats reportedly feel confident that they can get 10 GOP votes
for a bill that that includes state and local money.

House Speaker Nancy Pelosi (D-CA) and Senate Democratic Leader
Chuck Schumer (D-NY) lauded Biden’s plan. "We will get right to
work to turn President-elect Biden’s vision into legislation that
will pass both chambers and be signed into law," they said in a
joint
statement released Thursday. "We echo the
President-elect’s call for bipartisan action on his proposal and
hope that our Republican colleagues will work with us to quickly
enact it." But some Democrats might still object to elements of the
plan, too. Sen. Joe Manchin (D-WV) last week suggested that he
would want any additional direct payments to be more targeted.

Rep. James Clyburn (D-SC) told the Journal that he expects the
relief package to be broken up based on what can be passed
immediately on a bipartisan basis and what may need to go through a
process known as
budget reconciliation, which would require only 50
votes in the Senate.

Biden’s strategy "will test the president-elect’s legislative
savvy, and will force the Democratic Congressional leadership to
navigate razor-thin majorities to deliver the administration an
early victory," Punchbowl
News says. And the fight over longer-term stimulus may
be even more challenging, given that it would involve some tax
hikes.

Biden is set to speak about his plan at 7:15 p.m. ET.

Unemployment Claims Surge Along With the Coronavirus

About 965,000 people filed initial jobless claims in state
unemployment systems last week, the Department of Labor
announced Thursday. The new filings far exceeded
economists’ expectations, underscoring the ongoing economic damage
caused by the Covid-19 pandemic.

Another 284,000 filed for Pandemic Unemployment
Assistance, the federal program for those who are normally not
eligible for benefits, including self-employed and gig workers. All
told, about 1.2 million people filed for unemployment benefits.
Using unadjusted data, the total is closer to 1.4
million.

"Last week was the 43rd straight week total initial claims
were greater than the worst week of the Great Recession," Heidi
Shierholz of the Economic Policy Institute
wrote.

"Weekly first-time jobless claims are stuck at an
uncomfortably high level,"
wrote CNN’s Anneken Tappe. "In late August, the
figure dropped below 1 million, but since then, significant
improvements have been hard to come by -- and last week represented
a huge step in the wrong direction."

Some economists expect jobless claims to remain high for
weeks to come. "Claims will drift sideways, more or less, over the
next two to three months, before restrictions on the services
sector can be gradually eased as vaccination brings herd immunity
into sight," Ian Shepherdson of Pantheon Macroeconomics
said in a note.

Joseph Brusuelas, chief economist at the consulting firm
RSM, said that with more than 18 million people receiving some kind
of unemployment assistance, more help from the federal government
will be needed. "Despite those who make the case that all is well
and that no additional aid is necessary, we think that this data
affirms the necessity for another round of fiscal aid," Brusuelas

wrote.

Taxpayer Advocate: The IRS Needs More Funding

National Taxpayer Advocate Erin Collins released her

annual report to Congress Wednesday, and it came
with a blunt message: Years of funding cuts have made it difficult
for the nation’s tax and revenue agency to do its work.

As required, the report identifies the
10 most serious issues experienced by taxpayers.
The shrinking IRS budget and workforce were at the top of the list,
with the advocate saying that, "Inadequate funding combined with
weaknesses in hiring and retention strategies have created an
insufficient and disproportionately aging workforce." IRS funding
was reduced by about 20% on an inflation-adjusted basis between
2010 and 2020, the report says, leaving the agency with a shrunken
staff forced to work with outdated technology.

Most of the other top problems cited in the report are
connected to the lack of sufficient funding and staffing. Taxpayers
are waiting longer to speak to IRS representatives, if they get to
speak to them at all, and online technology is "plagued by limited
functionality." Ancient computer systems "prevent taxpayers from
obtaining full details about the status of their cases, and impede
the IRS’s ability to select the best cases for compliance actions."
And the amended tax returns process generates "over a million calls
that the IRS cannot answer," resulting in unnecessary delays and
confusion for taxpayers.

Number of the Day: $3,000

Presidential daughter and son-in-law Ivanka Trump and
Jared Kushner have lived in a 5,000-square-foot, six-bedroom,
six-and-a-half bathroom house in Washington during their time in
the Trump administration, guarded around the clock by a team of
Secret Service agents. While those agents are empowered to take
extraordinary steps to protect the lives of the top White House
aides, there’s one thing they have been forbidden to do: use a
bathroom at the residence.

As a result, according to
The Washington Post Thursday, after relying on a
porta-potty onsite, the Secret Service has rented a nearby studio
apartment to give agents access to a more formal bathroom, at a
cost of $3,000 per month. The rental has cost more than $100,000 in
public funds, the Post says.

Like so much else in the Trump administration, the
situation is unprecedented. "It’s the first time I ever heard of a
Secret Service detail having to go to these extremes to find a
bathroom," one law enforcement official told the Post.

Poll of the Day: Coming Apart

At least there’s one thing a bitterly divided country can
agree on: The pro-Trump insurrection in the Capitol, set against
the ongoing disaster of the coronavirus pandemic, appears to have
convinced most Americans that the country is coming apart at the
seams. According to an Axios-Ipsos
poll conducted earlier this week, 83% of
Republicans and 78% of Democrats agree that America is falling
apart.

Send your tips and feedback to yrosenberg@thefiscaltimes.com.
And please tell your friends they can
sign up here for their own copy of this
newsletter.

News

Views and Analysis