Biden Willing to Limit Who Gets $1,400 Checks

By Yuval Rosenberg

Biden Says $1,400 Checks Are a Promise He Won’t Break — but
He’s Willing to Limit Who Gets Them

President Joe Biden told House Democrats Wednesday that he was
open to further limiting eligibility for his proposed coronavirus
payments, but that the size of the $1,400 payments was a campaign
pledge he can’t break.

“I’m not going to start my administration by breaking a promise
to the American people,” Biden reportedly said on a call with the
House Democratic Caucus.

Biden
told his fellow Democrats that he’s “not married”
to a specific dollar figure for the next Covid relief package and
that they could make compromises in a number of areas, but he urged
his party’s lawmakers to stick together and act quickly. He also

said that the $618 billion Republican counteroffer
to his $1.9 trillion proposal “was not even in the cards.”

White House Press Secretary Jen Psaki on Wednesday sharply
criticized the plan released this week by 10 Republican senators,
saying that it doesn’t go far enough in key areas like direct
payments, unemployment benefits, aid to state and local governments
and eviction protections. She added that Biden and Senate Democrats
were united on the need to “go big” with the next Covid relief
package.

Senate Minority Leader Chuck Schumer (D-NY) also said that
Democrats were in agreement on the need to “go big and bold.”

"We must not, must not, repeat the mistakes of the past and do
too little, too reluctantly, and too late," he said in a speech on
the Senate floor.

A split inside the White House? Psaki also pushed back on
claims from some Senate Republicans that Biden was inclined to
negotiate a compromise deal with the GOP but was being kept from
doing so by Democratic congressional leaders and White House
staff.

Senate Minority Leader Mitch McConnell (R-KY) and a number of
other GOP senators have floated that theory following Biden’s
Monday meeting with the 10 Republicans behind the $618 billion
plan.

“Our members who were in the meeting felt that the
president seemed to be more interested in [a compromise] than his
staff did, or it seems like the Democratic leadership in the House
and the Senate,” McConnell said Tuesday. In a speech on the Senate
floor Wednesday, he criticized Democrats’ preparations to pass a
relief package via a party-line vote, and added: “The new president
talks a lot about unity, but his White House staff and
Congressional leadership are working from the opposite
playbook.”

In an Oval Office meeting with Schumer and Senate Democratic
leaders, Biden said he thought the relief package would ultimately
win some Republican backing. Psaki later told reporters that the
suggestion of a split between Biden and his advisers is
“ludicrous.”

What’s next: Congressional Democrats
are speeding ahead with their plans. The House voted 218-212
Wednesday evening to pass a budget resolution with reconciliation
instructions for Biden’s $1.9 trillion relief package. The Senate
is moving toward a “vote-a-rama” on a slew of
amendments to the budget resolution and then a vote on the
resolution itself later this week.

What Kind of Boost Would Biden’s Plan Provide?

As Biden pushes for his $1.9 trillion rescue package and the
$1,400 payments it calls for, a new
analysis by the Penn Wharton Budget Model
estimates that the president’s full plan would boost GDP by 0.6%
this year — much lower than some other analyses have found — and
that the relief checks would largely be saved rather than
spent.

The Penn Wharton report also says that the additional public
debt incurred under Biden’s plan would reduce GDP by 0.2% next year
and by 0.3% in 2040.

The analysis estimates that nearly all of the bottom 80% of
households by income would get aid under the Biden plan, with the
bottom 40% getting an average of more than $3,000. But the model
finds that 73% of the $1,400 relief payments will go straight into
household savings, with just 27% spent, minimizing any stimulus
from those “stimulus checks.”

Psaki said the new Penn Wharton analysis was “way out of step”
with most studies of Biden’s plan. “The analysis concludes that our
economy is near capacity, which would be news to the millions of
Americans who are out of work or facing reduced hours and reduced
paychecks,” Psaki said. “So this starting place means their model
is way off.”

The White House has been touting analyses from the
Brookings Institution,
Moody’s Analytics and
J.P. Morgan, all of which have found that Biden’s
plan would provide a much larger economic jolt.

The Brookings analysis, for example, found that Biden’s proposed
package would boost GDP by nearly 4% as of the end of this year and
2% at the end of 2022. Moody’s economists said Biden’s plan would
raise real GDP growth to nearly 8% this year and almost 4% in 2022,
nearly restoring full employment by fall of next year. An analysis
from
S&P Global earlier this week said that Biden’s
plan would restore the economy to pre-pandemic levels by summer and
bring unemployment below 4% by the middle of 2023, a year earlier
than it currently projects.

GOP plan wouldn’t return economy to pre-pandemic levels,
Brookings study says: A new analysis by Brookings’ Wendy
Edelberg and Louise Sheiner finds that the $618 billion Senate
Republican proposal would boost the economy somewhat but still
leave it below its pre-pandemic path through the end of next
year.

The study estimates that the GOP plan would raise GDP by 1.6% in
the fourth quarter of 2021 and by 0.8% in the fourth quarter of
2022. "This would leave GDP about 0.8 percent below its
pre-pandemic trajectory at the end of both 2021 and 2022," the
authors say.

Biden’s plan, they write, would raise GDP by 3.6% at the
end of 2021 and 2.1% at the end of 2022, lifting economic growth
above its pre-pandemic path. The authors say that the faster growth
“would likely put upward pressure on inflation, which the Federal
Reserve has said would be welcome.” At the same time, a temporary
economic surge could also create the risk of “a difficult economic
period after 2021.”

Number of the Day: One in Three

About a third of small businesses in a Federal Reserve survey
said that without government aid, they probably won’t make it until
the end of the pandemic recession, The New York Times
reported Wednesday.

The Fed survey of roughly 10,000 small businesses was conducted
last fall, before Congress passed a $900 billion relief bill in
December — but also before another wave of business
slowdowns and shutdowns this winter driven by the resurgent
coronavirus.

The Paycheck Protection Program, one of the primary means for
getting federal aid to small businesses, appears to have had a
noticeable effect on the business owners, the survey showed, with
77% of those who received forgivable loans saying they tried to
rehire employees, compared to 44% of those who were turned down for
funds.

“The new data comes at a time when some economists are
questioning the efficiency of the small-business loan program as a
job retention tool,” the Times said. “Most of the $325 billion in
small-business assistance in the relief package approved by
Congress in December is earmarked for a modified version of the
Paycheck Protection Program, but future small-business relief may
take a different form.”

Treasury Slashes Borrowing Estimate

The federal government spent less than expected at the end of
2020, so the U.S. Treasury earlier this week
sharply reduced its estimates for borrowing in the
first three months of 2021.

The Treasury now estimates that it will borrow $274 billion
through March, $853 billion less than the $1.1 trillion it expected
to borrow in its November estimate. Officials expect to have a cash
balance of $800 billion at the end of the quarter.

Last fall, the Treasury had assumed there would $1 trillion in
additional relief and stimulus spending at the end of 2020, but
that failed to materialize, with Congress passing a $900 billion
package only in the final few days of the year. That left the
Treasury with a higher-than-expected cash balance of $1.7 trillion,
reducing the need to issue more debt.

The Treasury estimates do not include possible spending
from another stimulus bill, and the outlook could still change
significantly. “There’s just a wide range in what is being proposed
in potential future legislation,” a Treasury official told
reporters.

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