Biden Rips Republicans on Covid Relief

Biden Rips Republicans on Covid Relief

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Plus, Larry Summers causes a stir
Friday, February 5, 2021

Biden Rips Republicans on Covid Relief, Says He’ll ‘Act Fast’

President Biden on Friday made a forceful case for his $1.9 trillion Covid rescue package, arguing in a speech to the nation that another weak monthly jobs report demonstrates that the economy urgently needs support on the scale he’s proposing and that, while he wants to act in a bipartisan fashion, Republicans are “just not willing to go as far as I think we have to go.”

Biden said he’s ready to press ahead without GOP backing. “I’m going to act. I’m going to act fast. I’d like to be doing it with the support of Republicans,” he said. “I’ve told both Republicans and Democrats that’s my preference, to work together, but if I have to choose between getting help right now to Americans who are hurting so badly and getting bogged down in a lengthy negotiation or compromising on a bill that’s up to the crisis, that’s an easy choice. I’m going to help the American people who are hurting now.”

Biden and the White House have argued that their package is bipartisan even if congressional Republicans don’t support it, pointing to polling that shows broad backing among voters in both parties. Biden has said he’s willing to negotiate over who would be eligible for relief payments and how that eligibility will be phased out, but he bluntly asserted on Friday that he won’t discuss sending out a smaller dollar amount. “I’m not cutting the size of the checks,” he said. “They’re going to be $1,400, period. That’s what the American people were promised.”

Lessons of 2009:
Republicans have criticized the Biden plan as too big and too poorly targeted. “It will not serve Americans to pile another huge mountain of debt on our grandkids for policies that even liberal economists say are poorly targeted to current needs,” Senate Minority Leader Mitch McConnell said Thursday.

Biden on Friday pushed back on claims that the U.S. can’t afford another massive Covid bill and on those GOP deficit warnings. “What Republicans have proposed is either to do nothing or not enough,” he said. “All of a sudden, many of them have rediscovered fiscal restraint and the concern for the deficits. But don’t kid yourself, this approach will come with a cost — more pain for more people for longer than has to be.”

He argued that “a growing chorus of top economists — right , center, left” now say that the U.S. can afford to borrow and spend more in order to make productive investments to boost the economy. “The simple truth is, if we make these investments now, with interest rates at historic lows, we’ll generate more growth, higher incomes, a stronger economy, and our nation’s finances will be in a stronger position as well,” he said.

House and Senate pass budget plan:
Following a 15-hour, all-night “vote-a-rama,” the Senate Friday morning — just after 5:30 a.m. — approved a budget resolution setting up the reconciliation process that would allow Democrats to pass a Covid relief plan without GOP votes. Vice President Kamala Harris cast the deciding vote to break a party-line 50-50 tie. The House then approved the amended Senate-passed resolution on Friday afternoon in a 219-209 vote largely along party lines.

Legislative committees will now get down to crafting the details of their Covid package and hash out intraparty differences (see more on those below), aiming to produce a result that can be approved by the narrow Democratic majority in the House and get the support of all 50 Senate Democrats.

The targeting of $1,400 relief checks remains one key area under discussion.

Another contentious issue, Biden’s proposed $15 minimum wage, appears likely to be left out of the final package due to Senate rules requiring that any reconciliation measure have an impact on the federal budget. That may help the rest of the package win approval from the likes of Sen. Joe Manchin (D-WV), who has expressed opposition to a $15 minimum wage.

House Speaker Nancy Pelosi (D-CA) said Friday that she hopes to pass the package and send it to the Senate within two weeks, ahead of a mid-March deadline when federal unemployment benefits are set to expire for millions of Americans. She added that Democrats still plan to pursue a “recovery” plan after passing this “rescue” bill. That next phase is expected to center around infrastructure spending and climate change — and to be even larger than the $1.9 trillion Covid bill.

U.S. Economy Added a Disappointing 49,000 Jobs in January

Biden’s comments came soon after the January employment report showed that the economy added 49,000 jobs last month, with private employers accounting for just 6,000 of the total, a disappointing result that suggests that the recovery is faltering. Additionally, December’s job loss figures were revised downward to 227,000 from the preliminary report of 140,000, indicating the labor market is even weaker than the data had previously indicated.

While the unemployment rate fell four-tenths of a percentage point to 6.3%, much of the reduction was attributed to about 400,000 people dropping out of the workforce, a worrying sign of worsening conditions. And many economists believe the official measure is artificially low. “The headline unemployment rate of 6.3% for Jan likely undercounts the number of out-of-work people in the US, not by design, but by the peculiar circumstances of the pandemic,” Joseph Brusuelas, chief economist at the consulting firm RSM, wrote. “Our estimate implies a real 7.5% rate, which we acknowledge could be much higher closer to 8.5%.”

The number of missing jobs remains enormous, about 9.9 million below the pre-pandemic level. Elise Gould of the Economic Policy Institute notes that the number of missing jobs is actually more than 12 million, if lost job growth over the last 11 months is taken into account.

Biden says jobs numbers support his case:
“It’s very clear that our economy is still in trouble,” Biden said at the White House. “At that rate, it’s going to take 10 years until we hit full employment,” he added. “That’s not hyperbole. That’s a fact.”

Biden reeled off a litany of data points that he said make it clear that the economy needs a significant boost: “[W]e have more than 10 million people out of work, 4 million people have been out of work for six months or longer, and 2.5 million women have been driven from the workforce. Fifteen million Americans are behind in their rental payments. Twenty-four million adults and twelve million children literally don’t have enough food to eat.”

Noting that January was the worst month for the pandemic so far, with more than 100,000 deaths, Biden said that millions of Americans are suffering and in need of immediate assistance:

“Are we going to say to millions of Americans who are out of work ... ‘Don’t worry, hang on, things are going to get better?' That’s the Republican answer right now. I can’t in good conscience do that. Too many people in the nation have already suffered for too long. And telling them we don’t have the money to alleviate their suffering, to get to full employment sooner, to vaccinate America after $8 trillion in deficit spending over the past four years — much of it having gone to the wealthiest people in the country — is neither true nor necessary.”

Op-Ed of the Day: Top Democratic Economist Warns Biden Plan Is Too Big

While Biden has said repeatedly that he sees more risk in going too small with a Covid relief package than in going too big — citing a lesson he says he learned when he was Vice President in the Obama administration — former Treasury Secretary Larry Summers warned in a Washington Post op-ed Thursday that going too big carries plenty of risks as well.

Summers is a divisive figure in Democratic circles and a frequent target of criticism from the left. As director of the National Economic Council, Summers was one of the architects of the Obama administration’s 2009 rescue plan, which he now admits was too small.

But the current situation is different, Summers argues in his widely discussed op-ed, citing the size of the proposed spending package relative to the output gap, a measure of just how far the economy is falling short. While the Obama stimulus fell well short of the output gap at the time, the Biden proposal exceeds the Congressional Budget Office’s estimate of the shortfall by a substantial margin. “The proposed stimulus will total in the neighborhood of $150 billion a month, even before consideration of any follow-on measures,” Summers wrote. “That is at least three times the size of the output shortfall.”

In addition to potentially overheating the economy and kicking off a burst of inflation that could be difficult to respond to, Summers argues that the sheer size of the package may make it harder to pass another round of public investment, which he says the country needs. “Is the thinking that deficits can prudently be expanded longer and further? Or that new revenue will be raised? If so, will this be politically feasible?”

White House not interested:
Although Politico reported that Summers’ op-ed had hit a nerve by expressing what “many liberal wonks have been whispering about for weeks,” Biden’s advisers rejected Summers’s analysis in no uncertain terms.

“I think [Summers is] wrong. I think he is wrong in a pretty profound way,” Council of Economic Advisers member Jared Bernstein said on CNN. “I very much disagree with the thrust of the argument,” he added, saying “we have to go big and we have to go bold here to finally put this crisis, to finally put this virus behind us and to finally and reliably launch a robust, inclusive and racially equitable recovery.”

Democratic Sen. Brian Schatz of Hawaii was more dismissive. “Why would we listen to the economist who admits he went too small last time if he’s warning us to go small again?” Schatz tweeted. “I swear this town is nuts. It’s like people can only remember thirty names and so they just keep going back to the same people.”

House Speaker Nancy Pelosi (D-CA) was even more blunt, laughing off a question about whether she had discussed the op-ed at a White House meeting with Biden: “We didn’t talk about Larry Summers,” she told CNN.

Number of the Day: 10 to 1

Lets’ end the week on a positive note: U.S. Covid vaccinations outnumbered new infections by 10 to 1 this week, CNN reports, and not a single state is seeing an upward trend in new cases.

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