Democrats Get a Big Boost in Bid for More Spending Bills

Democrats Get a Big Boost in Bid for More Spending Bills

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Plus, record economic growth in sight
Tuesday, April 6, 2021

Democrats Get a Big Boost in Bid for More Spending Bills

Democrats in the Senate won a technical procedural victory on Monday that could open the door to billions more in spending this year.

Budget reconciliation, which allows the Senate to pass bills related to spending and taxation with a simple majority, can be used more than once per fiscal year, according to a decision by the Senate parliamentarian.

The ruling gives Democrats more options for passing spending bills — potentially including parts of the $2.3 trillion infrastructure package President Joe Biden unveiled last week — by allowing the Senate to reopen the previous reconciliation bill passed in February and add new instructions, avoiding the 60-vote minimum required for most legislation in the upper chamber.

The parliamentarian’s decision has far-reaching implications for how the Senate operates. “The guidance could substantially weaken the filibuster by allowing the majority party to use budget reconciliation — a powerful tool that allows measures related to taxes and spending to pass on a majority vote — multiple times in a single fiscal year,” Emily Cochrane of The New York Times wrote. “That would dilute the power of the minority to stall or block such legislation in the Senate, the latest bid by the party in power to chip away at the arcane filibuster rules.”

It's not clear if or how Democrats will use the new procedural option, but a spokesperson for Senate Majority Leader Chuck Schumer (D-NY), who brought the issue to the parliamentarian, said the ruling “allows Democrats additional tools to improve the lives of Americans if Republican obstruction continues.”

Still, the decision is not a cure-all for Democrats, who still need to confront divisions within their own caucus. But it does potentially reduce the effectiveness of Republican opposition. “It’s important because it gives us a little more flexibility — we don’t have to push everything into one package,” Budget Committee Chair Sen. Bernie Sanders (I-VT) told MSNBC, while highlighting the issues he wants to address. “The ruling of the parliamentarian gives us a little bit more opportunity in that direction.”

The bottom line: Democrats now have another option for passing the kind of large-scale programs that President Biden has called for, but the procedural win doesn’t eliminate many of the essentially political constraints. In a note Tuesday, Goldman Sachs analyst Alec Phillips said that while the parliamentarian’s decision could allow Democrats “to pass a variety of fiscal initiatives separately, rather than one large bill,” maintaining unity on complex issues could still be a challenge: “the constraint on multiple reconciliation bills was not procedural, it was political, and the political disadvantages haven’t changed,” he said.

Quote of the Day: What Counts As Infrastructure?

“Washington has an attention span of several weeks, and this debate is a century old.”

– Shane M. Greenstein, an economist at Harvard Business School, talking to The New York Times about the newly revived debate over what qualifies as infrastructure.

Republicans accuse the Biden administration of stretching the term in its $2.3 trillion infrastructure plan to include questionable items, such as electric vehicles and care for the elderly, while arguing that only more traditional issues such as roads and bridges should be in the proposal. President Biden pushed back against GOP complaints Monday, saying that previous infrastructure plans backed by Republicans touched on a wide variety of issues, including, for example, broadband internet. “Their definition of infrastructure has changed,” Biden told reporters.

Biden Officials Overstated Infrastructure Jobs Estimate, Fact-Checkers Say

President Biden is calling his $2.25 trillion infrastructure plan the “American Jobs Plan,” and he claimed last week that the economy will create 19 million jobs if it is passed. In celebrating a strong March employment report that showed 916,000 jobs added last month, Biden on Friday said: “Independent analysis shows that if we pass this plan, the economy will create 19 million jobs — good jobs, blue-collar jobs, jobs that pay well.”

Other administration officials have also used that number in promoting the president’s plan, more directly attributing the job growth to the infrastructure plan. But multiple fact-checkers say that claim is an exaggeration — and a pretty big one at that.

The 19 million figure comes from a report published last week by economic research firm Moody’s Analytics that projected that the economy would add about that many jobs by 2030 if the infrastructure plan was passed. But the report also said that the economy would add 16.3 million jobs over the same time period without the infrastructure package, and 15.65 million jobs without Biden’s Covid rescue package or the infrastructure bill.

So the more accurate measure of the expected job creation resulting from the American Jobs Plan is about 2.7 million jobs, far fewer than Biden or other officials have claimed.

The White House and the Transportation Department told CNN that both National Economic Council Director Brian Deese and Transportation Secretary Pete Buttigieg had intended to say that the infrastructure plan would “help” create 19 million jobs rather than attributing all the growth to Biden’s proposal. Buttigieg told CNN on Monday that he should have been more precise and that the real number of jobs attributable to the American Jobs Plan in Moody’s modeling is 2.7 million.

The bottom line:
Moody’s analysis is largely positive on the plan’s expected effects. “The infrastructure plan results in a stronger economy over the coming decade, with higher GDP, more jobs and lower unemployment,” the report says, “Passage of the American Jobs Plan would ensure that the economy quickly returns to full employment, and the plan would provide a meaningful boost to long-term growth.” But in crafting its infrastructure sales pitch, the Biden administration has unnecessarily muddled its messaging by overreaching on the jobs number.

Record Growth Seen for World Economy: IMF

Driven by mass vaccinations and enormous amounts of government support, the rebound from the Covid-19 pandemic will produce record economic growth, the International Monetary Fund said Tuesday in its latest forecast.

The global economy is now projected to grow at a rate of 6% in 2021, the IMF said, raising its estimate of 5.5% made in January. If the projection holds, it will mean the fastest economic growth for the world economy in IMF records, which date to 1980.

“A way out of this health and economic crisis is increasingly visible,” IMF chief economist Gita Gopinath said.

US growth even faster: The IMF expects US growth to come in at 6.4% in 2021, the fastest pace since 1984, with the economy surpassing its pre-Covid level this year. Advanced economies as a group will grow at an estimated 5.1% rate, with most returning to pre-pandemic levels next year.

Governments deserve credit: While the pandemic took a terrible economic toll over the last year, it could have been much worse if governments had not responded so aggressively. “Although difficult to pin down precisely, IMF staff estimates suggest that the contraction could have been three times as large if not for extraordinary policy support,” the report says.

More work to do: The IMF warned that there is still considerable uncertainty about how the recovery will play out, and that policymakers will need to proceed cautiously. The Washington-based financial organization recommended that governments make public investments to boost long-term productivity while avoiding “sudden cliffs” in support for the unemployed:

“Considering the large uncertainty surrounding the outlook, policymakers should prioritize policies that would be prudent, regardless of the state of the world that prevails—for instance, strengthening social protection with wider eligibility for unemployment insurance to cover the self-employed and informally employed; ensuring adequate resources for health care, early childhood development programs, education, and vocational training; and investing in green infrastructure to hasten the transition to lower carbon dependence.”

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