Home Therapy fund Biden approaches political victory with House on the cusp of stimulus vote

Biden approaches political victory with House on the cusp of stimulus vote

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House set to send $ 1.9 trillion Covid-19 relief plan to President Joe biden for his signing, providing an economic boost that will last long after the $ 1,400 stimulus checks start rolling into Americans’ accounts this month.

With four days until extra unemployment benefits start to run out, Democratic House leaders are planning a stint on Wednesday. While a Republican MP has delayed the schedule, the final vote is still expected in the afternoon.

The bill is far more important than Wall Street’s initial expectations of what could be accomplished in a tightly divided Congress. It provides a model for a potential longer-term expansion of an American social safety net that has long been much smaller than its European counterparts. Democrats say the nearly $ 110 billion temporary extension of the child tax credit will help cut child poverty in half, while the unemployment benefit tax exemption and unemployment benefit relief student debt will help millions more.

WATCH: An explanation of who qualifies for a $ 1,400 stimulus check and how this round of payments will work.

Source: Quick Take)

Economists this week increased their growth projections to incorporate the impact. Morgan Stanley on Tuesday raised its forecast for economic growth in the United States for 2021 to 7.3% from 6.5%, a pace unmatched since the Korean War boom in 1951. The OECD on the same day over double his own estimate.

Rebound in hiring plans

“It seems like every week we get another reason to increase the forecast,” said Avery shenfeld, Chief Economist at the Canadian Imperial Bank of Commerce. “The vaccinations will free up a lot of saved expenses, on top of all the expenses we’re getting from this round of stimulus checks.”

White House press secretary Jen psaki said on Tuesday that the government would not have the checks – amounting to $ 1,400 for each individual, gradually dropping to zero for those earning $ 80,000 or more – printed with Biden’s name, as the Treasury seeks to speed up their distribution.

The IRS is ready to start sending payments within days of signing the invoice, according to a person familiar with the process who is not authorized to comment on the schedule because it is not yet finalized.

The non-partisan Congressional Budget Office estimated that $ 1.1 trillion in relief bill spending would be spent this year, and an additional $ 459 billion in 2022.

Sustained boost

This sustained flow of spending is reflected in the growth forecasts. The median of the estimates compiled by Bloomberg for 2022 is 3.8% – an expansion well above the average of 2.3% over the decade to 2019.

Shenfeld is among economists seeing a return to full employment in the United States next year, with an unemployment rate of 3.8%, although the median projection is 4.6%, above levels of before the pandemic.

“This legislation represents the boldest action taken on behalf of the American people since the Great Depression,” said the vice chairman of the House Democratic Caucus. Pete Aguilar from California.

The Senate passed the bill – which includes $ 160 billion for vaccine and testing programs, $ 170 billion to help schools open and more than $ 360 billion in aid to state governments , local and territorial – Saturday in a 50-49 vote. . The House is also expected to pass it without the support of Republicans.

Republican objections

GOP lawmakers have also skyrocketed the price beyond what is needed, given the economy is already rebounding as the coronavirus recedes amid the heightened vaccination campaign. Along with the surge in Treasury yields over the past month, they also point to heightened fears of a surge in inflation, with dangerous results given the heavy indebtedness of the United States.

“You can’t keep adding mountains of debt to hundreds of billions at a time” without consequence, said House Republican Whip Steve scalise of Louisiana, the lawmaker responsible for collecting the GOP votes. He blasted what he called House Speaker Nancy Pelosithe pursuit of a “socialist” agenda and the rejection of talks with “those of us who want to work together to deal with this virus and safely reopen our economy and our schools”.

Republicans have particularly opposed the more than $ 350 billion in state and local government funds provided as many states show no loss of revenue during the pandemic.

“Headline after headline confirms most states are not in financial trouble,” minority House leader said Kevin mccarthy said during Wednesday’s debate. “It just throws money away with no liability.”

A group of 11 Republican senators have proposed a $ 650 billion stimulus bill, with more targeted benefits and a focus on anti-virus efforts. Biden greeted most of the group at the Oval Office to say that the gap between his vision and the GOP was just too big to try to bridge.

The Progressive Perspective

In contrast, the Progressive Democrats had asked for even more than Biden had offered. Pramila Jayapal, who heads their caucus, asked 3 trillion dollars. The Liberals, however, pledged to back the Senate version of the Aid Bill in Wednesday’s vote.

Pelosi said on Tuesday that the relief bill was the most important she has led since Obamacare in 2010. She also predicted that there would be no political backlash from this episode – when Republicans took successfully argued against deficit spending and took control of the House. in the midterm elections.

“The public knows” what is planned in the relief bill, she said. “The public did not know about the Affordable Care Act and the administration did not exactly advertise it.”

Aid is targeted to the lowest paid Americans. A study by the Tax Policy Center found that the incomes of the bottom fifth of earners would increase by 20%, the highest among income groups. This will help accelerate the flow of money into the economy, as those in the lower brackets spend more of their budget on basic household needs, including health care, food. and clothing.

“It will likely hit the accounts before the end of the month,” said Aneta Markowska, Chief Economist at Jefferies LLC. “Not only is this paid for quickly, it is actually spent very quickly. “

(Updates with McCarthy’s comment in the fourth paragraph after the caption “Republicans Object”.)

–With the help of Laura Davison and Carl Riccadonna (economist).

To contact journalists on this story:
Erik Wasson in Washington at [email protected];
Katia Dmitrieva in Washington at [email protected]

To contact the editors responsible for this story:
Joe sobczyk to [email protected];
Scott Lanman to [email protected]

Christopher Anstey, Kathleen Hunter

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