Biden’s Rescue Plan

Biden’s Rescue Plan

Published on January 21, 2021 / Leer en español

Director, Washington D.C. Office
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Policy Director

President Joe Biden unveiled last week a $1.9 trillion COVID-19 relief package to help stabilize the faltering U.S. economy. According to Moody’s Analytics estimates, the plan will increase real GDP by “more than 7% in annualized terms in the first quarter of this year, despite the intensifying pandemic, and to almost 8% for all of 2021.”

In general, the Biden Plan can be divided into three programmatic categories: (1) Pandemic Response ($400 billion); (2) Direct Relief to Families ($1trillion); and (3) Support for Communities and Small Businesses ($440 billion). Among the Plan’s highlights, we find the following:

  • National vaccination program: $20 billion for a vaccination program in partnership with states, localities, tribes, and territories.
  • Expanded testing: $50 billion to expand testing, cover the purchase of rapid tests, expand lab capacity and help schools and local governments with testing protocols.
  • School funding: $130 billion to help schools reopen. The funds can be used to reduce class sizes and modify spaces for social distancing, improve ventilation and provide personal protective equipment. In higher education, roughly $35 billion in funding would go to public institutions, including community colleges and historically Black colleges.
  • Stimulus checks: The proposal includes $1,400 in direct funds for individuals on top of the $600 in aid approved by lawmakers last month.
  • Expanded unemployment benefits: Congress approved in December $300 in additional unemployment benefits through mid-March. The Biden plan increases the benefits to $400 per week and extends the program through September. The proposal would also extend assistance for people who have exhausted their regular benefits, as well as those who do not typically qualify for unemployment insurance programs, including self-employed people and gig workers.
  • Eviction protection: The plan extends eviction and foreclosure moratoriums to the end of September. Biden is also proposing an additional $25 billion in rental assistance on top of the $25 billion allocated in the bill passed by Congress in December.
  • Providing U.S. Territories with $1 billion in additional nutrition assistance for their residents. The Biden plan increases the Nutrition Assistance Program block grant to help thousands of working families in Puerto Rico, American Samoa, and the Commonwealth of the Northern Mariana Islands put food on the table for the duration of the pandemic.
  • Minimum wage: Biden’s proposal also calls on Congress to raise the minimum wage to $15 per hour.
  • Help for small businesses: $15 billion in grants for small businesses. The proposal would also attempt to leverage $35 billion in funds into $175 billion for loans for small businesses.
  • Aid to local governments: $350 billion in emergency funding for state, local and territorial governments to keep front-line workers paid, distribute vaccines, increase testing, and reopen schools.

To read the complete 19-page plan, click here.

Passage of the Biden Rescue Plan, however, will largely depend on the political dynamics in Washington, especially in the U.S. Senate. There are two potential avenues to ensuring passage through the Senate: (1) assembling a supermajority, or sixty votes, to avoid a filibuster, or (2) using the budget reconciliation process, which requires only a simple majority.

In this politically-charged environment, securing 60 votes in the Senate requires a monumental lobbying effort with slim chances of success. While the reconciliation process is not a slam dunk either, and it will require some political finesse, as the 50-50 split in the Senate provides little space for party-line opposition. However, it has been successfully used in the past to secure major tax legislation and mandatory spending with only a simple majority vote.

In addition to the simple majority advantage, the reconciliation process provides for expedited consideration of a bill relative to the process under normal rules given the strict limitations on debate time.  However, there are substantive limitations to the types of programs that can be included in a reconciliation bill. In general, only spending, tax, or debt proposals can be subject to the reconciliation process, and there are strict limitations on including extraneous policies and making non-germane amendments. Finally, the proposals must be budget-neutral within a 10-year horizon. This means that some much-needed economic stimulus programs will have to be included in another legislative vehicle.

In essence, even if Biden’s plan passes both chambers with an unlikely supermajority, the early win could preclude the new Administration from securing additional funding and legislative support in the future. A risky way to start off his presidency, given the hyper-partisan environment in Congress. In addition to the expected unrest in the coming weeks, political tribalism will likely intensify legislative disputes for years to come, further restricting President Biden’s ability to fulfill campaign pledges.