Biden's Stimulus Focuses On Democratic Priorities And Reducing Poverty By 25%
Mr. Biden released his $1.9 trillion plan on Thursday, urging Congress to help states, provide money to households and accelerate vaccinations in the early days of his administration. (Democrats have slim House and Senate majorities so they can pass new legislation). Some not Covid related topics the relief highlights are the ideas of an increase in the child tax credit for low-income households and expanded paid leave for workers.
Recent economic data shows the recovery is slowing to a snails pace and December numbers also may foreshadow a economic downturn. Retail sales fell for a third straight month in December. The economy lost jobs in December, the Labor Department said last week, ending seven months of employment gains.
The proposed $1,400-a-person payments will top off the $600 checks approved in December to bring the total to the promised $2,000. The Biden plan would extend a 15% increase in food-stamp benefits through September and expand federal support for child-care providers and parents. The plan would continue a federal eviction moratorium through September, and offer $30 billion in assistance for rent and utility bills and $5 billion for emergency housing. The plan would also raise the minimum wage to $15 an hour (assistance for the less fortunate based on future taxes is one thing, but such a raise to the minimum wage may cause issues for small businesses). Its unclear if the Biden administration has the votes to increase the wage and increase paid leave proposals.
Mr. Biden would also bolster the earned-income tax credit, which is a wage subsidy. And he would increase the current $300-per-week federal unemployment benefits supplement to $400 and extend the expiration date from mid-March through September.
Economists have argued that more government spending could help stave off an uneven and protracted economic recovery that could worsen inequality.
By giving people money they can spend on food and rent, Mr. Biden said, “That helps the whole economy grow.”
“Special interests and liberals are cheering,” said Rep. Kevin Brady (R., Texas), the top Republican on the House Ways and Means Committee. “The jobless and Main Street are left shaking their heads.”
The Biden proposals, including paid leave and money for child-care centers, would be especially beneficial for women—and women of color in particular—who are more likely to work in front-line jobs or hard-hit sectors that have seen steeper job losses, said Melissa Boteach, vice president for income security and child care at the National Women’s Law Center.
“It would be a historic turn for the U.S. safety net; it would be a historic turn in the country’s fight against child poverty; and it would bring us up to speed with most other high-income countries,” said Zach Parolin, a researcher at the Columbia University Center on Poverty and Social Policy (Mr. Parolin and several colleagues found it would reduce the poverty rate this year to 9% from 12.6% without additional aid, lifting roughly 12 million people out of poverty and bringing the rate below pre-pandemic levels).
The number of Americans who reported difficulty paying their regular bills or putting food on the table has risen since August.
“It is really centering the needs of workers that have been struggling the most, and recognizing that that’s not just the moral thing to do but the economically smart thing to do,” Ms. Boteach said.
The child tax credit would increase by %50 to $3,000 per child, plus an extra $600 for children under age 6. The plan would also make the tax credit fully refundable (households could get the entire amount, even if they make no income and pay no income tax).
Conservatives are likely to resist this fundamental change to the way the US government aids families because the change removes any link to income, said Don Schneider, an economist and former GOP aide at Cornerstone Macro in Washington.
“It’s a good conversation to have, but it would be a total rethink of what we’re doing,” he said.
Making the credit fully refundable instead of partially refundable would provide cash to the families of 27 million children, according to the Center on Budget and Policy Priorities.
The expansions of the child tax credit would last one year, but would be a success for top Democratic as its backed by senior lawmakers such as Reps. Rosa DeLauro (D., Conn.) and Richard Neal (D., Mass), and Sens. Sherrod Brown (D., Ohio) and Michael Bennet (D., Colo.).
“We need to do everything we can to ensure kids don’t suffer long-term damage from this crisis, to support middle-class families and to cut child poverty,” said Mr. Bennet, who wants monthly payments of the credit to create a universal child allowance.