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February 23, 2021

American Rescue Plan Gets Surprisingly Little Pushback

Plus, where is the economy headed?

 

Treasury Secretary Janet Yellen and Vice President Kamala Harris discuss
the American Rescue Plan at the White House earlier this month.
(Jacquelyn Martin/AP Photo)

The Chief

**Yesterday the House Budget Committee advanced**the American Rescue
Plan, Joe Biden's $1.9 trillion effort to end the coronavirus pandemic
and revive the economy. We have a bill
.
And it should pass the House this week, provided that nearly every
Democrat votes for it. Speaker Pelosi only has five votes to spare, and
there's little expectation that any Republican will take the leap and
vote for the bill.

Section 2101, raising the federal minimum wage to $15 an hour by 2025,
is in the House bill. The fate in the Senate is up in the air
.
There are two issues. First, the Senate parliamentarian has to rule on
whether the minimum wage increase is eligible to be included in the
reconciliation bill under the "Byrd rule," whereby all elements must
have a direct budget impact. (CBO scored the bill as costing $54 billion
over 10 years, but just that score isn't enough, because
reconciliation is a dumb system and let's just eliminate the
filibuster already.) That ruling could take place as soon as Wednesday.
Senate Budget Committee chair Bernie Sanders (I-VT) expressed confidence
that the measure will be ruled in order.

There's also the matter of at least two Senate Democrats not
supporting the wage increase, for different reasons. Sen. Joe Manchin
(D-WV) is actively trying to reduce the wage hike to $11 an hour; he
said he would offer that as an amendment. There's some support for a
lower wage

if that placates Manchin and gets something passed; Democrats have also
talked about adding small business tax relief to alleviate concerns that
they wouldn't be able to afford the higher wages. (Which is odd,
because all their competitors have to deal with it too, and it's
likely to be passed to consumers.) But Sen. Kyrsten Sinema (D-AZ)
appears to be opposed to the very notion of including the wage increase
in the relief package, regardless of the dollar amount.

It seems like this fight is just being delayed until the parliamentarian
makes her decision. That decision can always be overruled, so it's not
really a barrier. But Manchin has said he would never overrule the
parliamentarian, and Democrats would rather deal with the issue once
they know the procedural terrain.

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What's interesting is that the minimum wage issue is not just the most
contentious, but practically the only contentious element of a huge bill
that needs practically every Democrat in Congress in order to pass.
There are certainly other things that might flare up. The House Ways and
Means Committee pared back the unemployment extension by one month (it
now expires in August instead of September) to "pay for" a fix to
millions of multiemployer pensions. Instead of building in cushion to
the $1.9 trillion figure for things like this, Democrats put that number
in their reconciliation instructions, and now have this cap to deal
with. So once CBO scores the whole bill, there may need to be changes
and even tax increases or closed loopholes in the bill. And there are
other measures that belong, like waiving taxes on expanded unemployment
benefits

to prevent surprise tax bills, or relief for the 1.6 million student
loan borrowers

who are ineligible for the current payment pause.

One thing unlikely to change at this point is the $1,400 checks.
Yesterday Janet Yellen correctly made the point
that "there
are pockets of pain that go beyond what can be reached in
highly-targeted ways," shutting down the effort to limit the checks
beyond what's been done in previous bills. Claudia Sahm has a more
technical case

against deeper targeting. But that argument has been muted for now.

And so has almost everything else. Republicans have not found an angle

to derail this very popular bill. The best they can do is say "of course
giving money to people is popular." Well, yes. Especially during what
has become an enduring economic crisis for too many people in America.
About the best argument you can make is that Democrats should have moved
on this sooner
,
but people will remember the relief they got, not the timing of the
calendar. Save for a couple pieces, Joe Biden looks like he's going to
get the bill that he wanted, and we'll see how it works.   

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**Boom or Bust?**

**There's certainly tension between Biden** and the party's left
flank
,
and there always will be because that's the left flank's role, to
push Democratic leaders to do better. But we should pause to marvel at
the quiet audacity

of the relief package, the size and scope of which represents a real
departure from the free market dominance of the past. And the debate

over whether this is all too much and will lead to crushing inflation
depends on whether you think the economy is already poised for success
or whether you think widespread public need in the country requires a
rescue.

Fortunately, our age of expansive inequality allows everyone to pick and
choose their focus. Yes, everyone's getting packages delivered and the
rich are buying houses, so you can stress a blue-collar revolution

in construction and warehousing. Yes, spending statistics put the
economy on track for a boom
,
with growth unlike we've seen since the "morning in America" days of
the mid-1980s. (Of course, that's only true because of building in the
fiscal boost from the recovery plan.) Yes, you could even talk about
demand outstripping factory production
,
creating shortages that could lead to scarcity and inflation.

But there's another story where lower-skill jobs requiring less
education are imperiled
.
Restaurant, retail, and hospitality jobs are going to be particularly
hard-hit, according to Bureau of Labor Statistics projections. The
travel industry is going to be sour

for a long time. These happen to be large sectors of the economy
concentrated in the low-wage sector. And this puts them even further
behind for retirement
,
a particular problem with lower net-worth Black Americans.

In other words, it's a big country and both things can be true. We can
have robust growth that leaves millions behind in a painful transition
accelerated by the pandemic. We haven't figured out how to deal with
that, but more fiscal spending is a good bridge.

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What Day of Biden's Presidency Is It?

Day 35.

We Can't Do This Without You

Today I Learned

* Two-thirds of the public supports Biden's COVID response
.
(Gallup)

* Biden has already got the empathy part of the job down, see his
remarks
upon hitting the 500,000 death milestone from COVID. (CBS News)

* Republican opposition to Xavier Becerra

at Health and Human Services seems flailing. They could only get 11
Senators on the record? (Politico)

* Yellen and Fed chair Jerome Powell looking askance

at speculative financial markets. (Bloomberg)

* FDA will waive clinical trials

for any vaccines adapted to deal with new COVID variants. (

**New York Times**)

* Climate stress tests without consequences
,
as Yellen suggested yesterday, doesn't seem entirely worth it. (

**Wall Street Journal**)

* The Iran nuclear talks are not fully baked

yet. (

**Washington Post**)

* Biden has endorsed the bill

that would study reparations. (Associated Press)

* Biden has not yet endorsed the union drive

at the Amazon warehouse in Bessemer, Alabama. (HuffPost)

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