Just as Congress has finally eked out a $900 billion stimulus bill, President-elect Joe Biden and many Democrats are calling for more aid for the economy. And they have a point.
After months of back-and-forth, Republicans and Democrats were finally able to strike a deal on a new Covid-19 relief package, which both houses of Congress passed on Monday. The bill is much less ambitious than many progressives and prominent Democrats believe is necessary to help people and get the economy back on track, and they’re already setting the stage to battle for more.
The Washington Post reports that Biden sees this latest package as a “down payment” on what he plans to push for once he is inaugurated. “Immediately, starting in the new year, Congress will need to get to work on support for our COVID-19 plan, for support to struggling families, and investments in jobs and economic recovery,” Biden said in a statement on Sunday. “There will be no time to waste.”
As the Post notes, the former vice president hasn’t been super specific on his follow-up asks, though rebuilding the economy is one of the four planks of his “build back better” plan. He has said he would like a next package to amount to “hundreds of billions of dollars” — some progressive economists argue that number should be much higher, with the House’s HEROES Act clocking in at $3 trillion — and has cited money for state and local governments and larger stimulus checks for low-income people as possible priorities.
Money for state and local governments was a flashpoint in negotiations for the current package. Ultimately, Democrats nixed it from the bill in exchange for Republicans dropping their ask for a corporate liability shield (which would have ensured companies couldn’t be sued for coronavirus-related issues). Many economists and experts warn that without money for states and cities, the recovery will be longer and slower as places are forced to cut jobs and services.
The package passed on Monday includes another round of stimulus checks — $600 for individuals who made up to $75,000 in 2019, $1,200 for couples who made up to $150,000, and $600 per child. Payments will be phased out incrementally according to income.
It also stipulates an additional $300 in weekly federal unemployment payments for 11 weeks, through mid-March, and extends pandemic unemployment insurance programs that were otherwise set to end in December, such as one for freelancers and gig workers. The bill has in it additional dollars for the Paycheck Protection Program for small businesses, $25 billion rental assistance and an extended eviction moratorium through January, $13 billion in food aid, and tax credits for businesses that provide paid leave voluntarily. Paid leave, however, is not mandated. Vox’s Li Zhou and Ella Nilsen have a full explanation of what’s in the legislation.
Biden is hardly alone in already calling for Congress to do more.
On Tuesday morning, Sen. Elizabeth Warren (D-MA) said in a series of tweets that the current legislation “won’t do enough to stop the devastation” and that Congress’s 2021 to-do list “must include real relief” and “permanently upgrade the nation’s safety net so our economy isn’t held hostage by Republican inaction during a crisis.” She warned against the possibility of a K-shaped recovery, meaning the rich recover faster while the people at the bottom struggle.
A recovery looks like a K when an economy bounces back from a recession in an unequal way.— Elizabeth Warren (@ewarren) December 22, 2020
One group — the billionaires and giant corporations — not only recovers, but some even do a lot better. Everyone else falls sharply and struggles to make it out of crisis. pic.twitter.com/crC5pjWwiB
Speaker Nancy Pelosi said on the House floor on Monday that she hopes the $900 billion legislation will be understood to be a “first step.” Sen. Ron Wyden (D-OR) told the Hill that there is “no question” unemployment benefits will be extended past March 14. “Service industries will not come back in full until there is mass vaccination, and even then, it will take time to climb out of this deep economic hole.”
Rep. Maxine Waters (D-CA) told CNBC that the relief for renters in the legislation is “a start” but added that more aid and a longer eviction moratorium will probably be necessary. “We have to do whatever it takes,” she said, also noting that relief helps “mom-and-pop landlords.”
Progressive incoming members of Congress went further, directly slamming the bill. New York’s Jamaal Bowman called the $600 check a “slap in the face.” Cori Bush of Missouri said the idea of $1,200 “survival checks” was already a compromise and that $600 is not enough. She also criticized the process surrounding the nearly 6,000-page bill. “I refuse to normalize an anti-democratic process where a few rich, predominantly white individuals negotiate behind closed doors for most of 2020 and give the rest of us a few hours to consider the 5,593 page result of their secret negotiations,” she tweeted.
The US is heading in the direction of going too small on the economy
Since the outset of the pandemic, economists have warned that the real risk is for the federal government to be too cautious in its efforts to boost the economy, not too ambitious. “The risk of doing too little is much greater than the risk of doing too much,” former Obama economist Betsey Stevenson told Vox in March.
In a statement on Monday, Congressional Progressive Caucus Chair Pramila Jayapal (D-WA) echoed that sentiment. “We will need to go far bigger and bolder to rescue our economy and help the American people,” she said. “We must listen to the experts and economists who have told us that the dangers of going too small far outweigh the risk of going too big.”
With the vaccine rollout happening, the country has a real chance to decide what sort of economy emerges on the other side of the pandemic. The worse the economic situation is allowed to become in the US, the harder and longer it will be to recover. And this goes beyond topline numbers — people at the top of the income ladder have fared much better during the pandemic than everyone else. For example, the November unemployment rate was 6.7 percent; for Black workers, it’s still above 10 percent. The US is still 10 million jobs short of the employment level when the coronavirus hit, and if the current pace of jobs recovery holds, it will be years before those jobs are recovered.
The problem is that many Republicans do not see the situation this way. Many opposed this latest stimulus bill, and some have denied any more help was even necessary in the first place. They have sought to cast state and local government budget shortfalls as a “blue state” problem (though many red states are facing tax revenue declines, too) and argued that people just need to get back to work (never mind that there aren’t that many jobs available as the pandemic rages on, nor is everyone falling over themselves to be out and about consuming).
The Post pointed out that Senate Majority Leader Mitch McConnell has recognized additional negotiations are likely, but finalizing another package with Biden is not.
As Vox noted back in May, after the global financial crisis and the Great Recession, America experienced how long and terrible a slow recovery can be. It took years for unemployment to return to where it was pre-recession, and even then, wages remained stagnant. State funding for higher education, K-12 education, and local aid was still down even years later.
Democrats calling for more now appear well aware that a repeat could be on the horizon. The question is whether enough Republicans will get on board once Biden takes office.