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Joe Biden’s $1.9 trillion Covid-19 stimulus plan, explained

Biden has unveiled his opening bid in a proposal to rescue the economy.

Joe Biden speaking at a podium with “Office of the president-elect” behind him.
President-elect Joe Biden speaks in Wilmington, Delaware, on January 7, 2021.
Jim Watson/AFP via Getty Images
Emily Stewart covered business and economics for Vox and wrote the newsletter The Big Squeeze, examining the ways ordinary people are being squeezed under capitalism. Before joining Vox, she worked for TheStreet.

President-elect Joe Biden has unveiled his opening bid on Covid-19 relief and economic recovery: a $1.9 trillion stimulus deal meant to help the United States address the health and economic crises induced by the pandemic.

The proposal, called the American Rescue Plan, is divvied up into three buckets: $400 billion for dealing with the coronavirus, including vaccines and testing; $1 trillion in direct relief to families; and $400 billion in aid to communities and businesses. It includes money for testing, vaccines, and public health workers; $400 a week in extended federal unemployment insurance through September; rental assistance; emergency paid leave; and funding for reopening schools, among other items.

And, as Democrats promised when campaigning in Georgia, Biden’s plan would send out another $1,400 in stimulus checks, bringing the total this year to $2,000.

“We need to tackle the public health and economic crises we’re facing head on,” Biden said in a tweet on Thursday. “That’s why today, I’m announcing my American Rescue Plan. Together, we’ll change the course of the pandemic, build a bridge toward economic recovery, and invest in racial justice.”

The incoming Biden administration is sorting its approach to the economy into two stages: rescue and recovery. This is the “rescue” part of the equation, meant to address the immediate crisis. The details on the recovery plank are still to come.

Lawmakers have already passed two sweeping Covid-19 relief bills, including the $2.2 trillion CARES Act in March and an additional $900 billion in relief in December. Biden’s proposal is a follow-up to those and signals a rather ambitious push on addressing the pandemic and the economy — even though the plan is likely to change before it’s signed into law, if it is at all.

Overall, this is a big deal. The $1.9 trillion in relief Biden is proposing is more than double the $800 billion American Recovery and Reinvestment Act that Democrats passed in 2009 in the wake of the Great Recession. The size and scope of this proposal is a reflection of some lessons Democrats have learned: In 2009, many lawmakers believed they’d have a chance at another bill to deliver more help, but they never did. So the recovery was slower and more uneven than it could have been had they been more ambitious at the outset.

With that in mind, many Democrats and progressives plan to push the Biden administration and congressional leaders to go even further. Their mantra is that the real risk is doing too little — not too much.

“When Democrats passed the recovery act in 2009, it was smaller than was necessary, and a lot of members thought there was going to be another bite at the apple. There wasn’t,” one Democratic aide said. “Members who were around in that time period are very much cognizant of that lesson.”

What Biden wants done on the economy right now

Biden’s proposal for the American Rescue Plan is largely focused on immediate relief: measures necessary to help the country address the pandemic and its economic fallout. After all, the economy getting back to normal is contingent on getting the virus under control, which at this point means vaccinating as many people as possible, as quickly as possible.

Here’s a rundown of some of what Biden is proposing:

A national vaccination program and scaled-up testing. Biden is pushing to invest $20 billion in a national vaccination program in partnership with states, localities, tribes, and territories, including creating community vaccination centers and mobile vaccination units. He is also advocating for $50 billion to expand testing, including rapid tests, expanded lab capacities, and help for schools and local governments. And he is pushing for an additional $10 billion to manufacture pandemic supplies domestically, as well as $30 billion to the Disaster Relief Fund for supplies and protective gear.

A public health jobs program and funds toward addressing health disparities. Biden’s proposal looks to fund 100,000 health workers to expand the public health workforce. He also wants to increase funding for health services to underserved populations and those who live in congregate settings, such as nursing homes.

Money for reopening schools. Biden’s proposal calls for $130 billion to help schools reopen safely, $35 billion in funding for higher education, and $5 billion for governors to use to support educational programs for those hardest hit by Covid-19.

Emergency paid leave: Biden is calling for changes his team says will expand paid sick leave to 106 million more Americans, including renewing the expired requirement for employers to provide leave and expanding emergency paid leave to federal workers.

Bigger stimulus checks. Biden is proposing adding $1,400 to the latest round of stimulus checks so that they total $2,000. His plan also expands eligibility for the checks to adult dependents left out of previous rounds and to mixed-immigration status households.

Extended unemployment insurance. Under the current stimulus packages, the unemployed are eligible for an additional $300 in weekly federal unemployment benefits through March 14. Biden’s plan increases that amount to $400 through September and also continues extended benefits to people who have exhausted benefits or wouldn’t normally qualify, such as contractors or freelancers.

Housing assistance. The president-elect’s plan calls for extending eviction and foreclosure moratoriums through September, directing $30 billion toward rental assistance, and $5 billion in emergency assistance to secure housing for the homeless.

Food benefits. The plan includes extending the 15 percent increase in SNAP benefits through September, investing $3 billion in the special supplemental nutrition program for WIC, and providing US territories with $1 billion in nutritional assistance.

Child care assistance. The plan calls for a $25 billion emergency stabilization fund for child care providers and an additional $15 billion to the Child Care and Development Block Grant Program.

Tax credits for children and low–income workers. The plan expands the child tax credit — another important one for Democrats — to $3,000 per child up to age 17 and $3,600 for children under age 6. And, it increases the earned income tax credit from about $530 to $1,500 and expands eligibility.

Support for small business. Biden is proposing $15 billion in grants to hard-hit small businesses and leveraging $35 billion in government funds into $175 billion in loans and investment in small businesses.

Support for state and local governments. Biden’s plan calls on Congress to provide $350 billion in funds for state, local, and territorial governments. It’s framed as money that will help pay frontline workers, reopen schools, and get people vaccinated. It also requests $20 billion in relief for public transit agencies and $20 billion to support tribal governments’ pandemic response.

A $15 minimum wage. Biden’s proposal asks Congress to increase the minimum wage to $15 per hour as well as ending the tipped minimum wage and sub-minimum wage for people with disabilities. It also calls on employers to provide hazard pay.

This is an opening bid, and some Democrats want to go bigger

Biden’s proposal is likely just the beginning of Democratic debate on how to bolster the country’s public health crisis response and economic recovery. More than nine months into the pandemic, thousands of people are dying each day of Covid-19, and millions of people are still out of a job.

“Given the urgency of the moment, I think there is a good argument for doing as much as possible as quickly as possible and continuing to push for more,” said Angela Hanks, deputy executive director of the progressive group Groundwork Collaborative, which released an estimate before last month’s stimulus bill was passed suggesting that it would take $3 trillion to $4.5 trillion to really get the economy moving.

Discussions are underway among Democrats and progressives inside and outside the legislative process about how to do more. Sen. Cory Booker (D-NJ) and Rep. Ayanna Pressley (D-MA) sent a letter to Biden calling on his administration to push to include “baby bonds” in an economic recovery package. “We urge you to ‘go big,’ with a bold vision for racial and economic justice,” they wrote, arguing that baby bonds, which would create federally funded savings accounts for every child in America, “represent a once-in-a-generation opportunity to close the racial wealth gap and unleash economic opportunity for every American.”

Student debt cancellation — an increasingly important issue on the left — is absent from Biden’s plan. Biden has said he supports Congress canceling $10,000 in federal student debt, but that’s not in Thursday’s proposal. He has come under pressure, including from many Democrats in the House and Senate, to cancel up to $50,000 of student debt.

That’s not the only thing Biden can do on his own. If he can’t get Congress to raise the federal minimum wage to $15, he could require federal contractors to pay a $15 minimum wage. There is a long list of actions he can take unilaterally to boost the economy, as well as putting people in place across the executive branch who can enact an agenda to create a fairer, more prosperous economic landscape. “There’s a lot that actually can absolutely be done without Congress,” said Felicia Wong, president and CEO of the Roosevelt Institute.

Biden’s plan nods at automatic stabilizers tying social safety net mechanisms, such as expanded unemployment insurance, to certain economic conditions. That way, Congress doesn’t have to haggle about them all the time. But the idea is likely to get more attention in the coming weeks. A number of lawmakers have called for automatic stabilizers, including Sens. Michael Bennet (D-CO) and Ron Wyden (D-OR).

“Ideally, you have a social safety net that exists to activate in times of crisis, and we don’t have to rely on policymakers to act just in time or after,” Hanks said. “It also means that in those moments of crisis, you’re not worrying about the immediate impact on things like unemployment insurance and you can focus on other areas you didn’t anticipate.” For example, like a pandemic.

Sen. Bernie Sanders (I-VT), who is about to chair the Senate Budget Committee, has indicated he wants to go big from his new perch. That includes budget reconciliation, which could ultimately be the mechanism Democrats use if they can’t get enough Republicans on board with their agenda.

“It is absolutely imperative that the Congress not lose sight of the fact that working families in this country are facing more economic distress today than at any time during the Great Depression,” Sanders recently told Politico. “What Congress has got to show the American people is that … it can handle more than one crisis at a time.”

Budget reconciliation could be on the horizon

The general line from the Biden team and many Democratic lawmakers is that they want to give Republicans a chance to get on board with the agenda and pass Covid-19 relief through regular order, which would mean needing 60 votes to overcome a Senate filibuster. After all, that’s what happened throughout 2020. But if they can’t make it work, they’ll go another route.

“We need to know as early as we can, are [Republicans] serious about wanting this to go forward,” one Democratic aide said. “The disagreement will be how long we wait before we switch if we are going to be switching [tactics]. The best possible outcome here is that Republicans praise it and it’s bipartisan.”

Budget reconciliation — a process that exempts from the filibuster legislation primarily dealing with taxes and spending — is likely an option. (Vox has a full explainer on what it is.) In the current scenario, legislation passed under budget reconciliation could pass with 50 Senate Democratic votes plus tie-breaker Vice President-elect Kamala Harris.

My colleague Dylan Matthews recently ran down a list of what Biden can do with budget reconciliation, and the rescue plan mostly includes items that are clearly doable under reconciliation. Experts say there are ways to finagle the rules to make almost of all it work.

“Looking through the Biden plan, as best I can tell, almost anything in it besides the minimum wage increase they can do through reconciliation,” said Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget. He said there are a few areas where it could get tricky — namely, state and local aid and vaccination money. “They have to get a little creative, but it’s not even that hard.”

Democrats have two potential reconciliation bills to work with, one for the 2021 fiscal year and one for 2022. If they go that route, there will be a push on the left to make the proposal even bigger — that’s certainly, for example, what Sanders wants.

“I’m going to use reconciliation in as aggressive a way as I possibly can to address the terrible health and economic crises facing working people today,” he told Politico. That translates to spending on areas such as infrastructure, climate, and other parts of Biden’s “Build Back Better” plan.

But there are also moderate Democrats to contend with — getting to 50 votes means that the Joe Manchins and Kyrsten Sinemas of the world need to be on board. One Democratic policy adviser noted that a lot of the agenda is pretty uncontroversial, including expanded unemployment and state and local aid — among the caucus. Other elements, not so much. “It’s kind of a matter of what we think we can get away with and what we can push the envelope on and what we can convince 50 senators of, including our dear friend Mr. Manchin, on the floor,” the person said.

On a call with reporters earlier this week, Sen. Sherrod Brown (D-OH) said he looked forward to soon-to-be Senate Majority Leader Chuck Schumer putting some legislation on the floor, in a test of whether soon-to-be Senate Minority Leader Mitch McConnell and Republicans will take the same approach as under the Obama administration — obstruction at every turn. “If that’s his view of moving on anything, then we’ll have to find a way through reconciliation or something else. But I think you give them the chance,” Brown said.

Brown also said he believes there is “way more” consensus among Democrats than people may think. “My job is to find out what we can do together, find out what arguments work, are the most persuasive with them, and how I can figure out with them to make everything that we’ve come out with more palatable,” he said.

Biden and the Democratic Party are in a position many thought was unlikely after the November elections, when the probability of a double victory in Georgia’s Senate runoff elections seemed small: They have an opportunity to take some big swings at helping the economy, ultimately, helping people. Now we know what Biden’s opening bid to do that looks like. Over the days and weeks to come, the country will see how it plays out.

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