Biden Unveils $1.9 Trillion ‘American Rescue Plan’

Plus, unemployment claims surge along with the coronavirus  [The Fisc](   By Yuval Rosenberg and Michael Rainey Biden Unveils $1.9 Trillion ‘American Rescue Plan’ President-elect Joe Biden is set to unveil an [economic relief package]( that calls for $1.9 trillion in aid, including money for $1,400 direct payments to most Americans as well as $350 billion in funding for state and local governments and billions more to promote coronavirus testing and vaccine distribution. Biden is proposing a $400-a-week federal boost to unemployment insurance through September, expanded paid leave and an increase in the child tax credit from $2,000 to $3,000 for this year, with another $600 for children under age 6 and "new rules that would let the poorest households get the full benefit," according to [The Wall Street Journal](. "Aid for households makes up about half of the plan’s cost, with much of the rest going to vaccine distribution and state and local governments," the Journal’s Richard Rubin and Eliza Collins say. Here’s a rundown of the elements in Biden’s plan, per [Bloomberg News]( - Direct payments of $1,400, on top of the $600 approved in December - $400 per week in supplementary unemployment benefits through September - $350 billion for state and local governments - Raising the minimum wage to $15 an hour - $130 billion to help schools reopen - $160 billion in funding for a national program of vaccination, testing and other coronavirus containment efforts - $30 billion for rental and small-landlord support - $25 billion for childcare providers - Expanded food assistance - Expanded child tax credits - Expanded medical and family leave Biden’s plan is expected to call for two phases, with an immediate injection of coronavirus-related aid to be followed by a proposal for longer-term economic stimulus focused on jobs and infrastructure as a way to combat climate change. Biden’s plan doesn’t include cost offsets, relying instead on deficit financing, the Journal reports. "Mr. Biden’s argument is that now isn’t the time to worry about widening budget deficits, given the emergency and low interest rates," the Journal’s Rubin and Collins write. Pushing for bipartisan agreement: Biden will try to get Republicans to back his plan — and he’ll need at least 10 Senate Republicans to approve assuming that all 50 Senate Democrats support his proposals. It’s far from a sure bet, given prior Republican opposition to a relief package of this size. The cost of Biden’s plan is more than double that of the hard-fought bipartisan deal passed by Congress last month and approaches the price tag on the Cares Act passed in March. Some Republicans are also likely to resist providing $350 billion in aid to state and local governments and to the minimum-wage hike Biden wants, among other elements, though Democrats reportedly feel confident that they can get 10 GOP votes for a bill that that includes state and local money. House Speaker Nancy Pelosi (D-CA) and Senate Democratic Leader Chuck Schumer (D-NY) lauded Biden’s plan. "We will get right to work to turn President-elect Biden’s vision into legislation that will pass both chambers and be signed into law," they said in a [joint statement]( released Thursday. "We echo the President-elect’s call for bipartisan action on his proposal and hope that our Republican colleagues will work with us to quickly enact it." But some Democrats might still object to elements of the plan, too. Sen. Joe Manchin (D-WV) last week suggested that he would want any additional direct payments to be more targeted. Rep. James Clyburn (D-SC) told the Journal that he expects the relief package to be broken up based on what can be passed immediately on a bipartisan basis and what may need to go through a process known as [budget reconciliation]( which would require only 50 votes in the Senate. Biden’s strategy "will test the president-elect’s legislative savvy, and will force the Democratic Congressional leadership to navigate razor-thin majorities to deliver the administration an early victory," [Punchbowl News]( says. And the fight over longer-term stimulus may be even more challenging, given that it would involve some tax hikes. Biden is set to speak about his plan at 7:15 p.m. ET. Unemployment Claims Surge Along With the Coronavirus About 965,000 people filed initial jobless claims in state unemployment systems last week, the Department of Labor [announced]( Thursday. The new filings far exceeded economists’ expectations, underscoring the ongoing economic damage caused by the Covid-19 pandemic. Another 284,000 filed for Pandemic Unemployment Assistance, the federal program for those who are normally not eligible for benefits, including self-employed and gig workers. All told, about 1.2 million people filed for unemployment benefits. Using unadjusted data, the total is closer to 1.4 million. "Last week was the 43rd straight week total initial claims were greater than the worst week of the Great Recession," Heidi Shierholz of the Economic Policy Institute [wrote](. "Weekly first-time jobless claims are stuck at an uncomfortably high level," [wrote]( CNN’s Anneken Tappe. "In late August, the figure dropped below 1 million, but since then, significant improvements have been hard to come by -- and last week represented a huge step in the wrong direction." Some economists expect jobless claims to remain high for weeks to come. "Claims will drift sideways, more or less, over the next two to three months, before restrictions on the services sector can be gradually eased as vaccination brings herd immunity into sight," Ian Shepherdson of Pantheon Macroeconomics [said]( in a note. Joseph Brusuelas, chief economist at the consulting firm RSM, said that with more than 18 million people receiving some kind of unemployment assistance, more help from the federal government will be needed. "Despite those who make the case that all is well and that no additional aid is necessary, we think that this data affirms the necessity for another round of fiscal aid," Brusuelas [wrote](. Taxpayer Advocate: The IRS Needs More Funding National Taxpayer Advocate Erin Collins released her [annual report]( to Congress Wednesday, and it came with a blunt message: Years of funding cuts have made it difficult for the nation’s tax and revenue agency to do its work. As required, the report identifies the [10 most serious issues]( experienced by taxpayers. The shrinking IRS budget and workforce were at the top of the list, with the advocate saying that, "Inadequate funding combined with weaknesses in hiring and retention strategies have created an insufficient and disproportionately aging workforce." IRS funding was reduced by about 20% on an inflation-adjusted basis between 2010 and 2020, the report says, leaving the agency with a shrunken staff forced to work with outdated technology. Most of the other top problems cited in the report are connected to the lack of sufficient funding and staffing. Taxpayers are waiting longer to speak to IRS representatives, if they get to speak to them at all, and online technology is "plagued by limited functionality." Ancient computer systems "prevent taxpayers from obtaining full details about the status of their cases, and impede the IRS’s ability to select the best cases for compliance actions." And the amended tax returns process generates "over a million calls that the IRS cannot answer," resulting in unnecessary delays and confusion for taxpayers. Number of the Day: $3,000 Presidential daughter and son-in-law Ivanka Trump and Jared Kushner have lived in a 5,000-square-foot, six-bedroom, six-and-a-half bathroom house in Washington during their time in the Trump administration, guarded around the clock by a team of Secret Service agents. While those agents are empowered to take extraordinary steps to protect the lives of the top White House aides, there’s one thing they have been forbidden to do: use a bathroom at the residence. As a result, according to [The Washington Post]( Thursday, after relying on a porta-potty onsite, the Secret Service has rented a nearby studio apartment to give agents access to a more formal bathroom, at a cost of $3,000 per month. The rental has cost more than $100,000 in public funds, the Post says. Like so much else in the Trump administration, the situation is unprecedented. "It’s the first time I ever heard of a Secret Service detail having to go to these extremes to find a bathroom," one law enforcement official told the Post. Poll of the Day: Coming Apart At least there’s one thing a bitterly divided country can agree on: The pro-Trump insurrection in the Capitol, set against the ongoing disaster of the coronavirus pandemic, appears to have convinced most Americans that the country is coming apart at the seams. According to an Axios-Ipsos [poll]( conducted earlier this week, 83% of Republicans and 78% of Democrats agree that America is falling apart. Send your tips and feedback to yrosenberg@thefiscaltimes.com. And please tell your friends they can [sign up here]( for their own copy of this newsletter. News - [Biden Unveiling $1.9 Trillion Economic and Health Care Relief Package]( – Washington Post - [Experts Warn of Vaccine Stumbles ‘Out of the Gate’ Because Trump Officials Refused to Consult With Biden Team]( – Washington Post - [Biden Picks for Economic Team Bring Expertise on U.S. Wealth Gap]( – Bloomberg - [Fed’s Powell Says Won’t Raise Interest Rates Any Time Soon]( – Bloomberg - [Biden’s Vaccination Chief Takes On 100-Million-Dose Mission]( – Bloomberg - [The U.S. Needs More Covid Testing, and Minnesota Has Found a Way]( – Bloomberg Businessweek - [The Maddening Red Tape Facing Older People Who Want the Vaccine]( – New York Times - [Dozens of People on FBI Terrorist Watch List Came to D.C. the Day of Capitol Riot]( – Washington Post Views and Analysis - [The Most Progressive Relief Plan Is Targeted Aid, Not $2,000 Checks Across the Board]( – Washington Post Editorial Board - [The Pentagon Must Learn to Do More With Less]( – Bloomberg Editorial Board - [Congress Can Help State and Local Governments Prepare for a Rainy Day Without Repealing the SALT Cap]( – Leonard E. Burman et al, Tax Policy Center - [Is Johnson & Johnson’s Covid-19 Vaccine a Game Changer?]( – Sam Fazeli, Bloomberg - [The Alphabet Soup of Recoveries Adds ‘R’ and ‘I’]( – Jim Bianco, Bloomberg - [Donald Trump Is the Perfect Leader of the Worst Generation]( – John F. Harris, Bloomberg Copyright © 2020 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, [thefiscaltimes.com]( or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](