Economic Policy Update: Biden Administration COVID-19 Relief Bill

By: Nick Kinsella

On Monday, February 22nd, the House Budget Committee approved President Biden’s $1.9 trillion relief bill, allowing the House to hold a vote on the 26th and advance the bill in the legislative process. The bill is the third major economic relief package that may be passed into law over the past year in response to the Covid-19 pandemic that left millions of workers unemployed, homeowners struggling to meet mortgage payments, and small business owners unsure if they’d be able to reopen their doors again.

While the first relief package, the CARES Act, was passed in March of 2020 with high bipartisan support, the previous bill and the one to be voted on at the end of February have been largely debated within and across party lines. In December of 2020, former President Trump signed a $900 billion package that included $600 direct cash payments to U.S. citizens whose income fell under a threshold of $75,000 per year or $150,000 per household. Also included were an extension of various measures, including supplemental unemployment benefits and eviction moratoriums to mid-March, as well as additional funds for the Paycheck Protection Program to be distributed through the Small Business Association. As the expiration dates near and the funds come close to drying up, Congress is scrambling to come to a deal on the size of President Biden’s proposed relief plan and what should or should not be included.

According to the Wall Street Journal, the current bill approved by the House Budget Committee includes an extension of additional unemployment benefits through the end of August 2021, $1400 per-person checks to those who meet income requirements, billions of dollars in funding for state and local governments still weathering the economic impact of the pandemic, and a provision to raise the federal minimum wage incrementally to $15 an hour over the next several years. Many of these pieces of the bill are being fiercely debated between Democrats and Republicans, and even within their respective parties. Many members of the GOP caucus have criticized the bill for being too large, as its passing would place the government’s spending for relief at nearly $4 trillion. Additionally, the $15 minimum wage has created an unusual flip for members of both parties as some more conservative Democrats have agreed with colleagues on the Right that the increase could cause millions of jobs to disappear, thus hampering the rate of economic recovery. There are some Republicans, such as Senators Mitt Romney (Utah) and Tom Cotton (Arkansas) that have proposed an increase to the current $7.25 wage, albeit only to a $10 wage that they introduced in recent legislation talks.

While the bill is expected to pass in the House, it may be a slim margin, signaling future hurdles when it reaches the Senate. Unless Democrats can use a process called “budget reconciliation” that would allow them to pass legislation with a simple majority vote, then a total of sixty votes would need to pass the bill into law, at which point it would almost certainly be rejected. It’s worth noting though, that while Vice President Harris would have a tie-breaking vote in a 50-50 Senate split, many Democrats continue to express their concerns with the amount of the relief. As the country and world attempt to recover from Covid-19 nearly a full year after its first impact, this bill will be one to keep an eye on in the coming weeks.