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The Morning Dispatch: Senate Passes Biden Stimulus
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The Morning Dispatch: Senate Passes Biden Stimulus

But some worry the historically large $1.9 trillion package could be far more than the economy needs.

Happy Monday! Apparently the losers of the Revolutionary War are in some hot water? We were busy watching a very mediocre Slam Dunk Contest. 

(Unfortunately, the best Slam Dunk Contest of all time took place before your Morning Dispatchers were born.)

Quick Hits: Today’s Top Stories

  • The Senate voted entirely along party lines Saturday to pass President Joe Biden’s sweeping $1.9 trillion stimulus package, which includes $1,400 checks to millions of Americans, $350 billion in state and local aid, and an extension of federal unemployment benefits. The House is expected to take up and pass the Senate’s bill on Tuesday.

  • The U.S. economy added 379,000 jobs in February, according to the Department of Labor. The unemployment rate remained relatively stable month-over-month, dropping from 6.3 percent to 6.2 percent.

  • A memo obtained by Axios shows that the Centers for Disease Control will allow child migrant shelters to operate at full capacity amid a growing immigration crisis on the United States’ southern border, reversing its previous requirement that they stay at 50 percent to slow the spread of COVID-19.

  • President Biden issued an executive order Sunday directing federal agencies and departments to expand voting access, particularly among historically disenfranchised groups. The largely symbolic order will modernize Vote.gov and promote voting access and registration for military members, the federally incarcerated, and Native Americans.

  • New York state lawmakers voted Friday to strip Gov. Andrew Cuomo of his emergency pandemic powers. The governor reiterated yesterday that he will not step down, despite another two women coming forward with allegations of sexual harassment over the weekend and the top two Democrats in New York’s state legislature demanding his resignation.

  • The United States and South Korea reached a cost-sharing agreement over the weekend regarding American troops based on the Korean Peninsula. A State Department spokesman said the new deal—in effect through 2025—will result in a “meaningful increase” in South Korea’s contributions.

  • Pope Francis toured areas of war-torn Iraq over the weekend, paying homage to Christian areas affected by ISIS and taking part in a historic meeting with Ayatollah Ali al-Sistani, Iraq’s leading Shiite leader, in a call for peace.

  • The European Union and the United States announced they will lift tariffs on luggage, wine, jetliners, food goods, and other products for four months in an effort to “restore confidence and trust” between the two parties.

  • The United States confirmed 37,270 new cases of COVID-19 yesterday per the Johns Hopkins University COVID-19 Dashboard, with 3.2 percent of the 1,156,241 tests reported coming back positive. An additional 668 deaths were attributed to the virus on Sunday, bringing the pandemic’s American death toll to 524,987. According to the COVID Tracking Project, 40,212 Americans are currently hospitalized with COVID-19. According to the Centers for Disease Control, 2,439,427 COVID-19 vaccine doses were administered yesterday, bringing the nationwide total to 90,351,750.

Biden Gets His $1.9 Trillion

On January 14, then-President-elect Biden addressed the nation, outlining his $1.9 trillion American Rescue Plan (ARP). The plan, he argued, would “prevent long-term economic damage” from the coronavirus pandemic.

“A growing chorus of top economists agree that, in this moment of crisis, with interest rates at historic lows, we cannot afford inaction,” he said. “We need more action, more bipartisanship, and we need to move fast.”

Fifty-one days later, Biden got his action—almost exactly the $1.9 trillion he asked for, the second-largest appropriations bill in history—but it wasn’t bipartisan: The Senate voted entirely along party lines on Saturday to approve the ARP, 50-49 (Sen. Dan Sullivan was absent due to a family emergency). The Senate bill will now go back to the House for final approval, which it is expected to receive on Tuesday. Biden could sign it into law by the middle of the week.

“When I was elected, I said we were going to get the government out of the business of battling on Twitter and back in the business of delivering for the American people,” the president said in prepared remarks on Saturday afternoon. “And passing the American Rescue Plan will do that.”

The process was not without hiccups—and your Morning Dispatchers are glad our publishing schedule didn’t require us to stay up until 3:00 a.m. Saturday morning covering them. Earlier Friday, Sen. Bernie Sanders introduced an amendment to the stimulus package that would have overruled the Senate parliamentarian and appended a nationwide $15 per hour minimum wage to the legislation. Not only did every Republican vote against it, eight Democrats—including Sens. Joe Manchin, Kyrsten Sinema, and Chris Coons—did as well.

That vote remained open for 11 hours and 50 minutes—a Senate record—as Democrats scrambled to ease Manchin’s concerns about the duration of federal unemployment benefits in the bill, ultimately moving up the end date of the $300-per-week boost from the end of September to September 6. 

“The president has made it clear we will have enough vaccines for every American by the end of May, and I am confident the economic recovery will follow,” Manchin said Friday night. “We have reached a compromise that enables the economy to rebound quickly.”

But while progressives fixated on the minimum wage issue and Manchin’s last-minute efforts to shave a few billion dollars off the package’s total price tag, the Biden administration—and Republicans—focused on just how much did survive the Manchin/Sinema chopping block. Asked by a reporter about the grumbling from the left, Biden brushed it off.

“They’re not frustrated,” he replied. “Bernie Sanders said this is the most progressive bill he’s ever seen passed since he’s been here. And the compromises were all compromises that didn’t affect the substance and the essence of what the bill is.”

For Republicans—nearly a dozen of of whom met with Biden at the White House to discuss their $600 billion counteroffer—that was exactly the problem.

“I voted against the $1.9 trillion #COVID19 package because it’s full of wasteful spending unrelated to urgent pandemic needs,” Sen. Mitt Romney tweeted Saturday. “Republicans, in good faith, sought to negotiate a compromise bill that would have targeted COVID assistance to those who really need it.”

“Under the guise of providing COVID-19 relief, the Democratic leaders proposed a bloated $1.9 trillion package stuffed full of provisions that have nothing to do with fighting the coronavirus,” Sen. Susan Collins added.

Senate Minority Leader Mitch McConnell lambasted the Democrats for advancing such an enormous package on a strict party-line vote. “In 2020 we passed five historic pandemic rescue packages totaling $4 trillion,” he said. “Not one of them got fewer than 90 votes in the Senate or about 80 percent of the House. Last March, I convened the bipartisan task forces that wrote the historic CARES Act. Republicans and Democrats worked shoulder to shoulder.”

Romney and Collins are correct that a significant portion of the legislation is unrelated to the pandemic—at least directly. You can read the ARP in its entirety at Congress.gov. But here’s an overview of what’s in it:

  • An extension of the CARES Act’s $300-per-week federal unemployment benefits—which were set to expire March 14—until September 6. As long as the benefit recipient made less than $150,000 last year, 2020 federal taxes on the first $10,200 of unemployment benefits are waived. 

  • Another round of stimulus checks for single Americans making less than $80,000 per year or married couples making less than a combined $160,000 per year. Most eligible for a check (earning under $75,000/$150,000 per year) will receive $1,400, plus an additional $1,400 for each dependent.

  • A one-year expansion of the child tax credit from $2,000 per child to $3,000 per child ($3,600 if the child is under six years old), made fully refundable so even the lowest-earning Americans can access the full benefit. The legislation raises the age cap by one year as well, making 17-year-old children eligible. It also expands the earned income tax credit.

  • $350 billion for state and local governments to help them balance their budgets after being hit by revenue shortfalls over the past year, and $130 billion for K-12 schools, ostensibly to help them make the health and safety adjustments necessary to reopen for in-person learning.

  • $86 billion to bail out nearly 200 different union pension plans on the verge of collapse.

  • About $14 billion for COVID-19 vaccines and therapeutics, and approximately $50 billion for COVID-19 testing, contact tracing, and spread mitigation.

  • Tens of billions of dollars to subsidize health insurance premiums, defray housing costs, increase food stamp benefits, and more.

Many of these provisions are broadly popular with the American public. Seventy-six percent of voters in a Morning Consult survey last month—including 60 percent of Republicans—reported “strongly” or “somewhat” supporting the ARP. A Quinnipiac University poll found the package with a +44 net approval overall, and just barely underwater with Republicans. The White House regularly points to these numbers as evidence of the plan’s “bipartisan” nature.

“Look, the American people strongly support what we’re doing,” Biden said Saturday after the bill passed without a single GOP vote. “That’s the key here. And that’s going to continue to seep down through the public, including from our Republican friends. There’s a lot of Republicans who came very close. They’ve got a lot of pressure on them. I still haven’t given up on getting their support.”

Haley will have a more detailed breakdown of the ARP in her Uphill newsletter tomorrow, so be sure to subscribe here!

Does the Economy Really Need $1.9 Trillion?

The $1.9 trillion is coming, but the ARP will be signed into law in a very different world than the one in which it was first pitched. On the Thursday in January that Biden outlined the package, more than 240,000 new coronavirus cases were reported and nearly 4,000 deaths were attributed to the virus. Last Thursday, those numbers were 39,876 and 1,900, respectively.

Due in large part to vaccination efforts and the slowdown of the virus, economic conditions have dramatically improved as well. The Department of Labor Friday morning announced the U.S. economy added 379,000 jobs in February, beating expectations and driving the unemployment rate down a tenth of a percentage point to 6.2 percent. The economy added 166,000 jobs in January, after losing 306,000 jobs in December.

The month-over-month growth was the largest since October, and was driven almost entirely by gains in the leisure and hospitality sector as states across the country loosened restrictions on restaurants and bars. About 286,000 jobs were added in “food services and drinking places,” while employment in “accommodation” grew by 36,000 and “amusements, gambling, and recreation” by 33,000.

Sen. Rob Portman cited the data in his statement explaining his vote against the stimulus. “America’s economy is improving. The economy added 379,000 jobs in February and the nonpartisan Congressional Budget Office (CBO) said recently that without any additional stimulus the economy will recover to pre-pandemic levels by mid-year,” he said. “This makes it even more troubling that Democrats have passed this partisan and expensive bill, which even one of their own prominent economists warned could cause inflation and undermine our economic recovery going forward.”

The economist in question, Larry Summers—the Obama administration’s director of the National Economic Council—praised the “ambition” of Biden’s plan before rattling off a series of misgivings about its size in an op-ed last month. “There is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability,” he wrote.

Jason Furman, the former chair of Obama’s Council of Economic Advisors, told The Dispatch yesterday that, while he was excited about some of the longer-term structural changes in the ARP, “the shorter-term crisis-related parts of the package err on the side of being too large.”

In remarks on the Senate floor Saturday, Sen. Mitt Romney singled out the $350 billion pot of money for state and local governments. “There was an assumption states had massive revenue losses associated with the COVID experience, but the data that has come out since then shows many states did not,” he said. A recent report from the Urban-Brookings Tax Policy Center backs Romney up: While some states experienced a massive drop in tax revenue from 2019 to 2020, many held essentially steady—or even saw their revenues rise.

Still, the labor market—and the economy as a whole—has a long way to go before returning to pre-pandemic levels. Even with the relatively strong rebound since last April, the U.S. economy currently boasts only 143 million jobs, about 9.5 million fewer than the record-high 152.5 million in February 2020. The unemployment rate has fallen precipitously from its 14.8-percent high last April, and the labor force participation rate has fallen from 63.3 percent last February to 61.4 percent now.

“At some point, we’ll need to create about 1 million jobs a month, for month after month,” Furman said. Stan Veuger, an economist at the American Enterprise Institute, told The Dispatch the economic situation is “still quite bad.”

“There are some macro numbers that look good, but I don’t think the labor market is in great shape,” he continued. 

The latest Department of Labor update found more than 18 million Americans were on some form of unemployment insurance the week ending February 13, and last week’s jobs report listed 4.1 million Americans as long-term unemployed—more than 27 weeks. 

The White House has hammered these latter figures in recent days to make the case for passing the ARP. The report shows that “we have a long way to go,” National Economic Council Director Brian Deese said on Friday. “The challenge of long-term joblessness … is not getting better. So what we really need to do here is provide relief and support immediately in those areas of the economy that we know are struggling so that we can get the trajectory up significantly.”

Deese’s boss said something similar. “Without a rescue plan, these gains are going to slow,” Biden told reporters before a Friday briefing with Treasury Secretary Janet Yellen. “We can’t afford one step forward and two steps backwards. We need to beat the virus, provide essential relief, and build an inclusive recovery.”

Worth Your Time

  • The ARP is well on its way to becoming law. But Steven Rattner, a former Treasury Department official in the Obama administration, argued in the New York Times over the weekend that policymakers need to take inflation seriously, despite a seemingly benign monthly price index. “Some commentators, and White House advisers, dismiss inflation fears on the grounds that the economy has fundamentally changed since the 1970s,” he writes. “But let’s not be so blasé about how hard it would be to put that tiger back in its cage. Forty years ago, curbing the painful hike in prices took the Fed raising interest rates to 20 percent, forcing the economy into a brutal recession. … Congress is on the verge of injecting an additional $1.9 trillion into an economy that has already received more than $4 trillion in boosts from Washington. According to several estimates, the measure’s spending far exceeds the extent of the shortfall in economic output caused by the pandemic.”

Presented Without Comment

Toeing the Company Line

  • On Friday’s Dispatch Podcast, Sarah and Declan spoke with Oren Cass of American Compass about his think tank’s challenges to conservative orthodoxy, and what a post-Trump GOP could and should look like. “What has been missing from American politics and policymaking,” Oren argued, “is a conservatism that takes seriously the ways that public policy could really take on and address failures in our markets and things that are not going well in the economy.”

  • Friday’s G-File is on a subject near and dear to Jonah’s heart: Blogging. Since their golden age 20 years ago, he argues, blogs have devolved into hot takes and Twitter commentary primarily focused on attacking traditional media. “Blogging encouraged writers to focus less on the news than on the way it was presented and those who presented it. Commenting intelligently and quickly on actual news is pretty hard. Finding fault in others is much easier—and more fun,” Jonah writes. “The mainstream media is weaker than it has ever been. Yet many conservatives today would have you believe it isn’t just powerful, but tyrannical.” Jonah expands on this—and discusses a whole lot more—in an extra-long Ruminant.

  • Polling shows Americans’ willingness to receive a COVID-19 vaccine continues to increase, but white Evangelicals remain the religious subgroup least likely to want the jab. In his Sunday French Press, David argues Evangelical vaccine hesitancy is both an information problem and a spiritual problem. But there’s a path forward. “We must understand that they’re trusting voices they truly believe love them, care for them, and have their best interests at heart,” he writes. “This approach requires us to listen, to hear exactly why someone is concerned and to respond—again, without condescension—to their fears. In that atmosphere of trust and respect, you’ll often find that you can easily allay their concerns.”

  • Taking a break from political news and punditry, TMD’s Audrey Fahlberg reviewed the recent AppleTV+ Billie Eilish documentary.

Let Us Know

Do you think it was in the Biden administration’s strategic interest to cram as much as it could into the ARP on a party line vote, or will it come to regret not compromising with Republicans here later in the president’s term?

Reporting by Declan Garvey (@declanpgarvey), Andrew Egger (@EggerDC), Haley Byrd Wilt (@byrdinator), Audrey Fahlberg (@FahlOutBerg), Charlotte Lawson (@charlotteUVA), Ryan Brown (@RyanP_Brown), and Steve Hayes (@stephenfhayes).