President-elect Joe Biden’s $1.9 trillion economic relief proposal serves as the opening salvo in a legislative battle that could be prolonged by the go-big price tag and the inclusion of initiatives opposed by many Republicans.
Biden’s hand was bolstered by Friday’s release of U.S. retail sales data for December, which showed a third straight monthly decline as the pandemic sapped activity. The results indicated that the biggest part of the U.S. economy — consumer spending — took a step back last quarter.
Grace Bronstein is the CEO of TrustLife Insurance Management, an advisory firm that supports CPAs, trustees, financial advisors and estate planning attorneys in properly managing trust-owned life insurance. She is also the COO of AllFinancial Group, an affiliate of TLIM, an asset management firm that provides non-recourse financing for life insurance policies. Previously, she was a litigation associate at Schulte Roth & Zabel. She is a graduate of Columbia University and Columbia Law School.
Brian Hart is founder and president of Flackable, an award-winning public relations agency representing financial and professional services brands nationwide. The agency, which he bootstrapped in 2014 at the age of 27, guides growth-driven brands to new levels of credibility, authority and influence through its innovative, integrated approach to public relations. His professional recognition includes Bulldog Reporter‘s 2021 Silver PR Star Under 40, PRNEWS’ 2020 Agency Elite Top 100, Irish America Magazine’s 2019, 2018 & 2017 Business 100, PRNEWS’ 2017 Rising PR Stars 30 & Under, Lehigh Valley Business’s 2016 Forty Under 40 and Adweek’s 2015 PR Industry 30 Under 30.
In 2020, Brian developed an industry-first client portal and automated campaign status reporting system, a platform delivering unprecedented campaign clarity, transparency and accountability. He leads and mentors a growing team of top public relations talent who routinely land Flackable’s clients in top news outlets including The Wall Street Journal, CNBC, Fox Business, Bloomberg, Forbes, Barron’s, US News & World Report, The Associated Press, Reuters and various industry trade press.
Brian is a Temple University graduate with a B.A. in Strategic Communication and a Political Science minor. He began his career as a licensed life and health insurance professional at a broad-based financial services firm in King of Prussia, PA. Prior to founding Flackable, Brian represented a number of leading financial services firms at a public relations agency in New York City and New Jersey.
Arun serves as Deloitte’s Global Leader of Insurance Technologies, with a focus on building, enhancing, and delivering Deloitte’s technology capabilities to the insurance marketplace. In addition to his global responsibilities, Arun is a leader within Deloitte’s U.S. Digital practice and utilizes his 25 years of experience to lead and to deliver technology and strategy consulting services. He has hands-on experience across banking, securities, and insurance, as well as other industries, enabling him to provide clients with insights from IT organizations across the maturity spectrum.
“It’s not hard to see that we’re in a once-in-several-generations economic crisis,” Biden said Thursday night in unveiling his plan. “We have to act and we have to act now.”
The package has elements that would likely appeal to enough moderate Republicans to gain favor in the Senate — including a $400 billion effort to contain the coronavirus and speed the economy’s reopening, as well as $1,400 in additional direct stimulus payments.
Other parts are set to spur partisan warfare, including Biden’s proposals to more than double the federal minimum wage to $15 an hour, provide large-scale aid for state governments and offer higher unemployment benefits through September.
Negotiations could end up producing a smaller bipartisan package in the coming weeks, followed by a larger budget bill later in the year with Democratic priorities. Biden said he plans to unveil a second major package, aimed at longer-term economic rebuilding, at a joint session of Congress next month.
Republican Senator Marco Rubio of Florida kicked off calls for breaking the relief plan into pieces, tweeting that since Biden served in the Senate for more than 35 years “he knows the plan he outlined tonight can’t pass ‘quickly.’” Rubio called for proceeding with the $1,400 stimulus checks first.
While it’s possible Democrats might find ways to get the bulk of the package through the Senate with just majority support, “it looks more likely that the need to find bipartisan support might constrain the size of the package,” Goldman Sachs Group Inc. analyst Alec Phillips wrote in a note to clients. Still, Goldman boosted its forecast for near-term fiscal stimulus to $1.1 trillion from the $750 billion it had predicted before Biden’s roll-out.
Biden has several advantages in the struggle, including an ability to bypass Senate Republicans on some of the items using a special tool called budget reconciliation.
Enjoying unified Democratic control of Congress, Biden will also have the White House bully pulpit to put pressure on Congress to act. He has offered his plan as a way for the nation to come together to provide relief to impoverished Americans after the unprecedented mob violence in the Capitol last week, and amid the record spike in deaths from the pandemic.
“Unity is not a pie-in-the-sky dream, it is a practical step to getting things done,” Biden said Thursday. “The very health of our nation is at stake.”
The looming trial of outgoing President Donald Trump is set to prolong the partisan tensions of recent weeks. Unless incoming Senate Majority Leader Chuck Schumer and Republican leader Mitch McConnell strike agreement on procedures, it could prevent a floor vote on Biden’s cabinet nominations and legislation for weeks, though it wouldn’t delay committee work.
If Biden can’t get a deal on the whole bill, provisions such as stimulus checks and a $400-per-week boost to unemployment insurance could be put into a budget bill and passed with just 50 votes. There is a debate about whether the minimum wage could also be raised that way.
The incoming president is a veteran of dealing with McConnell, who may be willing to horse-trade for his priorities like COVID-19 liability protections for employers or an extension of business tax breaks.
Many economists are anticipating a robust period of growth in the U.S. once vaccinations get the virus under control and normal commerce resumes, but a rough road remains. The drop in retail sales last month came alongside the first decline in monthly payrolls since April. Unemployment remained mired at 6.7 percent.
Things could worsen in the coming months. Some extra support measures for small businesses and the unemployed passed by Congress in December run out in March, and a federal eviction moratorium expires at the end of January.
“Given the urgency of the current crisis and the desire to achieve passage in the administration’s first 100 days, we expect a narrower package to ultimately emerge — in the vicinity of $1 trillion,” said Andrew Husby, an economist with Bloomberg Economics. “That figure could be enough to push economic growth above 5 percent this year, compared with our current baseline of 3.5 percent.”
The U.S. Chamber of Commerce said in a statement Thursday it “welcomes the introduction of President-elect Biden’s American Rescue Plan,” and singled out praise for the vaccination focus, while omitting comment on the minimum-wage increase.
Kevin Brady, the top Republican on the House Ways and Means Committee, said the package was bad for businesses. “Special interests and liberals are cheering. The jobless and Main Street are left shaking their heads.”
But leading Democrats praised the plan.
Schumer and House Speaker Nancy Pelosi pledged in a statement to work quickly to put “Biden’s vision into legislation that will pass both chambers and be signed into law.”
Congressional Democrats will have their own requests. Incoming Senate Finance Committee Chairman Ron Wyden indicated he wants the plan tweaked to tie unemployment benefits to unemployment rates. “I look forward to taking the lead on a proposal that puts a stop to needlessly lurching from crisis to crisis, and gives jobless workers the certainty that they will be able to buy groceries and make rent,” he said in a statement.
Major lift
The bill would dedicate $350 billion for state and local governments, well beyond the $160 billion for such funding included in a bipartisan compromise that never made it into the December package.
Biden is also seeking to boost refundable tax credits for those with low-income and children while substantially expanding paid family and medical leave.
All of this will be a major lift for Congress to complete by the mid-March expiration of expanded unemployment benefits for gig workers and the long-term jobless, which has created a benefits cliff.
The new administration is under pressure not to allow a repeat of the eight-month standoff that held up the last round of economic relief.
One advantage: the departure of a volatile Trump, who changed his positions frequently in the talks and ultimately sat on the sidelines after losing the November election — only to threaten a veto of the passed bill at the last minute.
--With assistance from Mario Parker and Christopher Condon