The Daily - The $1.9 Trillion Stimulus Plan

Episode Date: March 2, 2021

The Senate is preparing to vote on another stimulus bill — the third of the pandemic.The bill has the hallmarks of a classic stimulus package: money to help individual Americans, and aid to local and state governments. It also contains provisions that would usher in long-term structural changes that have been pushed for many years by Democrats.Today, we explore the contours of the Biden administration’s stimulus bill and look at the competing arguments. Guest: Jim Tankersley, a White House correspondent for The New York Times.  Sign up here to get The Daily in your inbox each morning. And for an exclusive look at how the biggest stories on our show come together, subscribe to our newsletter. Background reading: The stimulus bill is polling strongly across the country, including with many Republican voters, despite a scattershot series of attacks from congressional Republicans.Before the vote on President Biden’s stimulus package, here’s a fact check on some of the common talking points. For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.

From The New York Times, I'm Michael Barbaro. This is The Daily. Over the weekend, the House of Representatives passed President Biden's first major piece of legislation, a massive stimulus package designed to end the pandemic and rescue the economy. Today, as the package moves to the Senate, I spoke with my colleague, Jim Tankersley,

about what's actually in it and the partisan debate that has erupted over its size and ambition. It's Tuesday, March 2nd. It's exciting. It's a little crazy. It's interesting. You're now a White House reporter who happens to be an economic specialist. Yes. So are you kind of like the economic White House reporter, or that's an oversimplification? I think it's, yeah, I think that that is very much true. I am basically doing my old job, but in the White House, but then also some new things in the White House.

That sounds like Joe Biden saying, I'm doing a new job, but in the White House. I've never been in the personal residence before, Michael, but I will be now. Right. Same gym, new title, very exciting. Right. Well, keep us posted on that. I will. So, Jim, we are here to talk about a major new stimulus package crafted by the Biden administration, passed by the House of Representatives, that is about to be voted on by the Senate. But I think we should start by situating ourselves in the history of stimulus packages passed by Congress

since the beginning of the pandemic. And I believe that this would be major stimulus package number three, correct? Yes. So the first plan was a fairly quick reaction by the end of March last year in 2020 as the pandemic was spreading, and that provided more than $2 trillion worth of assistance. It was a huge band-aid to the economy. The second one didn't come for quite some time after that, didn't come until December when Democrats, who were ascendant knowing Joe Biden had won the White House, and Republicans came together on a $900 billion package to extend some additional aid to the unemployed, try to help people continue through the pandemic. And then here, the third package, the Biden administration

comes along asking for what the administration hopes will be one last dose of help. Okay. And in terms of size and scale, how does this package number three stack up against the first two? You said that the first package was $2 trillion and the second was nearly a trillion. Well, the first package was the largest economic stimulus legislation in American history. And this is almost as big. This would be $1.9 trillion. So it's a lot of money. It's a lot of money. And that raises the question, what exactly is inside of it? What do you get for $1.9 trillion?

to help them buy things. That is headlined by direct checks to Americans. $1,400 per person and per child for people who earn up to $75,000 a year. So if you're a family of four, that's $1,400 for four individual people. Yeah. If you're a family of four and your family earns less than $150,000 a year total, you're looking at $5,600 in checks. Right. You get aid to state and local governments who have had to lay off a lot of workers and now with federal money could rehire those workers and avoid future layoffs. You also get more money for the unemployed, longer unemployment benefits, and more money for food stamps and rental assistance, sort of classic stimulus. Right. Literally, it stimulates the economy. It stimulates demand

to stimulate the economy. You also have money meant to unlock parts of the economy that currently aren't working the way they should be. So there's money for vaccines and testing, which is meant to fight the virus so that you can give people confidence to return to work and to go back out and shop again. You have money to reopen schools, and there's money for child care too, so that parents who have been forced to stay home with their children and not be able to work can go back to work and earn money and get the economy going that way. So this is non-traditional stimulus, but stimulus uniquely suited to a pandemic recession. Yeah, absolutely. This is sort of the money that you spend to get

this particular economy in this pandemic moment moving again. And then a last group of provisions in the bill are things that Democrats have wanted and been working for for a long time that they think would be particularly helpful in this moment in the recovery. So that includes a major expansion of some tax credits meant to fight child poverty for a year to help kids not go hungry or go homeless. It also includes an increase in the minimum wage to $15 an hour federally by 2025, which is something progressives have been pushing for for years. And Democrats say, you know, what helped give workers a raise right now when so many workers are struggling with lost hours and other problems in this recession and recovery that have disproportionately hurt low wage workers.

Got it. So these would be long term structural changes to the American economy in the mold of Democrats and progressives. Yes, that's what they're looking for here. So given the amount of ground that this package covers and its scale, what is the Biden administration's case for it? What is their argument and best case scenario for passing this? What is their argument and best case scenario for passing this? Their argument from the president, from the treasury secretary, Janet Yellen, all the way on down to White House economic aides, is that it's much better to go really big right now in this moment than to go too small. We've been here before. When this nation hit the Great Recession that Barack and I inherited in 2009.

When he was vice president, Joe Biden shepherded a stimulus bill in 2009. It was a big recovery package, roughly $800 billion. I did everything I could to get it passed, including getting three Republicans to change their votes and vote for it. But it wasn't enough. That was too small. It didn't meet all the needs

of the economy. They do not want to make that mistake again. They'd rather have too much than too little because the lesson they learned from 2009 is it's hard to come back one more time once you've gotten your first big bill as a new president. So they're being quite explicit about this. They are okay with the idea that this might be too big. That is fine with them. Yes. What they say over and over and over is the risk of going too small is much larger than the risk of going too big. And they would much rather take that risk that this ends up being too much money than it's not enough.

So Jim, taken together, what would these provisions mean for a low-income family in the United States with children? It would mean a lot. It would be thousands of dollars per family. So you would get money from the direct checks. If you are out of work, you'd get more expanded child tax credit, which is up to $3,600 for the year for kids under six and $3,000 per year for kids under 18. Columbia University estimates that if all this was passed, it would cut child poverty in half in the United States. And that would be a very meaningful accomplishment. Yeah.

And Jim, from the start, when this package was announced, it's been pretty clear that congressional Democrats have welcomed it, more or less. Is that right? Democrats have remained really unified over sort of the overall scope of the bill. They've had some disagreements here or there over individual provisions. Most notably, they changed, you know, who exactly was eligible to get those direct payments. And they've had a big debate between the progressives and the moderates in the party over the minimum wage and whether it should be raised to $15 an hour as part of the bill. But for the most part, they've just hung tough.

They've hung together and they said, Joe Biden wants a big bill. We should give him a big bill and we should be pretty deferential to how he wants to spend the money within that bill. Now, Republicans, not so much. No, Republicans do not think that the economy needs $1.9 trillion in stimulus right now. And they, in fact, went to negotiate with Joe Biden.

A group of Republican senators, 10 of them, went to negotiate with him shortly after he became president. And they brought their own proposal. And it was $600 billion. Let's talk about that number because $600 billion is not just smaller. It is a third as big. I mean, it's much, much smaller. Yeah. The Republicans had a real idea that Biden would negotiate with them. He made an opening bid. They were going to make an opening bid. You meet in the middle. It was a start. Maybe they meet in the middle. Maybe not. Right. But that was their expectation. Joe Biden's called for unity. We're going to make a bid and go

negotiate this dollar figure down significantly. And? That didn't happen. The Biden administration basically said, we are willing to negotiate in the realm of what we think is necessary, which is basically pretty close to $1.9 trillion. And so that left them very far apart. Right. And my sense is that Democrats and the president have basically said, thank you very much for your $600 billion proposal. We really like our $1.9 trillion proposal, and we are going to go it on our own. Yeah.

And usually that would be kind of fatal for a bill. You need 60 votes in the Senate to pass almost anything because of the filibuster. Right. But in this case, Democrats are employing kind of a special workaround called budget reconciliation. It's the same process used to pass the tax cuts under President Trump in 2017. And essentially what it does is it allows certain bills that deal with taxes and spending to pass with just 51 votes. In this case for the Democrats, all 50 Democrats in the chamber, plus the vice president, Kamala Harris, breaking the tie.

Got it. And they think they can pull that off. But of course, that would mean not having any Republican support for this giant stimulus package. Right. They could do it without any Republicans if every single Democrat hangs together. Jim, this is a pretty historic thing to pass on a party-line vote. $1.9 trillion in economic stimulus. But that's the plan. That appears to be the plan. I mean, there's still some hope the Democrats have that a few Republicans might join, but this is really a

Democrats are going to do it their way. They're going to do it with their votes and they are inviting Republicans to get on board. We'll be right back. So Jim, Republicans are not really influencing the course of this giant stimulus package, but it feels worth examining their critiques, which are many and are vocal. So where should we start with the Republican objections? It's hard to cover all the ground of how bad this bill is. I think we should start with the sort of political and policy critiques that they have. A lot within this bill is a waste or a wish list from the progressives. The idea that this is a liberal wish list with way

too much money in it that the economy doesn't need and that is not targeted to the needs of the recovery right now, but instead to just other priorities that Democrats have been wanting to push for a long time. Just the other day, President Biden challenged Republicans to show him the waste. What would you cut, President Biden said. How much time do you have, Mr. President? For example, they say, you know, Democrats have been wanting to raise the minimum wage for a long time, and here they are doing it at a time when Republicans warn it'll cost jobs. They also say that the Democrats are just trying to bail out blue states who have higher tax rates by giving them state and local aid. And they say things like even these expanded child tax credits are just a thing Democrats have been pushing for a long time to fight poverty.

But some Republicans call it welfare and say that it doesn't belong in this sort of a bill. summarize, the Republican critique of these provisions is that they're not required in an emergency and that really they're just Democratic priorities that could be debated and passed outside of an emergency stimulus package and should be passed outside of an emergency stimulus package. They would say that they shouldn't be passed at all. But yes, they are saying that the Democrats should not put a bunch of these provisions into an emergency stimulus package. And Jim, from your reporting, is that a fair critique? There are certainly some areas where you can make a very fair argument that Democrats are targeting things to longstanding priorities. Again, the minimum wage is a great example.

But even in some of the education spending, the Congressional Budget Office assesses the bill. It's like the scorekeeper in Congress for where money is going to go. And for example, they say a lot of the money for schools is not going to be spent likely over the next year to get schools reopened. It might be used for teacher salaries for years to come, which Republicans are calling a payout to teachers unions. And the next critique is the economic one. The Republicans saying the economics of this bill are way off. And the next critique is the economic one. The Republicans saying the economics of this bill are way off. And what do they mean by that? Well, they mean, first off, that it spends more money than the economy needs right now

to get back on its feet or to get back to where it was before the pandemic hit. But also that there's a risk to spending too much money. And that risk is you could cause inflation to go kind of wild across the economy. And that's going to cause prices to rise across the economy very quickly, which is bad. Okay. And economics 101, Jim, how does putting too much money into the economy affect prices and make them go up? If you have a set number of things being sold in the economy, goods and services, and suddenly a lot more money to buy those goods and services, then there's only so many things to go around. And so people start bidding against each other and the price of them goes up. There's only three hamburgers

and there are 10 of us and we all get a million dollars and we're hungry. Suddenly the price of a hamburger goes way up because we each want to eat. This will heretofore be known as the Jim Tankersley hamburger inflation lesson. I love it. Yes. Is that, Jim, a legitimate concern that this bill would cause inflation based on the financial and economic sources you talk to? Well, people have been warning about runaway inflation from government spending in recessions since the 1970s when we really did have runaway inflation and it was harmful to the country. But it just hasn't shown up in any of the times since then, including in the last crisis, 2009. There were lots of warnings from economists that inflation was right around the corner, and it just hasn't shown up.

Inflation's been quite low historically over the last 10 years or so. So it's almost a boy crying wolf situation. The burden of proof is on the people who are saying inflation is going to come really fast right now because those people have been wrong a lot in recent history when they've made similar warnings. So Jim, the inflation threat may be overstated, but I don't think we're overstating the depth of the opposition from Republicans to this stimulus bill. So that would make you think that their voters share these concerns about the stimulus bill. Do they? Actually, no. Polls show that this bill is widely popular. Recently, we did polling with SurveyMonkey, and they found that

70% of Americans support the Biden plan, including more than two in five Republicans, which is a lot for a bill pushed by a Democratic president. The support grows when you look at individual core components like the direct checks. The checks get 80% overall approval, and a majority of Republicans say that they're important to the bill. I really can't think of many things in American life that garner 70% approval in polls other than puppies and pizza. So doesn't that leave Republicans fighting something that their own constituents clearly want? And how do those Republicans answer for that with those constituents? The way they answer it is to say, hey, we know people want help, but we don't think they want

this bill. We think once we tell them more about what's in this bill, they'll see that it has too much extraneous stuff that doesn't actually help the economy get better, faster, the way that people would want. Now, Republicans are betting that over time they can drive down the support for this bill by making a bunch of political arguments against it because they believe the public wants something more targeted. That's their favorite word to use. They think people want smaller amounts of spending. People don't want as much debt added to an already growing national debt. But the flip side of that bet is that they could be very much the victims of Democrats saying, hey, we were there for the economy when it needed us toward the end of the pandemic. And Republicans were not. They refused

to help. And, you know, we're the ones who got you checks. We're the ones who got you a bunch of very popular things. And that's the other part of this is that the individual components of this bill, many of the things Republicans don't like, are very popular. So there is some bipartisan appeal to sending people money, and Republicans are fighting that now. Okay, so I want to ask a question that may be on the minds of listeners about this moment in the pandemic and in the pandemic recession, which is that we've started to turn a corner, right? Vaccinations are well underway. It feels like we are starting to see the light at the end of the tunnel. So is there an argument to be made that a bill this big is not necessary at this moment? Yes. And actually, the case is that if the parts of the bill work that are meant to speed up

the end of the pandemic, the vaccinations and the testing and everything, that might actually make it less necessary to have the parts that are there to expand the safety net and extend it for a bunch of months. If the first part of the bill works, we might not actually even need to spend all of the money for the second part, because hopefully more people will be going back to work and won't need unemployment benefits. More people are putting food on the table and don't need SNAP benefits, etc. spread more infections, or for whatever reason, it's still hard to vaccinate people, there's an insurance policy, which is that expansion of the safety net that we have several more months now of knowing that there will be help for vulnerable Americans who have lost jobs and are struggling to make rent and everything else that the bill is meant to address.

So if it works, then we may not need all that money. And if it doesn't, there's an insurance policy here. Got it. So this is a $2 trillion insurance plan against the possibility that the recovery is not as fast or as thorough as everyone would like for it to be in the coming months. And some of that money won't get spent, as in all insurance policies, if it's not needed. as in all insurance policies, if it's not needed. Right, absolutely. And it's especially an insurance policy for people on the low income end of the spectrum, people who have lost their jobs, who have lost hours,

who are struggling to make rent and put food on the table. They are the ones still really hurting right now. And the tragic possibility would be that if aid gets cut off too soon, we could come very, very close to the end of the pandemic and see people start to fall through the cracks, lose their homes, go hungry, suffer just immense economic distress when true relief and recovery is just right around the corner as the economy hopefully brightens up again.

Thank you, Jim. We appreciate it. Thank you. The Senate will take up the American Rescue Plan this week. On Monday afternoon, Democratic Senate Majority Leader Chuck Schumer said that the Senate would begin debating the stimulus package in the coming days. I expect a hearty debate and some late nights, but the American people sent us here with a job to do to help the country through this moment of extraordinary challenge, to end through action the greatest health crisis our country has faced in a century.

And that's just what we're going to do. We'll be right back. Here's what else you need to know today. A new study has found that the high rate of staff turnover at U.S. nursing homes likely contributed to the staggering number of coronavirus deaths inside the facilities over the past year. coronavirus deaths inside the facilities over the past year. The study found that the average annual turnover at the country's more than 15,000 nursing homes was 128 percent, and as high as 300 percent at some facilities, meaning that a huge number of workers left and were replaced throughout the pandemic. Researchers found that turnover that high made it difficult to enforce health protocols at nursing homes

and helped lead to rampant spread of the virus inside of them. Today's episode was produced by Stella Tan and Daniel Guimet. It was edited by M.J. Davis-Lynn and Lisa Chow and engineered by Corey Schreppel. That's it for The Daily. I'm Michael Bilbaro. See you tomorrow.