Today, Explained - Biden’s Big F***ing Deal

Episode Date: March 10, 2021

President Biden’s American Rescue Plan has been approved by Congress. It’s a revolution in American welfare disguised as stimulus. Transcript at vox.com/todayexplained. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Gambling problem? Call 1-866-531-2600 or visit connectsontario.ca. On this vote, the yeas are 220, the nays are 211. The motion is adopted. Today explained Sean Ramos for him. The new president accomplished something today. It's called the American Rescue Plan. It looks a lot like $1.9 trillion in stimulus spending, the CARES Act Part 2, but it's really a quiet revolution

in American welfare disguised as stimulus. And that's kind of why it was so hard to pass. Emily Stewart, Politics Vox. It was hard, but maybe not as hard as it could have been. A couple months ago, talking to people about this, the sense that I got is that they thought it was going to be pared down. It wasn't. Joe Biden proposed $1.9 trillion, and we got $1.9 trillion. It's been a long day, a long night, a long year. But a new day has come. And we tell the American people, help is on the way. Senate has never spent $2 trillion in a more haphazard way or through a less rigorous process. So the Democrats kind of ended up getting what they wanted, is what you're saying?

Not entirely what they wanted, but pretty close to it. So there are a few things where there were some compromises on stimulus checks. People are going to get those $1,400 stimulus checks pretty soon, but they are more targeted. So basically they'll go out to anybody making up to $75,000, but then they're going to phase out at $80,000. So some people who got them before won't get them. On the flip side, this time adult dependents are going to be eligible. So that means college students or elder adults that maybe live with their children. So people will get stimulus checks who have never gotten them before. On unemployment insurance, it is going to be a

little bit less generous. So instead of $400 checks that Biden was hoping to get out the door to the unemployed, they're going to be $300. But there are some tax provisions in there that we can talk about a little bit later. And on the minimum wage, you know, we talked about that recently. That is going to be a no. The parliamentarian said it couldn't go into the bill. But then when Democrats tried to put it back in, turns out not as many Democrats were on board. On this vote, the yeas are 42, the nays are 58. With a $15 minimum wage by 2025, as we thought. The point of order is sustained and the amendment falls. One of the Democrats who certainly wasn't on board, and we spoke to you about him last week

when we did an episode about the $15 minimum wage, was West Virginia Senator Joe Manchin. The Senate came to a chaotic standstill for nearly 12 hours as Republicans, Democrats, and President Biden frantically tried to win the support of West Virginia Democratic Senator Joe Manchin, who finally, finally voted with his party after some modifications to the bill. What role did he end up having on these negotiations across the board? You know, Joe Manchin was in a way kind of the star of the show. He was the person everybody was paying attention to. So on Friday, there were sort of several hours where it was not quite clear what was going to happen on unemployment insurance because it wasn't

clear what Joe Manchin was going to go for. He was kind of flirting with a Republican amendment that would have done $300 in extra benefits through July 18th, which is not what Democrats wanted. And so there was this big question of like, what can we get Joe to agree with? And ultimately that wound up being $300 through September 6th. And then this tax provision that's going to make the first $10,000 of unemployment insurance tax-free. So that's a big deal because we were afraid that people were going to get these giant tax bills that they couldn't afford and didn't know were coming. What did Manchin get out of his compromises on this bill? I mean, I guess in a world where he wanted $300 in unemployment insurance instead of $400 in extra unemployment insurance, like he got that.

But it's not entirely clear why there was this sudden last minute kerfuffle. And sometimes it's hard to know, like, how much of this is just at least him needing to appear like he's really pushing back so that he can appeal to people back in West Virginia. But he got things a little bit more targeted and in the way that he wanted. OK, so some setbacks for the plan that Biden sort of wanted to implement here. But that shouldn't take away from the fact that there are some huge wins for him, right? Yeah. I mean, Democrats, by and large, got what they wanted here, I think, with the exception of the minimum wage. And again, we don't know if they all wanted the minimum wage. But one big thing that they wanted for a long time is funding for states and cities. And so $350 billion in funding for states and cities in that bill, which is really huge.

There's more subsidies for Obamacare. There's a bunch of money for schools. There's money for vaccines and testing. There's money for restaurants. There's also a lot in here for children. Our bill would substantially expand the child tax credit and cut child poverty in this country in half. And the Biden administration estimates that they might cut child poverty in half with this. So this is really big. And these are long-term priorities that Democrats have wanted to put in place for a long time. And at least we're going to have them for a while. You said cut child poverty in half.

That's huge. Tell me more. Basically, what it does, the bill, is that it expands the child tax credit. So it makes it a little bit more generous. And it looks like around July, people are going to start receiving money for their children, which is really good. And that's on top of, you know, their parents are going to be getting stimulus checks and their parents are also going to be getting unemployment if they have lost their jobs. Getting money for their children as in just free money because you have kids.

Is that right? Yeah, it's sort of like a child allowance. Which I hear children like. Sorry. Sorry. And you mentioned earlier that there are changes to the tax code. Is that one of them or are there more? Yeah.

So the tax stuff can be a little bit wonky, but I do think it's worth talking about. So as mentioned, the first $10,200 of unemployment benefits aren't going to be taxable for households making up to $150,000. So there had been this concern among a lot of experts and advocates that people were going to wind up with a tax bill that they didn't expect and might not be able to pay. Like, if you have been unemployed so long that you have received $10,000 in benefits, your financial situation, who knows what it's like right now, right? And then another thing that snuck in there was a provision on student loan forgiveness. And what that does is it makes all forgiven student loans tax-free through 2025. Because

prior to this, what would happen with certain types of forgiven student loans was that, let's say you had $10,000 forgiven, that would be counted as your income for that year. And so that would come with a giant tax bill. Now, this is obviously important in the student debt debate. As people push Joe Biden to forgive student debt, this is a way for Elizabeth Warren et al. to say, look, we removed this hurdle for you. Now do student debt forgiveness. But even if it doesn't happen, there are people who do get their debts forgiven or discharged through other ways. And sometimes that's tax free and sometimes that's not. So this is good for those people as well. And it's one that a lot of experts hope will stick beyond 2025.

All right. So some big, huge changes to how this country works, essentially, to welfare in this country. Biden came into office touting bipartisanship. How'd he do on that front with this bill? I think it's worth saying the bill is popular, even if it's not popular among Republicans in Congress. A lot of the public likes the bill, Republicans and Democrats alike. Like, who doesn't want some extra money in their bank account right now? That being said, they did not get any Republican votes on this.

Like, not one? No, they didn't get any Republicans on the bill. I was speaking with one Senate aide a while back about this, and he said, well, Republicans are invited to vote for the bill. Now, I was speaking with one Senate aide a while back about this, and he said, well, Republicans are invited to vote for the bill. And in that sense, it's bipartisan, which like, OK, fair enough. But no, they didn't get any. They didn't get any Republicans. What does that mean for the rest of Biden's presidency? I mean, this was something that had popular support in the country that had popular support in the country, significant popular support in the country, and they still couldn't get a single Republican vote.

Is this what government's going to look like for the next two, four years? It is impossible to say for sure, but this isn't the best sign of what's to come. I do think that this doesn't necessarily bode super well for a bipartisan future. And I think that there are probably some conversations that are going to bubble up in the Senate about whether or not they want to keep the filibuster. But then again, our friend Joe Manchin, not quite sure if he's going to get rid of the filibuster. But yeah, I don't know if Republicans are going to be jumping over themselves to go join Democrats for other priorities in the near future. Quick break and then more on how this stimulus is something of a game-changer in disguise. Thank you. Wirecutter AuraFrame to make it easy to share unlimited photos and videos directly from your phone to the frame. When you give an AuraFrame as a gift, you can personalize it, you can preload it with a thoughtful message, maybe your favorite photos. Our colleague Andrew tried an AuraFrame for himself. So setup was super simple. In my case, we were celebrating my grandmother's birthday

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This deal is exclusive to listeners and available just in time for the holidays. Terms and conditions do apply. Dylan Matthews, you write about giving people money at Vox. How does this American Rescue Plan compare to other recent stimuli passed by presidents in recent memory? The Biden stimulus is not quite as big as the first stimulus in March 2020. It's sort of the one that kicked off the coronavirus era. But it's roughly the same. It's $1.9 trillion for the Biden stimulus, a little over $2 trillion for the first Trump-McConnell stimulus.

But what they spend money on is rather different. So the initial Trump stimulus was kind of oriented around giving loans to small businesses through the Paycheck Protection Program. Now remember, these are loans of up to $10 million. They are meant to be used on payroll, mortgage interest, utilities, and rent, even while the business is closed, in order to be forgiven. Larger businesses through various other programs. As far as the airlines are concerned, the airlines were going to back the airlines 100 percent. Not their fault. With the hope of like tidying them over through the COVID emergency. And it also had some provisions for individuals,

the unemployment benefits, the direct checks. But a lot of it was corporate. A lot of it was really designed around making sure businesses could make it through. The Biden stimulus is way more about individuals and it's way more about states. And I think the other thing is that the Biden stimulus is a true stimulus in a way that the CARES Act from last year wasn't really. The CARES Act was more of a relief plan, since part of what was happening, if we can all sort of go back and remember last March, we were talking very explicitly about how we needed to shut parts of the economy down. Every day, major American companies that employ countless people are seeing their commerce crushed by their own government for the sake of public health.

People had to stop going to restaurants. They had to stop doing in-person services, stop getting massages and haircuts, and stop going into offices. There was a concerted effort to try to slow the economy down because some aspects of the economy were spreading this virus. And so the CARES Act acted as a kind of relief for businesses and individuals to get through that. The Biden stimulus really wants to make the economy go faster.

We're handing out vaccines, we're coming out of this thing, and it's an effort to make sure people are spending aggressively as we come out of it. Part of what you're doing in trying to get the economy to recover is to put money in people's hands so they can spend it. The theory is that you get into this trap where no one believes the economy is growing so it doesn't grow. And what you need to do is give everyone the confidence that things are going to get better really, really fast. And the theory is that you do that by spending really, really aggressively. And so here we have a package that's

twice as big as the one passed in 2009 after the biggest financial meltdown, certainly of my lifetime. And I think a lot of that is because Biden himself and the people staffing him look back at the 2009 stimulus and think it was way too small. President Obama put me in charge of the Recovery Act, and it was hard as hell to get the votes for it to begin with. And then it was hard as hell to get even the number we got. But one thing we learned is, you know, we can't do too much here.

We can do too little. We can do too little. We can do too little and sputter. That's just dramatically different from how people were thinking about it in 2009 when Obama, even as he was pushing the stimulus, was saying, but then we really got to, like, get our affairs in order and cut the deficit, et cetera, et cetera. Biden's doing none of that. He's just going really, really big. So, like, Obama spent so Biden could spend. Yes, yes. Obama clipped coupons so that Biden could buy Rolexes.

What is the thinking here? Is the thinking that people will take this money and then buy stuff? Or is the thinking that people need this money to pay off all the debt they've accumulated over the past year? Or is it both of those things and more? I think there are a few theories. And part of what's interesting about this is that it responds to a few different theories of both of this recession and what happened in the last one. So one theory of what went wrong last time is called a debt overhang theory. And so some economists have argued that after the housing crisis collapsed, you had all these people stuck with underwater mortgages, drowning in debt they couldn't get out of.

And so all of their money went into trying to pay that off and get out from under that. And that meant sort of the real economy buying new stuff couldn't really get growing because there was this lingering debt problem that everyone was grappling with. And the Biden stimulus, if we have a similar debt overhang now, if people are in sort of rental debt to their landlords, if they're behind on their mortgages, if they're behind on their credit cards because they needed to use credit to make their way through the big expenses last year, just handing out money to them through the stimulus checks, through unemployment insurance bonuses for people

who are unemployed, that all helps with debt overhang. But it also helps in a more traditional model of what's happening, which is just people are spooked. People need some indication that the government's supporting them and that it's willing to back them if they want to buy a lot. Businesses need some kind of assurance that customers are going to have money to buy their products. And so this package also responds to that theory. It puts money in the hands of consumers. It puts more money in the hands of low-income consumers than high-income consumers. So people who are most likely to spend and least likely to just

pocket and save the money. And it could help people if they're overly burdened with debt and prevent that from slowing down the recovery too. Vox probably loves nothing more than writing about the ideas around giving people money for free. Cash politics, as some call it. Is this a sign that we might see more of it under the Biden administration? Yeah, I mean, Joe Biden's first big legislative initiative is a huge cash program. So I think this is clearly a policy that Biden is very enthusiastic about and believes in. I think it's also something that they've learned works politically. The main pushback they've gotten publicly on the $1,400 checks is not that they're

sending them, it's that it's not $2,000. That's a very different political situation than when the criticism is, you're spending way too much, you need to hem it in, you shouldn't be sending cash to anybody. We've suddenly gotten into this realm where the debate is not, should we do cash? It's how do we do cash and how big should we do cash? Ladies and gentlemen, the President of the United States of America, Barack Obama. At the signing ceremony for the Affordable Care Act, then-Vice President Joe Biden famously leaned over and whispered to Barack Obama that the legislation was a big fucking deal.

You think Kamala Harris is leaning over and telling Joe the same thing right now? It's a really, really huge deal. I was trying to think of the last bill as significant as this in my lifetime. I think it's a bigger deal than the Affordable Care Act. Really? It's sort of apples and oranges, but it affects more people and gets more money to the average person. I think you'd have to go back to the Johnson administration to find a president spending this much money on income support, particularly to low-income people. So yeah, I think it's a really, really huge deal.

And thinking about it in comparison to Obamacare, do you think it'll take a while, like Obamacare did do you think it'll take a while like Obamacare did for people to really appreciate? When Obamacare was passed, it had something around 40% approval. There'd been this long, brutal fight for it. And so a lot of people wound up hating it. It was the summer of the Tea Party protests and all these factors wearing it down. I've seen approval rates for this bill more in the 70% range. It's way, way, way more popular at the outset than Obamacare was, and it delivers benefits right now. Something that in retrospect feels bizarre about Obamacare is it got passed in 2010. No one got health insurance until 2014. And so you had this long period where you had this bill that everyone was trying to defend,

and there was no one they could point to and say, hey, this is someone who benefited from this. And that doesn't mean it's not important. It's an incredibly important bill. You can read all about it on Vox.com. But I think this is a more politically durable bill because it gives big benefits right away. And partly because of that, it starts out really, really popular. You've heard it once. You've heard it twice. But here it is thrice.

Read much more about the American Rescue Plan, giving people money. And sure, why not even Obamacare at Vox.com. But here it is thrice. Read much more about the American Rescue Plan, giving people money. And sure, why not even Obamacare at Vox.com.