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A group of 10 Republican Senators released details of their $ 618 billion stimulus proposal on Monday, which is said to be a counter-offer to President Joe Biden’s recently published US $ 1.9 trillion bailout plan. The Republicans have tested Biden’s plan as too costly and hope to lower the price of the next stimulus package.
After Biden, Vice President Kamala Harris, and the group of Senators met for about two hours, Senator Susan Collins (R-ME) told reporters outside the White House that the meeting was productive and the two sides will continue to discuss pandemic relief options . Meanwhile, White House press secretary Jen Psaki noted in a statement that despite the settlement between the president and GOP senators – and although Biden would prefer to pass his American bailout plan with bipartisan approval – the reconciliation option remains on the Table lies.
“The president has also made it clear that the American bailout plan has been carefully designed to meet the demands of this moment and that changes to it cannot leave the nation behind its urgent needs,” Psaki said in a statement.
On Monday, Senate Majority Leader Chuck Schumer (D-NY) and House Speaker Nancy Pelosi (D-CA) tabled a joint budget resolution, the first step towards passing a pandemic relief law on the reconciliation process.
Many Americans hoping for high government spending to offset the negative economic impact of the coronavirus pandemic may be disappointed: the package is small compared to Biden’s proposal and omits important provisions that the Democrats in Congress insisted on, such as: State and municipal funding.
The proposal also cuts economic impact payments, also known as stimulus checks, from $ 1,400 to $ 1,000, and restricts the pool of those who could receive them.
What’s in the GOP Stimulus Proposal
The new proposal, backed by prominent Republicans like Collins and Senator Mitt Romney (R-UT), is valued at an estimated $ 618 billion – less than half of Biden’s latest stimulus package.
“In the spirit of bipartisanism and unity, we have developed a Covid-19 framework that builds on previous Covid aid laws, all of which were passed with bipartisan support,” says a letter from the group of senators behind the new proposal to the president. “Our proposal reflects many of your stated priorities, and we believe that with your support, this plan could be quickly approved by Congress with bipartisan support.”
And while the proposal includes some help that both parties have sought, it provides less funding for each compared to Biden’s plan. And it leaves out some auxiliary categories completely.
The proposal provides funding for the continuation of government-funded unemployment benefits of $ 300 per week while; the American bailout plan would raise it to $ 400 a week. The current unemployment rate is 6.7%; it’s a notable decrease from a high of 14% during the pandemic’s most chaotic hour last spring, but 10.7 million Americans are unemployed – almost double what it was before the February 2020 pandemic (5.7 million).
Women, especially black and Latina women, who were economically disadvantaged before the pandemic, are largely responsible for these statistics. As of December, all jobs in the U.S. economy were women-based, according to the National Women’s Law Center. Meanwhile, the unemployment rate for black and Latino households is 9% compared to 6% for white households.
The GOP proposal would extend these benefits by the end of June; Biden’s proposal would extend it until the end of September. Cutting aid by $ 100 a week and ending aid two months earlier than Biden’s plan would result in a total loss of up to $ 6,000 in unemployment benefits per worker – and those who are already struggling one Cut off the lifeline.
The GOP proposal also provides for another round of stimulus checks for Americans, but it would reduce the amount of those checks and the pool of those they might receive. The total would be $ 1,000 per person, with an income limit starting at $ 40,000 per year for single parents and $ 80,000 per year for married couples who submit together. Individuals would not receive any payment at all once they hit an income cap of $ 50,000, while couples filing together would not be eligible once they hit an annual income of $ 100,000.
Biden’s proposal would award $ 1,400 per person, but he said he was open to negotiating income limits. The GOP proposal would provide $ 500 per adult and dependent child; Biden’s proposal would give them up to $ 1,400 per loved one.
And here are the main things the suggestion leaves out:
- It doesn’t include state and local aid – something the Democrats have insisted on in the next stimulus package. Covid-19 has sparked a severe national budget crisis that is jeopardizing the funding of key services such as the K-12 public schools and government employee salaries.
- Biden’s push to raise the federal minimum wage to $ 15 an hour is also absent from the GOP’s proposal, although promising research into the positive effects this could have on the federal budget looks promising. A new UCLA paper states that raising the minimum wage to $ 15 would save taxpayers $ 65.4 billion a year as wage and income tax revenues are increased.
The GOP Senators write in their letter that these adjusted thresholds are aimed at “families who are most in need of help”. There is evidence to suggest that the economy benefits directly from the cyclical controls, but it depends on who receives them. Research by the Kellogg School of Management found that individuals with bank accounts of $ 500 or less spent nearly half of their first Stimulus Check within 10 days of receiving it; those with $ 3,000 or more did not have immediate expenses in response to receiving their stimulus check.
However, the study finds that the income, or the amount of money deposited in a bank account, is not a predictor of “who will burn the money fastest” – or in other words, what will or cannot stimulate the economy the fastest.
Instead, the researchers say that liquidity, which refers to the amount of money ready to be spent, is a more appropriate indicator. Liquidity was an issue for Americans even before the pandemic; 37% of adults would not have the cash to pay for unexpected expenses, according to the latest data from the Federal Reserve. And the alternatives these people may have had before – lines of credit, loans from family members – may already be exhausted due to the economic conditions created by the pandemic.
A key campaign pledge from Biden was to send out $ 2,000 stimulus checks (he has arguably already watered down that promise by including checks for $ 1,400 in his proposal and the previous $ 600 for stimulus payments on even Rounded up to $ 2,000). The presidency could put him in the limelight of national scrutiny, which a new president would largely want to avoid at any time – let alone during a raging pandemic.
GOP proposal contradicts recommendations of the Ministry of Finance, top economists
A new report from the Congressional Budget Office predicts that the American economy will recover to pre-pandemic levels by the middle of this year, even if Congress does not approve further aid spending. The GOP’s proposal to cut stimulus spending is likely to be backed by this new data, but top economists continue to push for high federal spending, in part to support unemployed Americans while they wait to be called back to their jobs or embark on a new career. There is also concern that the economic recovery will be K-shaped, meaning that higher earners will regain their economic foundation as the lower segments struggle to survive.
Newly re-confirmed Treasury Secretary Janet Yellen has repeatedly called for heavy spending to help the economy and Americans who continue to endure the economic fallout from the coronavirus pandemic. Commenting on a business briefing with Biden last week, Yellen made it clear that she is currently more concerned with helping the American people than with the potential debt arising from a major stimulus package.
“I want to emphasize that the President is absolutely right: the price of doing nothing is much higher than the price of doing something and doing something great,” said Yellen. “We need to act now, and the benefits of acting now and acting big will far outweigh the costs in the long run.”
Yellen is not the only economist who speaks in favor of larger stimulus spending. A group of 120 economists – including Gene Sperling, former director of the National Economic Council under former Presidents Barack Obama and Bill Clinton – recently signed a letter to Congress in support of Biden’s American Rescue Plan. They described the latest stimulus package that came into force as “too little and too late to address the extent of the deteriorating situation”.