Joe Biden $1,400 checks demand defies economists, boosts Democrats

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President Biden held firm Wednesday on his demand for direct payments of up to $1,400 to millions of Americans in any coronavirus package, bolstering Democrats’ negotiating hand on Capitol Hill but defying economists who said the cash isn’t the best way to stimulate the economy.

The payments, with a $15-an-hour federal minimum wage and a $350 billion bailout fund for states and localities facing their own budget squeeze, have become the top flash points as Democrats rush to approve the president’s $1.9 trillion relief package.

Mr. Biden, in a meeting with Senate Democrats and a call with House Democrats, urged them to “stick together,” saying they can surmount Republican objections as long as they don’t abandon the outlines of the plan he’s put forth.

“We’re going to succeed or fail together,” Mr. Biden told the House Democrats, pointing to the massive losses Democrats suffered in the first elections after former Presidents Bill Clinton and Barack Obama took office. “We don’t want to let that happen here.” 

Democrats are searching for unity even as economists pick at their plans.

A new analysis Wednesday by the University of Pennsylvania found that while the $1.9 trillion package would boost gross domestic product by a little more than half a percent this year, the additional debt would be a drag on the economy in the future.

The Penn Wharton Budget Model also projected that 73% of the direct payments of up to $1,400 per person in the Biden plan would go into household savings and produce “small stimulative effects.”

“Sending checks to those who don’t need them and won’t spend them is not a good use of taxpayer money,” Sen. John Thune of South Dakota, the chamber’s second-ranking Republican, said on the Senate floor Wednesday.

White House press secretary Jen Psaki challenged the findings, calling them “way out of step” with other studies from the liberal Brookings Institution think tank, investment firm JP Morgan Chase, and financial research firm Moody’s.

Moody’s projected that Mr. Biden’s plan would spur 8% economic growth this year if it is enacted by March. That’s well above the current forecast of about 4% real GDP growth this year.

But the Moody’s analysis also questioned the value of the $1,400 payments.

“Much of the money goes to households that do not need the funds and will save a lot of it, at least initially,” wrote Chief Economist Mark Zandi and Assistant Director Bernard Yaros Jr.

Ms. Psaki said Mr. Biden is open to negotiating income limits on who would receive the checks but that he’s not backing down from the maximum total of $1,400 per person.

Congress just approved $600 checks in December, and Mr. Biden needs the additional $1,400 to make good on his promise of a total of $2,000 in cash assistance.

The direct payments in the rounds of coronavirus relief that Congress authorized last year started phasing out for individuals making more than $75,000 per year and couples making more than $150,000 per year.

Rep. Ilhan Omar, Minnesota Democrat, said it would be “disastrous” to lower the phaseout income threshold to $50,000 per year, for example.

“Many people who saw their $50K-75K a year income vanish overnight with no immediate sign of their jobs coming back would be left out,” Ms. Omar said on Twitter. “We should be fighting to get support for the many, not the few.”

Both the House and Senate are working this week on a vehicle to approve Mr. Biden’s plan without GOP support, harnessing the budget process, which can circumvent a filibuster in the Senate.

House Democrats powered a skeleton budget through their chamber on a 218-212 vote, while the Senate is expected to start voting on the budget plan Thursday. If senators make changes, the House would have to vote again later this week.

“Our country desperately needs this relief,” said Rep. John Yarmuth of Kentucky, chairman of the House Budget Committee, as he pushed for support during the debate.

But the price tag and the way the money would be allocated have left most Republicans cold.

Rep. Dave Schweikert, Arizona Republican, said the spending worked out to a cost of $350,000 for each new job it would produce.

“Is that compassion or is that lunacy?” he asked.

This week’s congressional votes are the easy part.

Once the budget is finalized, committees in both chambers will go to work writing the nuts and bolts of a spending plan, which then must be stitched together in a “reconciliation” package, which will need final approval.

That’s when issues like the $15-an-hour federal minimum wage will be tested among moderate Democrats.

Republicans, meanwhile, have called that a non-starter, at least at the $15 level.

Mr. Biden predicted that Republicans eventually will back his bill.

Sen. Mitt Romney says the president needs to give a bit if he expects that to happen.

“If it goes forward without any changes from what was originally proposed, I would predict that not a single Republican will support the $1.9 trillion plan,” the Utah Republican said.

Democrats have made clear they don’t consider Republican support a necessity and will try to push through a deal even without it.

“We are united as one for a big, bold package, working with our Republican friends when we can,” said Senate Majority Leader Charles E. Schumer, New York Democrat.

Even Sen. Joe Manchin, a Democrat from West Virginia who is often the linchpin in bipartisan negotiations, said Wednesday that while he wants a bipartisan process, he’s not going to stand firm on earning GOP votes.

“The red line is, are we going to have an open amendment process and look at everything and, basically, take the facts that we have,” Mr. Manchin said on “CBS This Morning.”

Democratic leaders argued that a “bipartisan” package doesn’t necessarily mean one that is supported by congressional Republicans.

Rep. Hakeem Jeffries, chairman of the House Democratic Caucus, said Republican mayors and governors and business groups such as the U.S. Chamber of Commerce support the plan.

“It is bipartisan amongst the American people,” he said.

Sixty-eight percent of U.S. adults said they support the $1.9 trillion package and 78% said they support the $1,400 payments, according to a Quinnipiac University poll released on Wednesday.

The $1.9 trillion package includes about $1 trillion in direct aid, more than $400 billion for coronavirus-related efforts such as vaccine distribution, $350 billion for states and localities, $15 billion in grants for businesses and $35 billion for small-business loans.

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