America's $5 trillion bet
Democrats' coronavirus relief bill will dramatically change many low-income families' lives over the next year. And in the process, it's setting a new precedent for what Washington can and will do in a crisis.
Why it matters: Once President Biden signs the latest relief bill into law, Washington will have spent more than $5 trillion in less than a year — far more than it has spent in past crises.
By the numbers: In a letter to colleagues Tuesday night, Senate Majority Leader Schumer wrote that the poorest 20% of Americans are estimated to see about a 20% boost in income from Biden's bill, citing an analysis from the Tax Policy Center.
- 85% of households will get $1,400 in stimulus checks; the unemployed will receive an additional $300 per week through the fall; and families with children under 17 will get $3,000 per child.
- That's in addition to increased rental assistance, food aid and health insurance subsidies. A recent Washington Post analysis found that 54% of Biden's package provides direct aid to individuals, compared with 40% or less in previous packages.
State of play: That's a lot of money to a lot of people — much of it delivered through temporary versions of programs that progressives have been chasing for years.
- The bill is peppered with progressive priorities — like a refundable child tax credit — that some Democrats are hoping will extend beyond the pandemic.
- That will depend on future political calculus, but either way, the bill has already upended the conventional wisdom about what's possible.
Between the lines: This bill and the series of other COVID packages passed in the last year work out to just over $43,000 per U.S. household — the type of spending that would have been unthinkable as recently as 2009, when Biden last took office.
- Flashback: Barack Obama's stimulus package, the American Recovery and Reinvestment Act, cost $840 billion.
Americans don't seem to mind the spending, and Democrats are betting the popularity of this legislation will propel them through the midterms.
- Public opinion over the past year has shown that Americans in both parties support immense government aid during a crisis.
- A Quinnipiac survey taken last month showed more than two-thirds of the country support Biden's rescue package.
The big picture: Economists predict the economy will grow at a pace of well over 6% in both the second and third quarters of 2021 as Biden's stimulus plan kicks in, according to FactSet.
- This time last year, the Wall Street consensus was that a coronavirus-addled economy would grow by only 2% in 2021.
- Congressional aides say that the expected economic boon, in conjunction with scientists promising a light at the end of the pandemic tunnel, mean this $2 trillion bill is likely the last mammoth COVID-related package we'll see.
Yes, but: There are also some foreseeable problems that could come back to haunt Democrats. Almost all the relief for families is expiring over the coming year, which could create economic pain down the line.
- The package is also so big that some experts worry the economy might grow too fast, resulting in inflation.