With a new Biden administration soon to take office, it appears that more government spending will soon be underway.
On Thursday, president-elect Joe Biden revealed details surrounding his $1.9 trillion pandemic stimulus bill, which includes revamped payments to households, money for vaccination programs, more money for local and state governments, and an extension of jobless benefits. In addition, the bill also proposes increasing the federal minimum wage to $15, additional aid for small businesses, and increased funding for education.
The new spending bill, called the American Rescue Plan, will increase direct payments to eligible Americans by $1,400, which, when coupled with the existing $600 already approved by Congress in December, will amount to the total $2,000 that President Trump previously advocated for. Moreover, the plan will also allow residents that are married to undocumented individuals to also receive the direct payments — something that was previously barred in prior stimulus bills.
The Biden administration plans to earmark $20 billion towards the creation of a national vaccine distribution program, which would provide free vaccinations to residents — regardless of their immigration status. The bill will also allocate $50 billion towards increasing Covid-19 testing efforts, including the purchase of rapid-result tests, increasing lab capacities, and aiding in the local implementation of testing regimens.
Biden’s stimulus bill also pushes for $350 billion in assistance for local and state governments, as well as $20 billion for public transit systems. City and state governments had previously threatened to initiate extensive cuts to public healthcare and eduction due to reduced tax revenue and increased costs as a result of the pandemic.
The American Rescue Plan would also extend and increase unemployment benefits that would otherwise expire in March. The proposal calls for an increase from $300 to $400 for jobless Americans, as well as extend the eligibility period through to September. In addition, the bill would also extend benefits for gig-economy workers, self-employed individuals, and those that have drained their regular unemployment benefits.
Other proposals in the bill include increasing the federal minimum wage from $7.25 to $15, and eliminating the tipped minimum wage widely used by the hospitality industry. However, this portion of the bill will likely irritate and alienate Republicans. The stimulus package also includes $35 billion in government funds towards low-interest loans for small businesses, and $15 billion in grants for the respective employers. Education is also takes up a large portion of the $1.9 trillion stimulus plan, with $170 billion going towards helping schools remain open amid the pandemic.
According to Biden officials, the new bill will be the first of two spending initiatives that the new administration plans to roll out at the beginning of Biden’s presidency. Details of the second bill are expected to be revealed sometime in February, and will focus on a long-term recovery for the US economy, including job creation, advancing racial equality, and additional climate change initiatives.
Following the news, stocks fell to session lows, while 10-year treasury yields were sent soaring.
Information for this briefing was found via CNBC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.