House Democrats Pass Sixth COVID-19 Relief Package

The U.S. House of Representatives voted 219-212 on February 27 to approve the Biden COVID-19 relief plan, paving the way for Senate action. The vote was largely along party lines, with two Democrats joining all Republicans in opposing it, despite wide public approval (75% overall approval, including 60% of Republicans).

Democratic leaders stitched together the bill following two weeks of protracted markups across the House’s policy committees. A Senate vote is expected as early as this week.

The House bill would deliver stimulus checks of $1,400 for most individuals, increase and extend federal unemployment benefits of $400, create a grant program for small businesses, provide aid to schools, increased funding for vaccines, relief for states and localities hard hit by the pandemic and would implement a federal $15 minimum wage, up from $7.25.

Senate action is expected to be considerably more complicated, requiring changes to meet the arcane special Senate parliamentary tests needed for use of the reconciliation process. Reconciliation will allow the Senate to pass the measure by a simple majority vote. The Senate Parliamentarian has ruled that a minimum wage increase to $15 per hour that is in the House bill does not meet the requirements of the unusual procedure and, therefore, is not expected to be part of the Senate package. That change, plus any other Senate amendments, would require that the legislation return to the House for another vote.

House leadership hopes to clear the package for Biden’s signature during the week of March 8. Without passage of the legislation, special federal unemployment benefits would expire on March 14.

Extremely low interest rates and public indifference to deficit spending make it easier for Democrats to support pumping more money into the economy. In addition, many believe that the Obama administration’s $787 billion stimulus package in 2009 was too small. It resulted in slower economic growth than would have been possible over the next seven years – averaging just a little over 2% per year, a trajectory that continued into the first three years of the Trump Administration. Democrats insist that deteriorating job reports, including the creation of only 49,000 new jobs in January, means that this stimulus package should be as large as possible.

The five previous relief bills have included funding for small businesses, stimulus checks, increased federal unemployment benefits, funding for hospitals, relief for renters and homeowners and more. The estimated price of those combined packages exceeded $3 trillion. It also made 2020 the year of the most federal money spent in one calendar year in American history.

Because there has been no increase in taxes or other federal revenue, the relief has been and will continue to be funded almost exclusively through borrowing. The 2020 deficit added significantly to the national debt, which is now more than $28 trillion. Nonetheless, most economists, even those who have consistently warned about increasing American debt, have said that additional relief is necessary to ward off further economic disaster. They counsel focusing on deficit reduction once the crisis has passed.