Before his inauguration, President Biden made it clear that he sees a need for more stimulus as he rolled out a US$1.9 trillion proposal. The new president’s negotiating skills will be tested as he works to move the proposal forward, and the details and dollar amounts will surely evolve. Ultimately, I think the next package will come by March 14, when unemployment benefits are set to expire. In addition to an extension of those benefits, the package could include a third round of stimulus checks, more state and local aid, and an extension of the eviction moratorium. In addition, I would expect more funding for virus testing, contact tracing, and vaccine dissemination. Biden will first attempt to pass the plan by securing the necessary 60 votes in the Senate. If that fails, he’ll likely turn to the budget reconciliation process to help push some of the spending through.
Sustaining the Recovery and Building for the Future
Biden also promised a second proposal in coming months, which will be aimed at ensuring a robust recovery going forward and will include spending on infrastructure (where there’s bipartisan support), manufacturing, and innovation. As all of this suggests, Biden and the Democrats are positioned to set the policy agenda—but, of course, their slim majority will limit their legislative ambitions somewhat.
Taxes will also be an area of focus, though I’d expect that to come later in 2021, with the potential for somewhat higher corporate taxes (perhaps a tax on intangible income), estate taxes, and top income taxes. The July 31 deadline for raising the debt ceiling may bring some conflict between the parties, with an eye to the 2022 midterm elections.