Covid Relief Bill is in Trouble — Already
Author: Greg Valliere
January 22, 2021
SO MUCH FOR THE UNITY THEME: We have argued for days that the concept of “unity” in Washington is illusory — and, sadly, that appears to be case as the week ends with the Senate in disarray over a covid relief bill.
THERE’S A DIZZYING NARRATIVE involving filibusters and budget sequestration, but the bottom line is increasingly clear: passage of a covid bill is many weeks away, despite the dismal employment data yesterday. And the bill’s price tag probably will be whittled down.
PRESIDENT BIDEN AND HIS TOP AIDES will meet with Republican Senators this weekend, seeking a compromise. But the idea of spending $1.9 trillion is a non-starter for the GOP. At the least, they will resist a $400 billion grant to state and local governments.
THERE ARE NOT 60 SENATE VOTES to cut off debate and thus move the Biden bill, no chance whatsoever. So Biden will have two options: go with the budget sequestration process, which can be used only twice this year, allowing for passage of a covid bill with only 51 votes. But at least one Democrat, Sen. Joe Manchin of West Virginia, will oppose that tactic unless the bill is pared back.
THE OTHER OPTION would be killing the Senate filibuster rule that requires 60 votes to pass legislation. Many liberal Democrats want to take this route, but that also would have detractors among moderate Democrats. Mitch McConnell wants a pledge now that Democrats will not seek that option; he could sit on Biden Cabinet nominations if he doesn’t get assurances on the filibuster rule.
COMPLICATING THIS NARRATIVE is the determination of Democrats to proceed on impeachment. We get pushback from some of our readers but we reiterate — impeachment is a strategic blunder.
AN IMPEACHMENT TRIAL will be a huge distraction as more important legislation languishes; it will make Trump a martyr, which he most definitely does not deserve; and it ultimately will fail. Yet Nancy Pelosi — who miscalculated spectacularly last fall on covid relief — is determined to hold a trial.
MUCH OF FEBRUARY will be consumed by a bitter impeachment trial as debate rages on a covid relief bill that may not pass until the next key deadline — March 14, when unemployment benefits are set to expire.
BOTTOM LINE: One way or another — through sequestration, the death of the filibuster, or a reduction of the covid bill’s price tag — something will pass by spring.
BUT THIS BRUISING BATTLE will make it even more difficult to win passage of the next bills — including a massive infrastructure package and tax hikes — which will be unanimously opposed by Republicans and perhaps a few Democrats as well.
FOR THE MARKETS, A REASSESSMENT MAY BE NECESSARY: Bond yields soared and stocks rose earlier this winter on the belief that massive stimulus is coming. There eventually will be some stimulus, but not as massive as expected just a few weeks ago.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
©2023 AGF Management Limited. All rights reserved.