First Take — How Much of Biden’s Pandemic Relief Can Pass?
Author: Greg Valliere
January 15, 2021
WE’RE ABOUT TO FIND OUT just how skilled a negotiator Joe Biden is, as critics already are proclaiming that his pandemic relief bill is too expensive. Our initial bottom line — subject to change — is that Biden could get about $1.5 trillion of his $1.9 trillion proposal.
WE SUSPECT THAT THE PRESIDENT-ELECT deliberately included some provisions that will have to be whittled down. He might not get $400 billion for state and local governments, and the minimum wage might not rise to $15 per hour, at least not right away.
SO BIDEN “WENT BIG” because he will have to compromise to get a handful of centrist Democrats to accept a slightly reduced package. Joe Manchin, the moderate Democrat from West Virginia, will win some concessions as Biden seeks 50 Senate votes for a final deal — without using the reconciliation process, which he will save for the next bill.
OUR QUICK TAKE ON THE KEY PROVISIONS:
Weekly unemployment checks, maybe not extending until fall as Biden proposed, maybe not rising to $400 per week. But this will pass, even if it’s slightly pared down.
State and local government aid of $400 billion, which includes funding for testing and vaccines, will pass but the devil will be in the details for this provision. In some configuration, billions for vaccines and testing is virtually certain to pass. The vaccine rollout has been a “dismal failure,” Biden said.
$130 billion for schools, probably will pass but, might face a small reduction.
$1,400 in relief checks, which would equal $2,000 in aid after factoring in the $600 in checks that passed in late December, could get a haircut; Manchin is strongly opposed to this provision because it would send checks to people who are employed.
The $15 billion for small businesses in Biden’s plan could get increased.
Eviction protection is likely to pass, but maybe not extending thru fall.
Money for transit, $20 billion, could get reduced.
A significant increase in the child tax credit has support in both parties.
A rise in the minimum wage is likely, although the real action on this is at the state level. Biden’s call for $15 per hour may be aspirational.
THE NEXT BILL: If you think this one will be difficult, just wait until the next bill, which would propose spending several trillion dollars on infrastructure, green jobs, health benefits, etc. Senate Budget Committee Chairman Bernie Sanders is writing this next bill, which includes tax hikes. That could be the ultimate test of Biden’s negotiating skills.
* * * * *
IMPEACHMENT UPDATE: We reiterate that the Democrats still don’t have the votes to convict Donald Trump in the Senate; they’re at least seven votes short. And we also reiterate that the next few days will be crucial — if there’s more violence or if there’ a huge list of Trump pardons, the Senate could be provoked into convicting.
IN THE MEANTIME, the terror threat seems to be real — but perhaps not in DC, which is an armed camp. With the country on edge, there’s only one person who can lower the temperature — Trump, who could concede the election and forcefully tell the extremists to stand down. If he does, the impeachment drive in the Senate would cool.
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.
©2021 AGF Management Limited. All rights reserved.