Here Comes the Hard Part — Senate Begins Debate on Covid Aid Bill
Author: Greg Valliere
March 2, 2021
FIRST OF ALL, there’s a legitimate question about the $1.9 trillion covid aid bill: does the country really need to spend that much money? We argued during February — as the economy recovered and bond yields surged — that something closer to $1 trillion would be plenty.
AS THE SENATE BEGINS DEBATE this week, even some Democrats have reservations about the level of spending, an issue that will get louder as controversy subsides over a minimum wage hike; that fight that will have to wait until later this year.
WITH MOST STATES reporting surprisingly solid revenues, some Senate Democrats are asking whether Congress should spend $280 billion on aid to state and local governments? Some Senators think that money should go to broadband build-outs.
“THE MOOD IS TO SCALE BACK,” a Congressional aide told us yesterday; the $300 weekly unemployment benefits may stay at that level instead of rising to $400. And there may be an increased focus on who will be eligible for $1,400 federal checks. If the bill is scaled back, or targeted differently, it might win a couple of GOP supporters.
BUT PRESIDENT BIDEN IS FOCUSED almost entirely on keeping all 50 Democrats on board, that’s the key. Biden met with moderates yesterday and will virtually attend party events today and tomorrow. With a minimum wage hike off the table, Democrats expect three moderates — Sens. Joe Manchin, Kyrsten Sinema and Jon Tester — to vote for the bill, enough for it to prevail in a 50-50 tie.
BOTTOM LINE: This is a bloated bill, even by Washington standards, but Biden’s poll numbers continue to rise and nearly a third of Republican voters say they support the measure. Passage by mid-March still appears likely, with a price tag of close to $1.9 trillion, even though some details may change.
* * * * *
POPULISTS WANT MORE TAXES: Elizabeth Warren generated tons of publicity yesterday with her Ultra-Millionaire Tax Act. A Wall Street transaction tax proposal will be coming soon. We’re not going to spend much time focusing on these proposals, because they have no chance of enactment.
WARREN AND HER ALLIES have solid public support for more modest tax hikes on corporations and wealthy individuals, and those proposals may pass by fall. But a wealth tax — difficult to enforce, easy to avoid — will fail. Every Republican scoffs at Warren’s plan, as do many Democrats; even liberal Treasury Secretary Janet Yellen is opposed.
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.
©2022 AGF Management Limited. All rights reserved.
