by Greg Valliere, AGF Management Ltd.
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.
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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.
