Joe Biden called the $1.9 trillion relief plan he rolled out Thursday night the “first step” on what he hopes will be a road to recovery for the coronavirus-battered U.S. economy. So, what’s left?
Plenty, according to the president-elect. Speaking in Wilmington, Del., Biden said he’d lay out a plan next month for spending on infrastructure, clean energy, worker training and more.
Biden called his strategy “a two-step plan to build a bridge to the other side of the crises we face and to a better, stronger, more secure America,” according to his prepared remarks.
The plan unveiled Thursday night includes increasing direct payments to $2,000 from the $600 now hitting Americans’ bank accounts; $20 billion for a national vaccination program; $50 billion for COVID testing; $350 billion for state and local governments; and many more provisions.
Some say Biden could have included more. Rep. Alexandria Ocasio-Cortez, the New York Democrat, said she believed the checks to Americans should be $2,000 a person versus the proposed $1,400. Yet even the $1,400 relief checks “could get a haircut,” in the words of Greg Valliere, AGF Investments’ chief U.S. policy strategist, as they face opposition from centrist Democratic Sen. Joe Manchin of West Virginia.
Also missing from Biden’s Thursday-night proposal: eliminating the state and local tax (or, SALT) deduction cap. Analysts at Beacon Policy Advisors say advocates such as incoming Senate Majority Leader Chuck Schumer, a New York Democrat, could get that provision included if his party uses the so-called budget reconciliation procedure to pass Biden’s priorities. But they note it’s a “non-starter” for Republican leaders and could also face resistance among some Democrats.
Biden’s rescue plan would be paid for through federal borrowing.
But tax increases are on the table in the future, as Lewis Alexander, U.S. chief economist at Nomura, wrote.
“There were no discussions of tax changes in [Thursday’s] proposal. We expect those to come up more during the discussion of infrastructure spending in February,” said Alexander. “However, ultimately, narrow congressional majorities, a weak economy, and the 2022 midterms will likely constrain any major tax changes from the incoming Biden administration,” he said.
Biden previewed his tax plans in his prepared remarks, saying that where he would make “permanent investments,” they can be paid for “by making sure that everyone pays their fair share in taxes.
“We can do it without punishing anyone by closing tax loopholes for companies that ship American jobs overseas or that allow American companies to pay zero in federal income taxes,” he said.
U.S. stocks (S&P:SPX) were on track to end the week on a down note after Biden announced his COVID relief plan and investors were assessing results from big banks.