American Rescue Plan (2021)

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    Biden, Needing a Win, Enters a Sprint for His Economic Agenda

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    As his poll numbers slide, the president and his aides have mounted an aggressive pitch in Congress and around the country for his spending plans on infrastructure and more.WASHINGTON — President Biden, his aides and his allies in Congress face a September sprint to secure a legislative victory that could define his early presidency.Democrats are racing the clock after party leaders in the House struck a deal this week to advance the two-track approach that Mr. Biden hopes will deliver a $4 trillion overhaul of the federal government’s role in the economy. That agreement sets up a potentially perilous vote on one part of the agenda by Sept. 27: a bipartisan deal on roads, broadband, water pipes and other physical infrastructure. It also spurred House and Senate leaders to intensify efforts to complete a larger, Democrats-only bill to fight climate change, expand educational access and invest heavily in workers and families, inside that same window.If the party’s factions can bridge their differences in time, they could deliver a signature legislative achievement for Mr. Biden, on par with the New Deal or Great Society, and fund dozens of programs for Democratic candidates and the president to campaign on in the months to come.If they fail, Mr. Biden could find both halves of his economic agenda dashed, at a time when his popularity is slumping and few if any of his other top priorities have a chance to pass Congress.The president finds himself at a perilous moment seven months into his term. His withdrawal of American troops from Afghanistan has devolved into a chaotic race to evacuate tens of thousands of people from the country by the month’s end. After throwing a July 4 party at the White House to “declare independence” from the coronavirus pandemic, he has seen the Delta variant rampage through unvaccinated populations and send hospitalizations and death rates from the virus soaring in states like Florida.Mr. Biden’s approval ratings have dipped in recent months, even on an issue that has been an early strength of his tenure: the economy, where some recent polls show more voters disapproving of his performance than approving it.The country is enjoying what will most likely be its strongest year of economic growth in a quarter century. But consumer confidence has slumped in the face of rapidly rising prices for food, gasoline and used cars, along with shortages of home appliances, medical devices and other products stemming from pandemic-fueled disruptions in the global supply chain.While unemployment has fallen to 5.4 percent, workers have not flocked back to open jobs as quickly as many economists had hoped, creating long waits in restaurants and elsewhere. Private forecasters have marked down their expectations for growth in the back half of the year, citing supply constraints and the threat from the Delta variant.White House economists still expect strong job gains through the rest of the year and a headline growth rate that far exceeds what any forecasters expected at the start of 2021, before Mr. Biden steered a $1.9 trillion stimulus plan through Congress. But the White House economic team has lowered informal internal forecasts for growth this year, citing supply constraints and possible consumer response to the renewed spread of the virus, a senior administration official said this week.Mindful of that markdown, and of what White House economists estimate will be a hefty drag on economic growth next year as stimulus spending dries up, administration officials have mounted a multiweek blitz to pressure congressional moderates and progressives to pass the spending bills that officials say could help reinvigorate the recovery — and possibly change the narrative of the president’s difficult late summer.The importance of the package to Mr. Biden was clear on Tuesday, when he pre-empted a speech on evacuation efforts in Afghanistan to laud House passage of a measure that paves the way for a series of votes on his broader agenda.For the infrastructure bill to pass, Congress must balance the desires of progressives who see a generational chance to expand government to address inequality and curb climate change and moderates who have pushed for a smaller package.Stefani Reynolds for The New York Times“We’re a step closer to truly investing in the American people, positioning our economy for long-term growth, and building an America that outcompetes the rest of the world,” the president said.Many steps remain before Mr. Biden can sign both bills into law — but his party has given itself only a few weeks to complete them. The infrastructure bill is written. But the House and Senate must agree on the spending programs, revenue increases and overall cost of the larger bill, balancing the desires of progressives who see a generational chance to expand government to address inequality and curb climate change and moderates who have pushed for a smaller package and resisted some of the tax proposals to pay for it.It is a timeline reminiscent of what Republicans set for themselves in the fall of 2017, when they rushed a nearly $2 trillion package of tax cuts to President Donald J. Trump’s desk without a single Democratic vote.Sticking to it will require sustained support from administration officials both in and out of Washington. In the first three weeks of August, Mr. Biden dispatched cabinet members to 31 states to barnstorm for the infrastructure bill and his broader economic agenda, with events in the districts of moderate and progressive members of Congress, according to internal documents obtained by The New York Times. His secretaries of transportation, labor, interior, energy, commerce and agriculture sat for dozens of local television and radio interviews to promote the bills.Even with those efforts, the initial clash over advancing the budget this week was resolved with a flurry of calls from Mr. Biden, top White House officials and senior Democrats to the competing factions in the House.Congressional leaders say they have spent months laying the groundwork so that their party can move quickly toward consensus. Speaker Nancy Pelosi of California told colleagues in a letter on Wednesday that “we have long had an eye to having the infrastructure bill on the president’s desk by the Oct. 1,” the date when many provisions in the bipartisan package are slated to go into effect.Committee leaders have been instructed to finish their work by Sept. 15, and rank-and-file lawmakers have been told to make their concerns and priorities known quickly as they maneuver through substantive policy disagreements, including whether it should be as much as $3.5 trillion and the scope of Mr. Biden’s proposed tax increases.“I’m sure everybody’s going to try their best,” said Representative John Yarmuth of Kentucky, the House Budget Committee chairman. “Some committees will have it rougher than others.”Senator Ron Wyden of Oregon, the chairman of the Senate Finance Committee, has been releasing discussion drafts of proposals to fund the $3.5 trillion budget reconciliation spending — the larger bill that Democrats plan to move without any Republican support — including raising taxes on high earners and businesses. On Wednesday, he provided granular details of a plan to increase taxes on the profits that multinational companies earn and book overseas.“I’m encouraged by where we are,” Mr. Wyden said in an interview.Democratic leaders and the White House have pushed analyses of their proposals that speak to core liberal priorities; on Wednesday, Senator Chuck Schumer of New York, the majority leader, released a report suggesting the two bills combined would “put our country on the path to meet President Biden’s climate change goals of 80 percent clean electricity and 50 percent economywide carbon emission reduction by 2030.”White House economists released a detailed report this week claiming the spending Mr. Biden supports, like universal prekindergarten and subsidized child care, would expand the productive capacity of the economy and help reduce price pressures in the future.While Republicans are not expected to get on board with the larger spending bill, they are still making their concerns known, labeling the bill socialist and a spending spree and claiming it will stoke inflation and drive jobs overseas.Mr. Biden can pass the entire agenda now with only Democratic votes, but the party’s thin majorities — including no room for even a single defection in the Senate — complicates the task. Ms. Pelosi said on Wednesday that the House would “write a bill with the Senate, because there’s no use our doing a bill that is not going to pass the Senate, in the interest of getting things done.”As part of an agreement to secure the votes needed to approve the $3.5 trillion budget blueprint on Tuesday, Ms. Pelosi gave centrist and conservative Democrats a commitment that she would only take up a reconciliation package that had the support of all 50 Senate Democrats and cleared the strict Senate rules that govern the fast-track process.“I’m not here to pass messaging bills — I’m here to pass bills that will actually become law and help the American people,” said Representative Stephanie Murphy of Florida, one of the Democrats who initially announced that she would not support advancing the budget, but ultimately joined every Democrat in advancing it.For moderates, Ms. Pelosi’s commitment served to shield them from potentially tough votes on provisions that the Senate may reject. It also signaled the political realities that could shape the final legislation. No Democrat will want to vote on a large spending bill doomed for failure. It will be Mr. Biden’s job to lead his coalition to a bill that can pass muster with moderates and progressives alike — and to convince every holdout that failure is not an option. More

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    Cutting off jobless benefits early may have hurt state economies.

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    When states began cutting off federal unemployment benefits this summer, their governors argued that the move would push people to return to work.New research suggests that ending the benefits did indeed lead some people to get jobs, but that far more people did not, leaving them — and perhaps also their states’ economies — worse off.A total of 26 states, all but one with Republican governors, have moved to end the expanded unemployment benefits that have been in place since the pandemic began. Many business owners blame the benefits for discouraging people from returning to work, while supporters argue they have provided a lifeline to people who lost jobs in the pandemic.The extra benefits are set to expire nationwide next month, although President Biden on Thursday encouraged states with high unemployment rates to use separate federal funds to continue the programs.To study the policies’ effect, a team of economists used data from Earnin, a financial services company, to review anonymized banking records from more than 18,000 low-income workers who were receiving unemployment benefits in late April.A Small Rise in EmploymentShare of workers on unemployment in late April who later began working.

    Note: Chart reflects data in 19 states that have cut off benefits, and 23 that have retained them. Source: Earnin via Coombs, et al.By The New York TimesThe researchers found that ending the benefits did have an effect on employment: In states that cut off benefits, about 26 percent of people in the study were working in early August, compared with about 22 percent of people in states that continued the benefits.But far more people did not find jobs. In the 19 states ending the programs for which researchers had data, about two million people lost their benefits entirely, and a million had their payments reduced. Of those, only about 145,000 people found jobs because of the cutoff. (The researchers argue the true number is probably even lower, because the workers they were studying were the people most likely to be severely affected by the loss of income, and therefore may not have been representative of everyone receiving benefits.)A Big Drop in BenefitsShare of workers on unemployment in late April who continued to receive benefits in some form.

    Note: Chart reflects data in 19 states that have cut off benefits, and 23 that have retained them. Source: Earnin via Coombs, et al.By The New York TimesCutting off the benefits left unemployed workers worse off on average. The researchers estimate that workers lost an average of $278 a week in benefits because of the change, and gained just $14 a week in earnings (not $14 an hour, as previously reported here). They compensated by cutting spending by $145 a week — a roughly 20 percent reduction — and thus put less money into their local economies.“The labor market didn’t pop after you kicked these people off,” said Michael Stepner, a University of Toronto economist who was one of the study’s authors. “Most of these people are not finding jobs, and it’s going to take them a long time to get their earnings back.”Less Income, Less SpendingAverage impact of ending federal programs on weekly unemployment benefits, earnings and spending, among people who were on unemployment in late April.

    Notes: Data is as of Aug. 6 and includes 19 states that have cut off benefits. Source: Earnin via Coombs, et al.By The New York TimesThe findings are consistent with other recent research that has found that the extra unemployment benefits have had a measurable but small effect on the number of people working and looking for work. The next piece of evidence will come Friday morning, when the Labor Department will release state-level data on employment in July.Coral Murphy Marcos More

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    When Will Unemployment End? Biden Urges Some States to Extend Benefits

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    President Biden is encouraging states with stubbornly high jobless rates to use federal aid dollars to extend benefits for unemployed workers after they are set to expire in early September, administration officials said on Thursday, in an effort to cushion a potential shock to some local economies as the Delta variant of the coronavirus rattles the country.Enhanced benefits for unemployed workers will run through Sept. 6 under the $1.9 trillion economic aid bill enacted in March. Those benefits include a $300 weekly supplement for traditional benefits paid by states, additional weeks of benefits for the long-term unemployed and a special pandemic program meant to help so-called gig-economy workers who do not qualify for normal unemployment benefits. Those benefits are administered by states but paid for by the federal government. The bill also included $350 billion in relief funds for state, local and tribal governments.Mr. Biden still believes it is appropriate for the $300 benefit to expire on schedule, as it was “always intended to be temporary,” the secretaries of the Treasury and labor said in a letter to Democratic committee chairmen in the House and Senate on Thursday. But they also reiterated that the stimulus bill allows states to use their relief funds to prolong other parts of the expanded benefits, like the additional weeks for the long-term unemployed, and they called on states to do so if their economies still need the help.That group could include California, New York and Nevada, where unemployment rates remain well above the national average and governors have not moved to pare back benefits in response to concerns that they may be making it more difficult for businesses to hire.“Even as the economy continues to recover and robust job growth continues, there are some states where it may make sense for unemployed workers to continue receiving additional assistance for a longer period of time, allowing residents of those states more time to find a job in areas where unemployment remains high,” wrote Janet L. Yellen, the Treasury secretary, and Martin J. Walsh, the labor secretary. “The Delta variant may also pose short-term challenges to local economies and labor markets.”The additional unemployment benefits have helped boost consumer spending in the recovery from recession, even as the labor market remains millions of jobs short of its prepandemic levels. But business owners and Republican lawmakers have blamed the $300 supplement, in particular, for the difficulties that retailers, restaurants and other employers have faced in filling jobs this spring and summer.Two dozen states, mostly led by Republicans, have moved to end at least some of the benefits before their expiration date.In their letter to Congress, the administration officials said the Labor Department was announcing $47 million in new grants meant to help displaced workers connect with good jobs. They also reiterated Mr. Biden’s call for Congress to include a long-term fix for problems with the unemployment system in a large spending bill that Democrats are trying to move as part of their multipart economic agenda. More

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    Big Economic Challenges Await Biden and the Fed This Fall

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    Expiring unemployment benefits and the Delta variant add uncertainty to a recovery that has brought strong growth but an unusual labor market.WASHINGTON — The U.S. economy is heading toward an increasingly uncertain autumn as a surge in the Delta variant of the coronavirus coincides with the expiration of expanded unemployment benefits for millions of people, complicating what was supposed to be a return to normal as a wave of workers re-entered the labor market.That dynamic is creating an unexpected challenge for the Biden administration and the Federal Reserve in managing what has been a fairly swift recovery from a recession. For months, officials at the White House and the central bank have pointed toward the fall as a potential turning point for an economy that is struggling to fully shake off the effects of the pandemic — particularly in the job market, which remains millions of positions below prepandemic levels.The widespread availability of Covid-19 vaccines, the reopening of schools and the expiration of enhanced jobless benefits have been seen as a potent cocktail that should prod workers off the sidelines and into the millions of jobs that employers say they are having trouble filling.But that optimistic outlook might be imperiled by the resurgent virus and policymakers’ response to it. Big companies are already delaying return-to-office plans, an early and visible sign that life may not return to normal as rapidly as expected. At the same time, long-running federal supports for people hurt by the pandemic are going away, including a moratorium on evictions, which ended on Saturday, and an extra $300 per week for unemployed workers. That benefit expires on Sept. 6, and some states have moved to end it sooner.Federal lawmakers are also planning to repurpose more than $200 billion worth of Covid relief to help pay for a $1 trillion infrastructure plan. An infrastructure bill moving through the Senate would rescind previously allocated virus funds for colleges and universities along with unused unemployment benefits and airline aid. It would also claw back unspent funds from some expired small-business programs to help offset the plan’s $550 billion in new spending. Democratic leaders have been adamant that the Senate will vote on the infrastructure bill before leaving Washington for a scheduled August recess.White House economists have said they see no need yet to consider major new measures to bolster the recovery. After months of blockbuster economic growth, falling unemployment numbers, and complaints from business leaders and Republicans that government support is preventing workers from taking jobs, administration officials remain locked into their current policy stance despite renewed risks.Administration officials have said President Biden is not pushing to extend the extra $300 per week for jobless people. It’s unclear whether the administration will try to extend a program that expanded unemployment benefits to workers who would not typically qualify for them, including the self-employed, gig workers and part-timers.Officials say the $1.9 trillion economic aid package that Mr. Biden signed in March, and that caused forecasters to lift their estimates for growth this year, has given the economy enough cushion to endure another surge from the virus. Mr. Biden has also vowed that the virus will not lead to new “lockdowns, shutdowns, school closures and disruptions” like last year’s.“We are not going back to that,” he said last week.White House advisers say the most important thing the president can do for the economy is continue to make the case for more people to get vaccinated. On Thursday, Mr. Biden asked states to use money from the March stimulus package to pay $100 to every newly vaccinated person and said the government would reimburse employers who gave workers time off to be vaccinated or take others to get shots.“We have held the view from the beginning that addressing the pandemic and recovering the economy were inextricably linked. That continues to be true,” Brian Deese, who heads Mr. Biden’s National Economic Council, said in an interview. “But because of the progress that we have made in addressing the pandemic and in putting in place both historic and durable economic policy supports, we have a set of tools right now to address both of these challenges.”The Fed is taking an optimistic but wait-and-see approach. Central bankers voted at their July meeting to leave emergency support in place for now. They gave no precise date for when they may begin to reduce their help for the economy, though they are beginning to draw up a plan for paring back support.Much like their counterparts at the White House, officials at the Fed are counting on solid economic data this autumn. Jerome H. Powell, the Fed chair, said last week that he expected strong labor market progress in the months ahead, partly because virus fears and child care issues should subside.“There’s also been very generous unemployment benefits, which are now rolling off. They’ll be fully rolled off in a couple of months,” Mr. Powell said during a news conference after the Fed’s July meeting. “All of those factors should wane, and because of that we should see strong job creation moving forward.”Administration and Federal Reserve officials have expressed hope that children’s return to schools and fading fears of the virus will encourage more people to begin looking for work again.Whitney Curtis for The New York TimesMr. Biden told a CNN forum in Ohio on July 21 that he still sees no evidence that the supplemental benefits have had a “serious impact” on hiring. But even if they had, he said, they would soon run their course.“We’re ending all those things that are the things keeping people back from going back to work,” he said.That stance carries some risk. While the economy grew faster in the first half of this year than it had in decades, the job market is still missing 6.8 million positions from its February 2020 level, and while policymakers are optimistic, it is not clear how quickly those jobs will come back. The economy has never reopened from a pandemic before, and nobody knows to what degree unemployment insurance is dissuading workers.“Seven to nine million Americans should be working right now if the pandemic had never happened, so that’s a lot of Americans that we need to put back to work,” Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said on CBS’s “Face the Nation” on Sunday. “But is it six months, or is it two years? I’m not sure.”If it takes workers more time to go back into jobs, it could make for a much slower economic recovery than either the Fed or the White House is banking on. Workers stuck on the sidelines without enhanced benefits might pull back on spending, hurting demand and slowing the rapid rebound that has been underway in recent months.So far, administration economists remain heartened by the economic data. Officials said last week that they saw no evidence yet of the Delta variant’s hurting economic activity, and that they were hopeful that the more than 160 million Americans who were vaccinated would not pull back spending even if the variant continued to spread — making this wave of the virus less economically damaging than past ones.And as government spending support for the economy slows down, the Fed is still keeping money cheap to borrow, which should continue to pad economic growth.Shoppers in Los Angeles, where masks are required indoors. New public health guidelines could again chill some economic activity.Alex Welsh for The New York TimesFed officials have said they want to see more proof of the labor market’s healing before they slow their monthly bond purchases, which will be their first step toward a more normal policy setting.Mr. Powell said at his news conference last week that “we’re some way away from having had substantial further progress toward the maximum employment goal.”“I would want to see some strong job numbers,” he added.In the text of a speech on Friday, Lael Brainard, an influential Fed governor, said she wanted to see September economic data to assess whether the labor market was strong enough for the Fed to begin dialing back support, which suggests she would not favor signaling a start to the slowdown until later this fall. But her colleague Christopher J. Waller said in a CNBC interview on Monday that he would probably prefer to begin pulling back bond purchases quickly, if jobs data hold up, perhaps as soon as October.Increases in interest rates — the Fed’s more traditional, and more potent, tool — remain farther away. Most Fed officials in June projected that they would not lift their federal funds rate until 2023 at earliest, because they would like the labor market to return to full strength first.How rapidly the economy can achieve that goal is an open question. Employers regularly complain about the enhanced benefits, but even they have sent mixed messages on whether those are the main driver keeping labor at bay.“Many contacts were optimistic that labor availability would improve in the fall as schools restart and enhanced unemployment benefits end,” the Atlanta Fed’s qualitative report on business conditions found in June. “However, there were several who do not expect labor supply to improve for six to nine months.”Peter Ganong, an economist at the University of Chicago, said that if the pattern that he and his fellow researchers had seen in employment data held, he would not expect a wave of workers to jump back into jobs just because supplemental benefits expired.“So far, we see small employment differences even when vaccines are becoming available,” he said. Mr. Ganong and his co-authors compared the job-finding rates of people whose wages were more fully replaced by supplemental benefits and people whose wages were less fully replaced. They found small and relatively steady differences, even as the economy reopened.But Mr. Ganong cautioned that his research tracked the supplemental insurance. For many workers, unemployment benefits could come to an end altogether as extensions lapse, which may have a bigger effect.There is plenty of room for labor market progress. People in their prime working years are participating in the labor market by working or searching for jobs at much lower rates than before the pandemic — and that metric has made little progress in recent months.“Generally speaking, Americans want to work, and they’ll find their way into the jobs that they want,” Mr. Powell said last week. “It may take some time, though.”Alan Rappeport More

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    Covid Aid Programs Spur Record Drop in Poverty

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    WASHINGTON — The huge increase in government aid prompted by the coronavirus pandemic will cut poverty nearly in half this year from prepandemic levels and push the share of Americans in poverty to the lowest level on record, according to the most comprehensive analysis yet of a vast but temporary expansion of the safety net.The number of poor Americans is expected to fall by nearly 20 million from 2018 levels, a decline of almost 45 percent. The country has never cut poverty so much in such a short period of time, and the development is especially notable since it defies economic headwinds — the economy has nearly seven million fewer jobs than it did before the pandemic.The extraordinary reduction in poverty has come at extraordinary cost, with annual spending on major programs projected to rise fourfold to more than $1 trillion. Yet without further expensive new measures, millions of families may find the escape from poverty brief. The three programs that cut poverty most — stimulus checks, increased food stamps and expanded unemployment insurance — have ended or are scheduled to soon revert to their prepandemic size.While poverty has fallen most among children, its retreat is remarkably broad: It has dropped among Americans who are white, Black, Latino and Asian, and among Americans of every age group and residents of every state.Poverty Rates Have Fallen for Every Demographic Group More

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    Inflation Is New Battle Line as Republicans and Biden Spar Over Spending

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    Republicans say President Biden’s spending plans will keep inflation rising, but the White House says the proposals could help tame costs.WASHINGTON — Republicans have made Americans’ concerns over rising prices their primary line of attack on President Biden’s economic agenda, seeking to derail trillions of dollars in spending programs and tax cuts by warning that they will produce rocketing 1970s-style inflation.They have seized on the increasing costs of gasoline, used cars, and other goods and services to accuse the president of stoking “Bidenflation,” first with the $1.9 trillion stimulus bill he signed in March and now with a proposed $3.5 trillion economic bill that Democrats have begun to draft in the Senate.There are unusually large amounts of uncertainty over the path of inflation in the coming months, given the vagaries around restarting a pandemic-stricken economy. Yet even many economists who worry that high prices will linger longer than analysts initially expected say there is little reason to believe the problem will worsen if Mr. Biden succeeds in his attempts to bolster child care, education, paid leave, low-emission energy and more.“There’s been a lot of fear-mongering concerning inflation,” Joseph E. Stiglitz, a liberal economist at Columbia University, said on Tuesday during a conference call to support Mr. Biden’s economic plans. But the president’s spending proposals, he said, “are almost entirely paid for.”“If they are passed as proposed,” he added, “there is no conceivable way that they would have any significant effect on inflation.”The debate over the effects of the proposals “has nothing to do with the current angst over inflation,” said Mark Zandi, a Moody’s Analytics economist who has modeled Mr. Biden’s plans.Still, rising inflation fears have forced the president and his aides to shift their economic sales pitch to voters. The officials have stressed the potential for his efforts to lower the cost of health care, housing, college and raising children, even as they insist the current bout of inflation is a temporary artifact of the pandemic recession.The administration’s defense has at times jumbled rapid price increases with inflation-dampening efforts that could take years to bear fruit. And officials concede that the president recently overstated his case on a national stage by claiming incorrectly that Mr. Zandi had found his policies would “reduce inflation.”The economics of the inflation situation are muddled: The United States has little precedent for the crimped supply chains and padded consumer savings that have emerged from the recession and its aftermath, when large parts of the economy shut down or pulled back temporarily and the federal government sent $5 trillion to people, businesses and local governments to help weather the storm. The economy remains seven million jobs short of its prepandemic total, but employers are struggling to attract workers at the wages they are used to paying.But the political danger for Mr. Biden, and opportunity for Republicans who have sought to derail his plans, is clear.The price index that the Federal Reserve uses to track inflation was up nearly 4 percent in May from the previous year, its fastest increase since 2008. Republicans say it is self-evident that more spending would further inflame those increases — a new rationale for a longstanding conservative attack on the vast expansion of government programs that Mr. Biden is proposing.Nine out of 10 respondents to a new national poll for The New York Times by the online research firm Momentive, which was previously known as SurveyMonkey, say they have noticed prices going up recently. Seven in 10 worry those increases will persist “for an extended period.” Half of respondents say that if the increases linger, they will pull back on household spending to compensate.Administration officials acknowledge that inflation worries are softening consumer confidence, including in the University of Michigan’s survey of consumer sentiment, even as the economy rebounds from recession with its strongest annual growth rate in decades.The issue has given Mr. Biden’s opponents their clearest and most consistent message to attack an agenda that remains popular in public opinion polls.“There’s no question we have serious inflation right now,” Senator Patrick J. Toomey, Republican of Pennsylvania, told CNN’s “State of the Union” on Sunday. “There is a question about how long it lasts. And I’m just worried that the risk is high that this is going to be with us for a while. And the Fed has put itself in a position where it’s going to be behind the curve. You combine that with massively excess spending, and it is a recipe for serious problems.”Some Republicans say a portion of Mr. Biden’s spending plans would not drive up prices — particularly the bipartisan agreement he and senators are negotiating to invest nearly $600 billion in roads, water pipes, broadband and other physical infrastructure. But the party is unified in criticizing the rest of the president’s proposals in a way that many economists say ignores how they would actually affect the economy.“There’s no question we have serious inflation right now,” Senator Patrick Toomey, Republican of Pennsylvania, said.Stefani Reynolds for The New York TimesSome of the proposals would distribute money directly and quickly to American consumers and workers — by raising wages for home health care workers, for example, and continuing an expanded tax credit that effectively functions as a monthly stipend to all but the highest-earning parents. But they would also raise taxes on high earners, and much of the spending would create programs that would take time to find their way into the economy, like paid leave, universal prekindergarten and free community college.Some conservative economists worry that the relatively small slice of immediate payments would risk further heating an already hot economy, driving up prices. The direct payments in the proposals “would exacerbate pre-existing inflationary pressures, put additional pressure on the Fed to withdrawal monetary policy support earlier than it had planned, and put at risk the longevity of the recovery,” said Michael R. Strain, an economist at the conservative American Enterprise Institute.Other economists in and outside the administration say those effects would be swamped by the potential of the spending programs like paid leave to reduce inflationary pressure.“The economics of these investments strongly belies the Republican critique because these are investments that will yield faster productivity growth, greater labor supply, the expansion of the economy’s supply side — which very clearly dampens inflationary pressures, not exacerbates them,” Jared Bernstein, a member of Mr. Biden’s Council of Economic Advisers, said in an interview.Administration officials pivoted their sales pitch on the president’s agenda last week to emphasize the potential for his plans to reduce prices.Mr. Biden’s agenda is “about lowering costs for families across the board,” Mike Donilon, a senior adviser at the White House, told reporters. He said officials believed they were in “a strong position” against Republican attacks on inflation, in part by citing Mr. Zandi’s recent analysis. The president also referred to that analysis last week during a forum in Ohio on CNN, saying it had found that his proposals would “reduce inflation.”The Moody’s analysis did not say that; instead, it found that some of Mr. Biden’s spending plans could help relieve price pressures several years from now. It specifically cited proposals to build additional affordable housing units nationwide, which could help hold down rents and housing prices and reduce the cost of prescription drugs.White House officials concede that Mr. Biden overstated the analysis but point to more measured remarks in a speech this month, when he said his plans would “enhance our productivity — raising wages without raising prices.” More

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    Democrats Roll Out $3.5 Trillion Budget to Fulfill Biden’s Broad Agenda

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    “We’re going to get a lot done,” President Biden said, as Senate Democrats began drafting the details on a social and environmental bill that could yield transformative change.WASHINGTON — President Biden and congressional Democrats vowed on Wednesday to push through a $3.5 trillion budget blueprint to vastly expand social and environmental programs by extending the reach of education and health care, taxing the rich and tackling the warming of the planet.The legislation is still far from reality, but the details that top Democrats have coalesced around are far-reaching. Prekindergarten would be universal for all 3- and 4-year-olds, two years of community college would be free, utilities would be required to produce a set amount of clean energy, and prescription drug prices would be lowered. Medicare benefits would be expanded, and green cards would be extended to some undocumented immigrants.At a closed-door luncheon in the Capitol, Mr. Biden rallied Democrats and the independents aligned with them to embrace the plan, which would require every single one of their votes to move forward over united Republican opposition. But crucial moderate lawmakers had yet to say whether they would accept the proposal, with a majority of policy details left to resolve.Mr. Biden’s message to the senators on Wednesday, said Senator Richard Blumenthal of Connecticut, was “be unified, strong, big and courageous.”Senate Democratic leaders have said they aim to pass both the budget blueprint and a narrower, bipartisan infrastructure plan that is still being written before the chamber leaves for the August recess — a complex and politically tricky task in a 50-50 Senate. The narrowly divided House would also have to pass the budget blueprint before both chambers begin tackling the detailed legislation.Speaker Nancy Pelosi, who must ultimately get the package through the House, embraced the deal, telling Democrats in a letter on Wednesday, “This budget agreement is a victory for the American people, making historic, once-in-a-generation progress for families across the nation.”The outline includes large swaths of Mr. Biden’s $4 trillion economic agenda. It wraps in every major category from his American Families Plan, including investments in child care, paid leave and education, and expanded tax credits that this week will begin providing a monthly check to most families with children.“I think we’re going to get a lot done,” Mr. Biden told reporters as he left his first in-person lunch with the Democratic caucus as president.Nodding to budget constraints, party leaders conceded that many of the programs included in their plan — including the tax credits — could be temporary, leaving a future Congress to decide whether to extend them further.The proposal also includes some measures that go beyond what Mr. Biden has called for, like expanding Medicare to cover dental, vision and hearing benefits. Democratic leaders left it to the Senate Finance Committee to decide whether to include reducing the eligibility age for Medicare to 60, a priority of Senator Bernie Sanders of Vermont, the Budget Committee chairman.The resolution would also create what would effectively be a tax on imports from countries with high levels of greenhouse gas emissions. That could violate Mr. Biden’s pledge not to raise taxes on Americans earning less than $400,000 a year if the tax is imposed on products that typical consumers buy, such as electronics from China.Democrats on Mr. Sanders’s committee must produce a budget resolution in the coming days that includes so-called reconciliation instructions to other Senate committees, which in turn will draft legislation detailing how the $3.5 trillion would be spent — and how taxes would be raised to pay for it.That would pave the way for Democrats to produce a reconciliation bill this fall that would be shielded from a filibuster, allowing them to circumvent Republican opposition but requiring all 50 of their members — and a majority in the narrowly divided House — to pass it.“In some cases, it doesn’t provide all the funding that I would like to do right now,” Mr. Sanders said. “But given the fact that we have 50 members, and that compromises have got to be made, I think this is a very, very significant step forward.”He added: “If you’re asking me at the end of the day, do I think we’re going to pass this? I do.”A neighborhood in Austin, Texas, where many homes have solar panels. The blueprint of the legislation includes clean energy provisions and other social programs.Tamir Kalifa for The New York TimesAt the private lunch, Senator Chuck Schumer of New York, the majority leader, outlined the proposal and the directives it would lay out.Democrats included the creation of a civilian climate corps to add jobs to address climate change and conservation, and to provide for child care, home care and housing investments. They are also expected to try to include a path to citizenship for some undocumented immigrants and address labor protections.Democrats would also extend expanded subsidies for Americans buying health insurance through the Affordable Care Act that were included in the broad pandemic aid law that Mr. Biden signed this year.Huge investments would go to renewable energy and a transformed electrical system to move the U.S. economy away from oil, natural gas and coal to wind, solar and other renewable sources. The budget blueprint is to include a clean energy standard, which would mandate the production of electricity driven by renewable sources and bolster tax incentives for the purchase of electric cars and trucks.To fully finance the bill, it is expected to include higher taxes on overseas corporate activities to alleviate incentives for sending profits overseas, higher capital gains rates for the wealthy, higher taxes on large inheritances and stronger tax law enforcement.Senator Ron Wyden of Oregon, the chairman of the Finance Committee, said on Wednesday that he was also preparing to overhaul a deduction for companies not organized as corporations, like many small businesses and law firms — created by the 2017 Republican tax law — in order to cut taxes from small businesses but raise additional revenues from wealthy business owners.Specific provisions will have to pass muster with the strict budgetary rules that govern the reconciliation process, which require that provisions affect spending and taxation, not just lay out new policies. The Senate parliamentarian could force Democrats to overhaul or outright jettison the clean energy standard, the provision that climate activists and many scientists most desire, as well as the immigration and labor provisions, among others.Moderate Democrats, who had balked at a progressive push to spend as much as $6 trillion on Mr. Biden’s entire economic agenda, largely declined to weigh in on the blueprint until they saw detailed legislation, saying they needed to evaluate more than an overall spending number.“We’ve got to get more meat on the bones for me,” Senator Jon Tester, Democrat of Montana, told reporters, though he added that he would ultimately vote for the budget blueprint. “I’ve got to get more information on what’s in it.”The size of the package could be shaped by the success or failure of the bipartisan infrastructure plan, which would devote nearly $600 billion in new spending to roads, bridges, tunnels, transit and broadband. The group of lawmakers negotiating that package has yet to release legislative text as they haggle over the details of how to structure and pay for the plan.“I want to be able to tell people in South Carolina: I’m for this, I’m not for that,” said Senator Lindsey Graham of South Carolina, the top Republican on the Senate Budget Committee.Stefani Reynolds for The New York TimesIf Republicans cannot deliver enough votes to move the package past a filibuster, Democrats could simply fold physical infrastructure spending into their reconciliation plan and take away any chance for Republicans to shape it, said Senator Rob Portman, Republican of Ohio and one of the negotiators of the bipartisan bill.“If we don’t pass infrastructure, they’re going to put even more infrastructure in than we have and worse policies,” said Mr. Portman, who fielded skepticism from his colleagues at a private Republican lunch on Tuesday. Some Republicans had hoped that a bipartisan accord on physical infrastructure projects would siphon momentum from a multitrillion-dollar reconciliation package. Instead, it appears very much on track, and it may intensify the pressure on Republicans to come to terms on a bipartisan package, even if they fiercely oppose the rest of the Democrats’ agenda.“I want to be able to tell people in South Carolina: I’m for this, I’m not for that,” said Senator Lindsey Graham of South Carolina, the top Republican on the Budget Committee and a peripheral presence in the bipartisan talks.He added that the lengthy floor debate over the blueprint would allow Republicans to “ferociously attack it, to have amendments that draw the distinctions between the parties, to scream to high heaven that this is not infrastructure.”Senator Joe Manchin III of West Virginia, a moderate Democrat, said he looked “forward to reviewing this agreement” but was also interested in how the programs would be financed.Sarahbeth Maney/The New York TimesSenator Joe Manchin III of West Virginia, the centrist Democrat whose support might be determinative, told reporters after lunch with the president that he had concerns about some of the climate language. But he did not rule out supporting the budget proposal or the subsequent package. Senator Kyrsten Sinema, Democrat of Arizona and another key moderate, also hung back on Wednesday.Still, the $3.5 trillion package had plenty in it to appeal to senior Democrats who were eager to use it to advance their longtime priorities. For Senator Patty Murray of Washington, the chairwoman of the Health, Education, Labor and Pensions Committee, it was an extension of a more generous child tax credit, as well as subsidies for child care, prekindergarten and paid family leave.For Mr. Sanders, it was the Medicare and climate provisions.“Finally, we are going to have America in the position of leading the world in combating climate change,” he said.Mr. Tester said the need for school construction was so high that trillions could go to that alone.“The plan is a strong first step,” said Senator Elizabeth Warren, Democrat of Massachusetts, adding that she was focused on funding universal child care. “We’re slicing up the money now to find the right ways to make that happen.”The budget measure is expected to include language prohibiting tax increases on small businesses, farms and people making less than $400,000, fulfilling a promise Mr. Biden has maintained throughout the negotiations. Asked on Wednesday whether the proposed carbon tariff would violate that pledge, Mr. Wyden replied, “We’ve not heard that argument.”Lisa Friedman More

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    Child Tax Credit Monthly Payments to Begin Soon

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    The Biden administration will send up to $300 per child a month to most American families thanks to a temporary increase in the child tax credit that advocates hope to extend.WASHINGTON — If all goes as planned, the Treasury Department will begin making a series of monthly payments in coming days to families with children, setting a milestone in social policy and intensifying a debate over whether to make the subsidies a permanent part of the American safety net.With all but the most affluent families eligible to receive up to $300 a month per child, the United States will join many other rich countries that provide a guaranteed income for children, a goal that has long animated progressives. Experts estimate the payments will cut child poverty by nearly half, an achievement with no precedent.But the program, created as part of the stimulus bill that Democrats passed over unified Republican opposition in March, expires in a year, and the rollout could help or hinder President Biden’s pledge to extend it.Immediate challenges loom. The government is uncertain how to get the payments to millions of hard-to-reach families, a problem that could undermine its poverty-fighting goals. Opponents of the effort will be watching for delivery glitches, examples of waste or signs that the money erodes the desire of some parents to work.While the government has increased many aid programs during the coronavirus pandemic, supporters say the payments from an expanded Child Tax Credit, at a one-year cost of about $105 billion, are unique in their potential to stabilize both poor and middle-class families.“It’s the most transformative policy coming out of Washington since the days of F.D.R.,” said Senator Cory Booker, Democrat of New Jersey. “America is dramatically behind its industrial peers in investing in our children. We have some of the highest child poverty rates, but even families that are not poor are struggling, as the cost of raising children goes higher and higher.”Among America’s 74 million children, nearly nine in 10 will qualify for the new monthly payments — up to $250 a child, or $300 for those under six — which are scheduled to start on Thursday. Those payments, most of which will be sent to bank accounts through direct deposit, will total half of the year’s subsidy, with the rest to come as a tax refund next year.Mr. Biden has proposed a four-year extension in a broader package he hopes to pass this fall, and congressional Democrats have vowed to make the program permanent. Like much of Mr. Biden’s agenda, the program’s fate may depend on whether Democrats can unite around the bigger package and advance it through the evenly divided Senate.The unconditional payments — what critics call “welfare” — break with a quarter century of policy. Since President Bill Clinton signed a 1996 bill to “end welfare,” aid has gone almost entirely to parents who work. Senator Marco Rubio, Republican of Florida, recently wrote that the new payments, with “no work required,” would resurrect a “failed welfare system,” and provide “free money” for criminals and addicts.Senator Marco Rubio, Republican of Florida, is among those who argue the new payments will erode the desire of some parents to work. Erin Scott for The New York TimesBut compared to past aid debates, opposition has so far been muted. A few conservatives support children’s subsidies, which might boost falling birthrates and allow more parents to raise children full-time. Senator Mitt Romney, Republican of Utah, has proposed a larger child benefit, though he would finance it by cutting other programs.With Congress requiring payments to start just four months after the bill’s passage, the administration has scrambled to spread the word and assemble payment rosters.Families that filed recent tax returns or received stimulus checks should get paid automatically. (Single parents with incomes up to $112,500 and married couples with incomes up to $150,000 are eligible for the full benefit.) But analysts say four to eight million low-income children may be missing from the lists, and drives are underway to get their parents to register online.“Wherever you run into people — perfect strangers — just go on up and introduce yourself and tell them about the Child Tax Credit,” Vice President Kamala Harris said last month on what the White House called “Child Tax Credit Awareness Day.”Among the needy, the program is eliciting a mixture of excitement, confusion and disbelief. Fresh EBT, a phone app for people who receive food stamps, found that 90 percent of its users knew of the benefit, but few understand how it works.“Half say, ‘I’m really, really ready to get it,’’’ said Stacy Taylor, the head of policy and partnerships at Propel, the app’s creator. “The others are a mix of ‘I’m worried I haven’t taken the right steps’ or ‘I’m not sure I really believe it’s true.’”Few places evoke need more than Lake Providence, La., a hamlet along the Mississippi River where roughly three-quarters of the children are poor, including those of Tammy Wilson, 50, a jobless nursing aide.The $750 a month she should receive for three children will more than double a monthly income that consists only of food stamps and leaves her relying on a boyfriend. “I think it’s a great idea,” she said. “There’s no jobs here.”While the money will help with rent, Ms. Wilson said, the biggest benefit would be the ability to send her children to activities like camps and school trips.“Kids get to bullying, talking down on them — saying ‘Oh your mama don’t have money,’” she said. “They feel like it’s their fault.”Families receiving groceries at a food pantry in Queens. Experts estimate that the monthly payments will cut child poverty by nearly half.Shannon Stapleton/ReutersBut in West Monroe, a 90-minute drive away, Levi Sullivan, another low-income parent, described the program as wasteful and counterproductive. Mr. Sullivan, a pipeline worker, has been jobless for more than a year but argued the payments would increase the national debt and reward indolence.“I’m a Christian believer — I rely on God more than I rely on the government,” he said.With four children, Mr. Sullivan, who has gotten by on unemployment insurance, food stamps, and odd jobs, could collect $1,150 a month, but he is so skeptical of the program he went online to defer the payments and collect a lump sum next year. Otherwise, he fears that if he finds work he may have to pay the money back.“Government assistance is a form of slavery,” he said. “Some people do need it, but then again, there’s some people that all they’re doing is living off the system.”Progressives have sought a children’s income floor for at least a century. “No one can doubt that an adequate allowance should be granted for a mother who has children to care for,” wrote the economist and future Illinois senator Paul H. Douglas in 1925 as children’s benefits spread in Europe.Four decades later, the Ford Foundation sponsored a conference to promote the idea in the United States. The meeting’s organizer, Eveline M. Burns, lamented the “shocking extent of childhood poverty” but acknowledged strong political opposition to the payments.While hostility to unconditional cash aid peaked in the 1990s, multiple forces revived interest in children’s subsidies. Brain science showed the lasting impact of the formative years. Stagnant incomes brought worries about child-rearing costs into the middle class. More recently, racial protests have encouraged a broader look at social inequity.An existing program, the Child Tax Credit, did offer a children’s subsidy of up to $2,000 a child. But since it was only available to families with sufficient earnings, the poorest third of children failed to fully qualify. By removing that earnings requirement and raising the amount, Democrats temporarily converted a tax break into a children’s income guarantee.Analysts at Columbia University’s Center on Poverty and Social Policy say the new benefits will cut child poverty by 45 percent, a reduction about four times greater than ever achieved in a single year.“Even if it only happens for a year, that’s a big deal,” said Irwin Garfinkel, a professor at the Columbia School of Social Work. “If it becomes permanent, it’s of equal importance to the Social Security Act — it’s that big.”Opponents warn that by aiding families that do not work, the policy reverses decades of success. Child poverty had fallen to a record low before the pandemic (about 12 percent in 2019), a drop of more than a third since 1990s.“I’m surprised there hasn’t been more pushback from other conservatives,” said Scott Winship of the conservative American Enterprise Institute, who argues that unconditional aid can cause the poor long-term harm by reducing the incentive to work and marry. Research suggests that framing the payments as a benefit for children leads to parents spending it on things like diapers and school supplies rather than on themselves.Jenn Ackerman for The New York TimesGetting the money to all eligible children may prove harder than it sounds. Some American children live with undocumented parents afraid to seek the aid. Others may live with relatives in unstable or shifting care.Dozens of groups are trying to promote the program, including the Children’s Defense Fund, United Way and Common Sense Media, but many eligible families have already failed to collect stimulus checks, underscoring how difficult they are to reach. The legislation contained little money that could be used for outreach, leaving many groups trying to raise private donations to support their efforts.The Rev. Starsky Wilson, president of the Children’s Defense Fund, praised the Biden administration for creating an online enrollment portal but warned, “we really need to be knocking on doors.”Gene Sperling, the White House official overseeing the payments, said that even with some families hard to reach, deep cuts in poverty were assured.“While we want to do everything possible to reach any missing children, the most dramatic impact on child poverty will happen automatically,” because the program will reach about 26 million children whose families are known but earned too little to fully benefit from the previous credit. “That will be huge.”By delivering monthly payments, the program seeks to address the income swings that poor families frequently suffer. One unknown is how families will spend the money, with critics predicting waste and supporters saying parents know their children’s needs.When Fresh EBT asked users about their spending plans, the answers differed from those about the stimulus checks. “We saw more responses specifically related to kids — school clothes, school supplies, a toddler bed,” Ms. Taylor said. “It tells me the framing of the benefit matters.”There is evidence for that theory. When Britain renamed its “family allowance” a “child benefit” in the 1970s and paid mothers instead of fathers, families spent less on tobacco and men’s clothing and more on children’s clothing, pocket money, and toys. “Calling something a child benefit frames the way families spend the money,” said Jane Waldfogel, a Columbia professor who studied the British program.While the payments will greatly reduce poverty, most beneficiaries are not poor. Jennifer Werner and her husband had a household income of about $75,000 before she quit her job as a property manager in Las Vegas two years ago to care for her first child. Since then, she has used savings to extend her time as a stay-at-home mother.Ms. Werner, 45, supports the one-year benefit but wants to see the results before deciding whether it should last. “When you have a child you realize they’re expensive — diapers, wipes, extra food,” she said. But she added “I don’t know where all that money’s coming from.”She hopes the country can be fair both to taxpayers and to children whose parents work too hard to offer sufficient attention. “If the benefit helps parents nurture their kids, that would be a wonderful thing,” she said. More