A Closer Look at Joe Biden's Enormous Package
It's gonna be a rocky road
Joe Biden hopes his enormous package will stimulate America. President Biden (GOD that feels good to write) has announced a $1.9 trillion stimulus package. That’s larger than the GDP of Mexico and more than nine New Zealands (don’t worry Jacinda, we think you’re priceless).
So what’s in it? Does everybody get their own Federated State of Micronesia? Are we finally going to see the army of surgeons forcing gender reassignment surgery upon unsuspecting children, just like JK Rowling warned us?
$1.9 Trillion is one of the largest stimulus packages in American history. For comparison, the TARP program at the height (or depths) of the financial crisis was only $700 billion. Here’s a breakdown of the plan’s key components, a bit of context for each part, and a few cries for help.
$1,400 + $600 = $2,000, so STFU
The stimulus checks seem to be getting the most attention, but are actually only a small part of the bill.
People on Twitter were angry (that sentence, by the way, is literally always true) that Biden didn’t push for a full $2,000 stimulus check. Biden instead argued that the previous $600 checks were just the appetizer to this main course and combined they equal $2,000 (what Canadians have been getting every single month since the pandemic began)!
Assuming it has the same criteria as the previous $600 stimulus, individuals making up to $75k and couples making up to $150k will be eligible for the full $1400. It will phase out above those income thresholds, though for those with dependents they may be eligible for additional stimulus.
Unemployment Supplements of $400
Don’t spend it all in one place (or do, because that’s only half the average grocery bill for a family of four)
The plan also calls for an additional $400 to anyone currently receiving unemployment insurance (UI). Hopefully you're #blessed enough to have no idea how unemployment insurance actually works, so here's a little breakdown:
Step 1: Lose your job (not recommended). If you voluntarily leave your job, you don’t get insurance. So why not just do the damned thing and get fired!
Step 2: File an initial claim to get your benefits. When you read headlines like INITIAL CLAIMS RISE, they’re not talking about a mining boom in 19th century Montana, they’re talking about unemployment.
Step 3: Generally, you get a weekly check worth half of the wage of your previous job. You can get this for up to 26 weeks, but some states limit that length of time significantly. You also have to prove you’re looking for work. However, this all varies from state to state.
The percent of the unemployed who receive benefits varies from 9% in Mississippi to 57% in Massachusetts, two vastly different states united only by their absurd use of consonants.
This bill will add $400 to those weekly checks. After the CARES act passed in March, if you were unemployed, you’d get half your previous weekly wage + a $600 supplement. As a result, two thirds of recipients were receiving more in unemployment benefits than they were when they were working. Again, you can say that’s a good thing - people should be supported in a national crisis. You can also say that’s a bad thing - recipients have zero incentive to search for work. The same study however, found there was no impact on re-hiring rates as a result of the new program. In other words, people still looked for jobs as much as they could.
The $600 expired in July, and in the December stimulus congress proposed $300. Biden then proposed $400.
A fun (read: terrifying) thing to think about is how the hell states afford this. But this is America. If you can’t afford something, what do you do? Lever up, baby! So states can borrow from the Treasury to fund additional UI benefits. Here’s the kicker, they have to repay these debts in 2-3 years or an automatic additional tax on employers kicks in.
So like, to help support people while they look for work, states will take a loan and hope employers start hiring. But if states haven’t paid back that money in 2-3 years (probably because the economy is still shit), then the people doing the hiring have to pay extra an extra tax...meaning they’ll have less money to hire new employees. The federal government, baby!
Anyway, that’s a shit show and maybe a topic for a future podcast episode? Back to the plan.
A $15 Minimum Wage!
You about to lose your job (or not...economists can’t seem to agree)
The minimum wage debate has become, wait for it - polarized. The Left argues businesses will reach for their money tree and absorb additional labor costs with a smile on their face. After all, history shows businesses love nothing more than supporting their workers.
The Right thinks it’s totally fine for someone working forty hours a week to live below the poverty line. Poor people will reach for their money tree and be able to...afford to live. (Did they even try to be born rich?)
The Congressional Budget office, a strictly non-partisan research office, published a study of minimum wage increases in 2019. They found a $15 minimum wage would lift 1.3 million American workers out of poverty (meaning they’d earn above the poverty line). However, they also project it could eliminate 1.3 million jobs. They also project it could eliminate zero jobs. They also project it could eliminate 3.7 million jobs.
Actually, their own report says “There is considerable uncertainty about the size of the effect on employment.” Another review by economists at Dartmouth of 15 years of research on minimum wage and employment found “no support for the proposition that the minimum wage has had an important effect on U.S. employment.”
Based on the research, it looks like a minimum wage hike would have a negative impact on employment, but it probably wouldn’t be very significant. But, it would lift over a million people above the poverty line. Idk man, sounds good?
$350 Billion to State and Local Governments
A cute program transferring taxpayer dollars to the management consulting firms planning states’ covid responses
The Brookings Institute estimates that, due to the Rona, state and local govt revenues will decline by $188 billion, $189 billion, and $167 billion in the next three years, respectively. This grant aims to help fund their covid response and recovery efforts.
Luckily, state and local government finances are all extremely well managed so everything will be totally fine.
$50 Billion for Covid Testing
9 months into a pandemic it might be a good idea to spend a little $$ to let people know if they have fucking covid, lol.
$20 Billion for a National Vaccination Program
STAB ME IN THE VEIN DADDY FAUCI
$25 Billion in Rental Assistance
Only Trump should be evicted because of Covid
According to a Census Bureau tracker, 35% of the country faces potential eviction upon the expiration of eviction moratoriums (though those have had spotty enforcement). This plan would extend the eviction moratorium, set to expire in January, to September 30th, 2021. As far as we can tell, there is no actual rent relief though, so this feels like we’re just kicking the can / time-bomb down the road…? COOL!
$175 Billion to K-12 Schools and Universities
We don’t know if schools should be open, but from what we can tell, neither does anyone else.
A fierce debate has raged over whether or not to reopen schools. Trump, with his trademark nuance, tweeted "SCHOOLS MUST OPEN" (RIP Trump's Twitter lol). He seemed largely uninterested in the public health questions this raised (as well as literally anything else to do with governing). Predictably, the left immediately opposed reopening schools. Look, usually taking whatever Trump wants and doing the opposite is a good move, but this may not be one of those times. In fact, research by the American Academy of Pediatrics found children are unlikely to contract or spread the virus. Germany, which reopened schools in September, reported no major outbreaks linked to schools, though they closed schools again in December amidst a new surge.
Biden wants to reopen schools immediately, and announced:
$130 billion for k-12 schools to be spent on necessary measures to ensure schools can reopen safely, like reducing class sizes and increasing space to allow for social distancing. $35 billion for colleges and universities to reopen safely by leveraging testing and enforcing covid protocols. $5 billion for the “hardest hit” areas to be spent at the discretion of governors and local officials, targeting the lowest-income and most adversely impacted schools and districts.
The public health questions are murky, but it looks like overall k-12 schools are not a huge risk factor (though nothing is zero risk). School closures have disproportionately affected low-income communities, and many public health experts and social justice advocates have argued in favor of their reopening. And now it seems Papa Joe agrees with them.
This concludes our deep dive into Joe Biden’s huge package. You can be absolutely sure the Republicans will take an even closer look at his package, say it's bad for America, and try their best to take a hatchet to it.
Welcome to the Biden administration!