Editorials

The Irish Times view on the US stimulus plan: Biden’s big bazooka

The pandemic legislation will send direct payments of €1,200 to hundreds of millions of Americans

US president Joe Biden’s call for bipartisanship has fallen at the first hurdle, a harbinger of the challenge every piece of his agenda will face. Photograph: Mandel Ngan/AFP via Getty Images

Wed Mar 10 2021 - 19:00

The passing of US president Joe Biden’s first legislative intitiative, a €1.6 trillion pandemic relief bill, his “American Rescue Plan”, is a notable achievement only 50 days into office, and a major step in undoing some of his predecessor’s damage, notably to the access of millions to healthcare.

The Bill, endorsed by Senators on Saturday, was backed yesterday in the House with the support of Democrats alone. Biden’s call for bipartisanship has fallen at the first hurdle, a harbinger of the challenge every piece of his agenda will face. Republicans are set to filibuster the next Bill, a bid to restore workers’ union rights.

The pandemic legislation, which fulfils key election promises, will send direct payments of €1,200 to hundreds of millions of Americans, extend by months a €250 dole bonus, substantially expand tax credits for children to fight child poverty, and provide funding for states, local governments and schools, as well as coronavirus testing and vaccine distribution. At a cost of €29 billion it will also plug important holes in Obamacare and for two years expand health insurance subsidies for 1.3 million more middle-class Americans.

The final Bill was inevitably a compromise, however, a product of fiscal conservative pressure within the Democratic Party ranks. In particular a failure to raise the minimum wage to €15, a key election pledge, will disappoint many members of the party. The unemployment benefits are also curtailed, and tighter eligibility limits were introduced for the income payouts. And there are some elements, crucially child credits and health insurance subsidies, that the Democrats will hope will yet be made permanent.

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The bill is an emergency response to the pandemic crisis and economists warn that after the stimulus, the "Biden boom" – forecasters surveyed by Bloomberg predict 5.5 per cent growth this year – there is a danger the economy will return to what has been called "secular stagnation". Biden's longer challenge will come soon and his team is said to be working on a major infrastructure and climate change package to pump-prime the economy. The hefty borrowing and tax increases that that will necessitate will be politically fraught and fought tooth and nail in Congress.

Biden's Democratic predecessors, Bill Clinton and Barack Obama, had real problems pushing through ambitious economic programmes despite more substantial majorities in Congress. Fiscal conservatives in their own party and mid-term congressional losses made for uphill battles. But polls suggest that as many as 75 per cent of voters support the stimulus plan, whose direct benefits to taxpayers are much more tangible and, so, much more likely to elicit voter gratitude. With a Republican Party unable to shake off the Trump monster on its back, Biden's boldness could yet be rewarded electorally.

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