Biden's Big Stimulus Plan Faces Hurdles, Even With a Democrat-Led Senate

Updated - First published on Jan. 12, 2021

Christy Bieber

By: Christy Bieber

Writer

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Will the incoming president be able to provide the coronavirus stimulus he believes America needs?

President-elect Joe Biden has made clear he believes more coronavirus stimulus relief must be one of the first priorities of his administration. In fact, the future president wants to release a large-scale relief plan as early as this Thursday. It will be the first major proposal the president-elect has set forth since the electoral college votes were certified and his win was assured.

When Biden is sworn in, he'll have the benefit of working with a Congress under the control of his party, since the Democrats have a slim majority in the U.S. House of Representatives as well as the U.S. Senate.

However, that doesn't mean it'll be smooth sailing. There are several hurdles to overcome before any further coronavirus aid is signed into law.

These are the key components of the president-elect's plan

Although the specific details -- and the price tag -- of the Biden stimulus plan have yet to be unveiled, his proposal is expected to include:

  • $2,000 stimulus checks for eligible Americans
  • Expanded unemployment benefits
  • Money for the distribution of vaccines
  • Funds to facilitate the re-opening of schools
  • Aid to state and local governments

According to a Bloomberg report, a person familiar with the president-elect's plan also indicates it could include expanded tax credits for dependent care; an expansion of the Earned Income Tax Credit, and an expansion of the child tax credit. These have long been on the Democrats' wish list.

In speaking of his plan on Friday, Biden said, "If we don't act now, things are going to get much worse," and he pointed to historically low interest rates as justification for spending generously to bolster the economy.

Here are the obstacles Biden's plan faces

Despite the president-elect's desire to act swiftly, there are some major challenges that could affect his ability to pass a large-scale relief bill quickly.

The first issue is that the Democrats have the smallest possible majority in the Senate. The chamber is split 50-50, with Vice President Kamala Harris set to cast tie-breaking votes. Most legislation in the Senate requires a 60-vote majority to overcome potential filibuster. So unless a substantial number of Republicans sign onto Biden's relief bill, passing it through ordinary legislative channels isn't possible.

Republicans have vigorously objected to providing billions to state and local governments, and many on the right have said they aren't on board with spending trillions more on relief regardless of what the bill includes. As a result, it would be difficult or impossible for the plan Biden unveils on Friday to get the necessary 60 votes.

This fact alone won't kill the bill. With a procedure called reconciliation, Democrats can pass spending-related bills with just a 51-vote majority. However, while some components of Biden's plan -- including aid to the unemployed and stimulus checks -- could pass using reconciliation, aid to states and some other measures might not qualify for this process.

Even if the Democrats can use reconciliation to pass most of Biden's proposals, there's another obstacle. The president's plan needs the support of every Democrat, assuming all Republicans vote against it. And there are several conservative Democrats who've expressed concerns about big spending in the past, including Joe Manchin from West Virginia and Jon Tester of Montana. If either vote against his proposal, it would fail -- and Manchin has already signaled he's skeptical about authorizing $2,000 checks.

Finally, there's yet another holdup to a fast bill: House Democrats have introduced an article of impeachment saying President Donald Trump incited the riot that resulted in the takeover of the U.S. Capitol on Jan. 6. The Senate returns from recess Jan. 19, so if the House impeaches the president, the resulting trial would likely become the Senate's first priority, thus delaying action on any coronavirus relief bill.

With so many obstacles in the way, it's not surprising that leading economists believe any new coronavirus stimulus legislation will end up much smaller than what the president-elect has advocated for. Economists from UBS Group AG, for example, estimate that a package Biden can pass would likely end up with just a $500 billion price tag, not the trillions that the new president hopes for.

It remains to be seen if Americans will get more money in their bank accounts, but it's clear that no one should count on broad relief, even with Washington under the control of the Democrats.

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Christy Bieber
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Christy Bieber is a personal finance and legal writer with more than a decade of experience. Her work has been featured on major outlets including MSN Money, CNBC, and USA Today.

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