House Passes Budget to Speed Biden’s Plan: Stimulus Update

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(Bloomberg) -- The House passed a budget Wednesday evening that smooths the path for fast-track passage of President Joe Biden’s $1.9 trillion Covid-19 relief plan. Treasury Secretary Janet Yellen met with Democratic and Republican mayors in an effort to bolster support for the proposal.

The House vote followed action by the Senate on Tuesday to consider a similar budget resolution -- beginning a process that would let Democrats proceed with the Biden stimulus without Republican votes. Still, the president told reporters before an Oval Office meeting with Democratic senators that he thought some Republicans would support his package.

Senate Majority Leader Chuck Schumer said Tuesday that the legislative process the Democrats are using, known as reconciliation, is open to GOP participation and that the stimulus bill can still be tweaked with their input. But he said Democrats won’t risk moving slowly or timidly to strengthen the economy.

House Passes Budget to Set up Stimulus Fast Track

The House passed a fiscal 2021 budget resolution on a 218 to 212 vote, easing the path for passing legislation based on Biden’s $1.9 trillion stimulus plan with just Democratic votes.

The Senate plans to follow suit, passing an identical version of the budget later this week; the upper chamber on Tuesday voted along party lines to begin debate on that budget resolution.

Congressional committees will then have until Feb. 16 to craft a bill according to instructions in the budget and the House could vote on it as soon as Feb. 23. That bill will be able to pass the Senate with just 50 votes plus a vice presidential tie-breaker, rather than the usual 60 votes that would require Republican cooperation.

“We have the plan and the ability to do this. And, thankfully, we can also afford to do it. Interest rates and inflation are at historic lows -- lower today than even before the pandemic -- and the return on smart investments in the economy have never been higher,” House Budget Committee Chairman John Yarmuth, a Kentucky Democrat, said on the House floor.

Energy and Commerce Committee Chairman Frank Pallone of New Jersey said there is a lot of work left to draft the details of the bill over the next two weeks but he expects it to end up hewing closely to what Biden proposed.

-- Erik Wasson

Yellen Meets With Mayors to Boost Stimulus (1:13 p.m.)

Treasury Secretary Janet Yellen held a bipartisan discussion with six mayors -- from cities including Little Rock, Arkansas and Arlington, Texas -- in an effort to build support for passage of Biden’s proposed stimulus plan.

During the virtual conversation, Yellen highlighted the proposal’s $350 billion for state and local government funding, saying the money would help cover the cost of distributing coronavirus vaccines and reopening schools, the Treasury Department said in a statement.

She also argued the merits of aid for small businesses and a child tax credit for families, according to the statement. “Secretary Yellen reiterated that a major lesson of the last recession was that the federal government didn’t provide enough aid to states and localities resulting in sharp cuts in crucial things like infrastructure and education,” according to the statement.

Other mayors on the call included those representing Scranton, Pennsylvania; Providence, Rhode Island; Mesa, Arizona; and Boise, Idaho. -- Saleha Mohsin

Most Stimulus Funds Would Go to Savings, Penn Analysis Finds (9:13 a.m.)

Nearly three-fourths of the relief-check money proposed in President Joe Biden’s stimulus plan would be saved rather than spent this year, according to an analysis Wednesday from University of Pennsylvania researchers.

The Penn Wharton Budget Model initiative analyzed a variety of data, including previous estimates of spending and government figures on consumption and savings from 2019 to the third quarter of 2020 -- a period that includes the initial recessionary shock from the coronavirus and the bounce-back in spending following government stimulus.

The proposed $1,400 relief checks “will flow largely into household savings and will produce only small stimulative effects,” the report said. “Sectors affected by the pandemic still face restrictions and are unlikely to grow from stimulus payments.”

The researchers also said that even after the pandemic ends and Americans can resume normal activities, they aren’t likely to accelerate spending beyond the pre-recession period.

The findings underscore some of the criticism that Biden’s stimulus plan has faced mainly from Republicans, who balk at the cost and size. It also highlights the challenges of predicting outcomes in the pandemic-induced recession that continues to keep people at home.

A separate report from the Penn researchers said that those in the bottom half of incomes are more likely to spend, a finding similar to other research. The bottom 80% of income earners would receive the majority of the benefits from checks and other direct support, including child tax credits, the analysis showed.

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