• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
  • Canada
  • United Kingdom
  • Subscribe
  • facebook
  • instagram
  • RSS
  • RSMUS.com

The Real Economy Blog

Search

  • Economics
  • Technology
  • Consumer
  • Industrials
  • Finance
  • Real Estate
  • Health Care
  • Life Sciences
Home > Coronavirus > Biden outlines next round of fiscal aid

Biden outlines next round of fiscal aid

Jan. 15, 2021 by Joseph Brusuelas

  • email
  • Twitter
  • Facebook
  • Linkedin

President-elect Joe Biden put forward an ambitious $1.9 trillion fiscal aid plan to address the public health crisis, the damage caused to the economy by the pandemic and the rollout of a national vaccination program.

In our estimation, this package will bolster not only growth but also public confidence.

If enacted as proposed, which is highly unlikely, the plan would imply $2.9 trillion in aid pumped into the economy in the near term, which underscores our robust gross domestic product forecast of 5.4% for the year, with risk of a quicker pace of growth. To put this in perspective, this bill would imply that the total effort by the federal government to offset the impact of the pandemic would be roughly $5.8 trillion, or 26.7% of GDP.

 

While we do not think that the package will be passed as is, much of it will be put into place and provide what has been lacking for some time: A national program to address the greatest health crisis in over a century and the means to put forward a coherent and competent plan for vaccine distribution. In our estimation, this package will bolster not only growth but also public confidence.

But as with any aid program, the devil is in the details, and this plan provides a framework for understanding the incoming Biden administration’s priorities. Most important, the package will have to work its way through the legislative process and garner enough support in the Senate to avoid any potential filibuster. For this reason, the total size of the package and its composition could get larger and change, or get smaller. If reconciliation has to be used, then the total package will be smaller if the Democrats must find offsetting tax hikes to push it through.

The portion of the package that will garner the most attention is the additional $1,400 in one-time checks, which would be on top of the $600 checks that were part of the aid package passed in late December. In addition, the incoming administration will ask for an unemployment insurance supplement of $400 to assist hard-hit workers, which is just above the $300 provided in December.

The Biden economic team also inserted an increase in the minimum wage to $15 an hour, which one would assume is an attempt to address the growing economic inequality around the economy. That would be an increase from the current $7.25 an hour, and there was no language around how quickly this would be phased in.

State and local governments would receive aid to the tune of $440 billion, which includes funds to reopen schools, grants and loans to small businesses and outright relief for state and local governments to prevent a loss of jobs that we think could be as high as 1.5 million.

At the core of the proposal is $160 billion for funding a national vaccination program, expanding testing and the acquisition of protective gear and supplies.

For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.

  • email
  • Twitter
  • Facebook
  • Linkedin

Related posts

  • With added benefits, lenders stand ready to roll out more fiscal aid

    The legislation provides needed relief for the small businesses most affected by the downturn and customers of financial institutions while also providing a host of measures that will provide benefit beyond the banking industry.

  • Jobless claims: Pace of firings increases to 853,000, pointing to urgent need for fiscal aid

    As policymakers continue to negotiate over another round of fiscal aid, initial claims for unemployment insurance increased to 853,000 for the week ending Dec. 5.

  • Late year fiscal aid lifts growth prospects for 2021

    Congress on Dec. 21 passed a $2.3 trillion year-end spending bill, including $1.4 trillion to fund the federal government through September 2021 and a $900 billion rescue package to provide direct fiscal aid to households and businesses equal…

Filed Under: Coronavirus, Economics Tagged With: coronavirus, Covid-19, fiscal aid, Joseph Brusuelas

About Joseph Brusuelas

@JoeBrusuelas

Joe Brusuelas, “chief economist to the middle market,” is the preeminent voice championing issues and policies facing midsize companies in the United States and around the world. An award-winning economist, Brusuelas has more than 20 years’ experience analyzing U.S. monetary policy, labor markets, fiscal policy, international finance, economic indicators and the condition of the U.S. consumer.

A member of the Wall Street Journal’s forecasting panel, Brusuelas regularly briefs members of Congress and other senior officials regarding the impacts of federal policy on the middle market and the factors by which middle market executives make business decisions. He also frequently offers his insights on the U.S., Canadian and global economies in the financial media. In 2020, he was named one of the 100 most influential economists by Richtopia.

Before joining RSM in 2014, Brusuelas spent four years as a senior economist at Bloomberg L.P. and the Bloomberg Briefs newsletter group, where he co-founded the award-winning Bloomberg Economic Brief. Earlier in his career, he was a director at Moody's Analytics covering the U.S. and global economies for the Dismal Scientist website. He also served as chief economist at Merk Investments L.L.C. and chief U.S. economist at IDEAglobal.

Primary Sidebar

Other Regions

  • Canada
  • United Kingdom

Categories

  • Economics
  • Technology
  • Consumer Products
  • Industrials
  • Financial Services
  • Real Estate
  • Health Care
  • Life Sciences

Recent Economics articles

  • Powell statement: Market challenging Fed’s credibility on inflation targeting Mar. 4, 2021
  • 5 things to know in life sciences: Week of March 1 Mar. 4, 2021
  • C-PACE: Government push toward greener buildings may fuel financing demand Mar. 3, 2021

RSMUS.com links

The Real Economy

Middle Market Business Index

MMBI Special Reports

Footer

  • Facebook
  • Instagram
  • RSS

About The Real Economy Blog

The Real Economy Blog from RSM US LLP was developed to provide timely economic insights about the middle market economy. It is offered as a complement to RSM’s macroeconomic thought leadership, including The Real Economy monthly publication and the proprietary RSM US Middle Market Business Index (MMBI).

© 2021 RSMUS.com | Privacy Policy | Cookie Policy

The Real Economy Blog
  • Economics
  • Technology
  • Consumer
  • Industrials
  • Finance
  • Real Estate
  • Health Care
  • Life Sciences