Far from over
Now it's the Senate's turn to shape the Covid relief bill.
Now that House Dems have given their stamp of approval to the Biden administration’s $1.9 trillion Covid relief stimulus package, the real work begins in the Senate. Don’t be surprised if it ends up notably smaller. The nonpartisan Senate parliamentarian already has ruled that the $15 minimum-wage component can’t be included in the legislation because it fails to adhere to strict budget reconciliation rules that allow for a simple majority vote. Now come the Senate moderates who may well determine its ultimate makeup: Democratic Sens. Joe Manchin (W.Va.), Kyrsten Sinema (Ariz.) and Jon Tester (Mont.) and Republican Sens. Mitt Romney (Utah), Susan Collins (Maine) and Lisa Murkowski (Alaska).
These six are akin to the bipartisan Problem Solvers Caucus in the House, with each representing more centrist views relative to their compatriots on the left and right. Without them, it’s difficult to see much getting done. Any legislation seeking a simple majority via budget reconciliation would need all three Democrats or, if one or two oppose, one or two of the GOP centrists. The struggle for the progressive wing of the Senate is it’s trying to sell Biden’s plan as triage to avert a double-dip recession, and that’s simply not true. And the moderate Dems know this, as do much of their constituencies.
That means to pass this bill, there almost assuredly will need to be significant modifications beyond the stripping of the minimum-wage piece. These could include more narrow targeting for the $1,400 stimulus checks so that they go to lower-wage people who truly need the help; eliminating/modifying the state/local bailout piece (21 states have actually seen year-over-year growth in tax receipts during the crisis); trimming the unemployment insurance bonus from $400 to $300 per week and ending it sooner than the proposed end-of-September cutoff. Remember, some $1 trillion from four prior Covid relief bills hasn’t been spent yet, leaving room for some proportionate trims.
What might the final Senate version be? We wouldn’t be surprised if it falls as low as $1 trillion, although some Wall Street sources think it may be closer to the original figure. Whatever it is, a House and Senate conference committee will need to reconcile differences to arrive at a final compromise. Then Biden will be left to sign a bill that doesn’t completely fulfill his progressive campaign promises but signals his desire for bipartisan unity, or not sign the bill to signal his own personal disappointment. With some of the unemployment insurance benefits set to expire in mid-March, all of this should occur over the next two weeks. In the interim, uncertainty could spark more market volatility amid the sharp backup in benchmark 10-year Treasury yields the past two months.