Biden's Plan: The Good, the Bad, the Ugly

Mish

We have details of Biden's Plan. Let's take a look at 16 items.

Here's Biden's Plan

  1. $1.9 Trillion Total
  2.  Stimulus checks of $1,400 per person in addition to the $600 checks Congress approved in December. 
  3. Moratorium on evictions and foreclosures would be extended through September.
  4. The federal minimum wage would be raised to $15 per hour from the current rate of $7.25 per hour.
  5. Guaranteed paid sick leave.
  6.  A $20 billion national program would establish community vaccination centers across the U.S. and send mobile units to remote communities. Medicaid patients would have their costs covered by the federal government, and the administration says it will take steps to ensure all people in the U.S. can receive the vaccine for free, regardless of their immigration status.
  7.  An additional $50 billion would expand testing efforts and help schools and governments implement routine testing. Other efforts would focus on developing better treatments for COVID-19 and improving efforts to identify and track new strains of the virus.
  8. The child care tax credit would be expanded for a year, to cover half the cost of child care up to $4,000 for one child and $8,000 for two or more for families making less than $125,000 a year. Families making between $125,000 and $400,000 would get a partial credit.
  9.  $15 billion in federal grants to help states subsidize child care for low-income families, along with a $25 billion fund to help child care centers in danger of closing.
  10. $130 billion for K-12 schools to help them reopen safely. The money is meant to help reach Biden’s goal of having a majority of the nation’s K-8 schools open within his first 100 days in the White House. Schools could use the funding to cover a variety of costs, including the purchase of masks and other protective equipment, upgrades to ventilation systems and staffing for school nurses. 
  11. Public colleges and universities would get $35 billion to cover pandemic-related expenses and to steer funding to students as emergency grants. An additional $5 billion would go to governors to support programs helping students who were hit hardest by the pandemic.
  12. $15 billion in grants to more than 1 million small businesses that have been hit hard by the pandemic, as well as other assistance.
  13. $350 billion in emergency funding for state, local and territorial governments to help front-line workers.
  14.  $20 billion in aid to public transit agencies.
  15.  $9 billion to modernize information technology systems at federal agencies, motivated by recent cybersecurity attacks that penetrated multiple agencies.
  16. $690 million to boost federal cybersecurity monitoring efforts and $200 million to hire hundreds of new cybersecurity experts.

The above points condensed from APNews.

Biden's Speech

Optimistic Finish

You can Replay the Full 25 minute Video on C-Span.

The Good

Biden's Delivery: He came across as sincere and empathetic. 

Here are a couple of comments by my readers.

  • Realist: The most refreshing thing was that he didn’t spend his 25 minutes telling everyone how great he was. The second thing I liked was that he sounded sincere and showed empathy for his fellow Americans. I also liked that he didn’t comment on Red state Blue State difference. There was no call for his supporters to liberate Texas. What a difference!
  • DaveBarnes: It is just so refreshing to listen to a cogent articulate speech. Whether you agree with Biden or Trump, there is a remarkable difference in how they speak to the country.

Biden's vaccination plan is also worthy of consideration. 

The Ugly

Unfortunately, I have issues with nearly everything else. $1.9 trillion is too much and it is not targeted.

Trump wanted to send $2,000 to nearly everyone. Biden embraced the idea and will succeed. 

I have a problem sending out blanket checks to people who are working and have not lost a penny to Covid. 

Grants and small business loans will be a pile of graft. But some of it may hit the mark as forced closures in many states have some businesses struggling.

I fear $350 billion in emergency funding will find its way into the pension plans of corrupt states like Illinois.

Eviction moratoriums are a two-edged sword. What about landlords who are on the verge of bankruptcy because they cannot kick out the non-payers? 

The Downright Terrible

Look no further than point number 4 for the single worst item in the bill.

Not only is a $15 minimum wage a bad idea, Biden could not possibly have picked a worse time to try.

Small businesses were among the hardest hit in the pandemic, and here comes Biden telling these businesses they have to start paying workers $15 an hour. 

Jobs in Reverse

Nonfarm Payrolls 2020-12

Unemployment Claims Jump the Most Since March

Yesterday, I noted Unemployment Claims Have the Largest Increase Since March 2020

Last Friday, I noted the Jobs Recovery Has Gone Into Reverse

The economy is down nearly 10 million jobs since the start of the pandemic.

Are businesses struggling to stay in businesses supposed to go on a hiring spree? 

And where does it stop? $15 today will be $20 in a year. 

And what about those people making $15 now? When new hires get paid what they do, guess who will demand a raise.

Does Biden want to drive still more jobs overseas? I suppose not, but that will be the result. 

Excellent Delivery

Biden made an excellent delivery. If Trump had more empathy and far less self-praise he would probably have been elected. 

However, a good delivery of questionable ideas with at least one terrible idea mixed in is not the greatest of starts. 

That said, this plan is likely the best we could have expected. I have hopes the minimum wage idea dies in the Senate. It will only take one or two Democrats to kill the worst proposal of the lot.

"We didn't get into all this overnight," Biden said of the nation's twin challenges of the pandemic and recession. "We won't get out of it overnight. And we can't do it as a separated, divided nation. The only way we can do it is to come together. To come together as fellow Americans, as neighbors."

That's a great speech conclusion. If only his overall plan was as good.

Mish

Comments (132)
No. 1-34
Sechel
Sechel

I'm against eviction moratoriums too. It really picks winners and loser. My mom lives in a two family home and the income from the tenant is crucial to helping meet the monthly expenses. there's an implied assumption that all all landlords are donald trump ebinezer scrooge types which is simply not true

As far as direct payments go, I'm all for it. I think it preferable to loans to airlines or all some of the dubious lending in ppp that went on.

FromBrussels
FromBrussels

The US is becoming more and more of a giant (debt)MONSTER with feet of clay... Entirely under the auspices of its reserve currency status of course....Let's hope fairytales last forever ...

Frilton Miedman
Frilton Miedman

My concern, it's going to be easy for critics to go along the "thank god he's not Trump" line and be less critical.

I would prefer to see stronger emphasis/funding on vaccine expediting, jobs, technology than tossing stimulus checks at everyone.

A thing that's been coming up about the participants on the insurrection last week, a majority of them are displaced workers because of COVID, Michigan in particular.

Surgically promote/incentivize industry in these areas, target the root problem.

Realist
Realist

Minimum wage laws are well-intentioned, but not the best solution to low wages. What is required is workers with a skill set that justifies paying them a decent wage. More skills training (or re-training) and lifelong education would go a long way to creating a workforce that can earn a decent wage. Workers are competing with both automation, and workers elsewhere. Paying someone $15/hour to do a job that is done elsewhere for $2/hr is not a long term solution.

The countries with the best education and skills training will win the competition for the best paying jobs in the long run. In addition, continuing education must be done at low cost in order to be sustainable.

Both government and the private sector need to be involved. One of the biggest problems in the US is that everyone wants to pass the responsibility to someone else.

Finally, training programs won’t succeed if the workers aren’t invested in their own success. It seems that far too many Americans sit back and expect a high paying job without having to do what is necessary.

RJM Consulting
RJM Consulting

I don't disagree with the criticism of the timing of announcing the 15/hr min wage; I do disagree with sloppy economics and the specious claim that "it will be $20 in a year". Do some math and chart the growth of the minimum wage over the last fifty years, and then adjust it for real inflation. The failure to internalize cost of living increases into minimum wage keeps increasing the distance between the lowest rung of the economic ladder and median income (of the middle class).

amigator
amigator

The targeted cash payments is discriminatory toward married couples. I always thought that it was our goal as a country to have a strong family unit and to promote this within our Country, if so why then penalize married couples. When you have a couple that are married neither gets a check based on income. If the couple was just living together (not married) then at least one may receive the check. That policy does not promote the family in a positive goal, that goes for taxes too the marriage penalty has never been fixed.

Bungalow Bill
Bungalow Bill

Trump killed the Republicans in Georgia with his $2000 request. It will be interesting to see who jumps on board now.

BobHertz
BobHertz

If the $2000 subsidy was cut off at $35,000 of individual income and $70,000 of family income, I think it would still pass Congress. And it would be much fairer.

shamrock
shamrock

With $20/hr (give or take depending on state) of unemployment benefits, the de-facto minimum wage to get people to come back to work is more like $30/ hour.

TexasTim65
TexasTim65

Excellent synopsis on the good/bad/ugly of the proposal.

The problem with means testing for the 2K stimulus is that the cost of the means testing (tens of thousands of hours of pouring through claims) will cost more than just sending out 2K at a blanket cutoff level. Even the blanket cutoff level is going to be gamed by people in my situation (partner is not my wife so she and my daughter will each get 2K even though I won't because my salary is beyond the married couple cutoff) or her parents (dad is a doctor who owns practice and he/wife each get 2K because most of his earnings/deductions are business and his actual salary is under the cutoff).

The minimum wage will be a disaster. It's one size fits all that the gov't loves. If they made shoes, they would only make size 10 and if your feet were too big you'd cut open the toes and if your feet were too small you'd have to wear extra socks. Big cities may need 15 (or more) but small rural towns definitely do not. My partner is from a small town in Texas (100K is small but not tiny) and there people easily live on 7.50/hr because starter homes are readily available for 50-75K and cost of living is very low because no one makes a lot of money (gas well under $2, local food very cheap, labor costs very cheap etc). The town has manufacturing jobs because wages are cheap. Force this town to 15/hr and the manufacturing will all be gone and the inflation will huge because everything is suddenly going to cost a lot more. Minimum wage should be left to the states and better yet, city level.

ohno
ohno

I like the paid sick leave. Lots of people are going to work sick despite the risks. Of course some places will just screw you elsewhere to pay for it i'm sure.

njbr
njbr

In the scale of things...this was from October (6 months in)...

...The estimated cumulative financial costs of the COVID-19 pandemic related to the lost output and health reduction is shown in Table 1. The total cost is estimated at more than $16 trillion, or roughly 90% of annual GDP of the United States. For a family of 4, the estimated loss would be nearly $200,000. About half of this amount is the lost income from the COVID-19-induced recession; the remainder is the economic impact of shorter and less healthy life....

What will another 6 months bring?

There is a cost for incompetence.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7604733/#:~:text=The%20estimated%20cumulative%20financial%20costs,loss%20would%20be%20nearly%20%24200%2C000.

Call_me_Al
Call_me_Al

@Realist the history of minimum wage laws is not one of good intent.

As for raising the federal minimum wage to an arbitrary $15, here are a couple points to consider:

  1. Raising the minimum wage inevitably increases the number of jobs that are minimum wage and similarly decreases the number of jobs that pay better. That is not a good outcome.

  2. Fixating on $15 is catchy for the movement, but it addresses a symptom and not a cause. The devaluing of the dollar (or if you prefer, loss of purchasing power) is the problem. Address that, and doubling the minimum wage won't be necessary.

numike
numike

I have a problem sending out blanket checks to people who are working and have not lost a penny to Covid. ABSOLUTELY! Friends of mine have a paid off house worth 700,000 and at least 2million invested for their soon to come retirement. They said to me "we dont need nor want the 1,200 600 or 2,000" They donated to their charity both the 1,200 and the 600.

BillSanDiego
BillSanDiego

Think about the moratorium on eviction for a moment. The renter does not have to pay rent, meaning that the rent is accrued and will be owed when the moratorium expires. It's been extended another nine months, for a total of 19 months. So $1200 monthly accrues to $10,800. Does someone who has not been working for 19 months have $10,800 to pay up at the end of the moratorium? Of course not. So the landlord has been paying mortgage, taxes and maintenance for 1.5 years and will get stiffed at the end of the period.

If the government wants to mandate $15/hr minimum wage, then the government should pay that minimum wage. People don't buy as many $9 hamburgers as they did $6 hamburgers. Is the government going to pay the business for the loss due to higher prices?

Curious-Cat
Curious-Cat

Mish –
Respectfully, I have some questions for you and your readers.

  1. By what standard do you conclude that $1.9 trillion is “too much”? How much would you propose and why?

  2. How long do you think it would take the Federal Government to arrive as a fair “targeted distribution” mechanism? Who will decide what is fair? Apparently, the point of the payment is to get the money into the economy as quickly as possible, not as fairly as possible. If it were as fairly as possible there would be tax increases on those in the upper income while giving money to lower incomes. (I am not proposing that.)

  3. I agree that landlords are put at an extreme disadvantage. However, what do you think the social consequences will be of making 10 million families homeless? Are those social consequences acceptable to you? What spending will be required to remedy them over the next, say, five years? Do you think there would be a rise in crime rates? How would we deal with those?

  4. Have you or anyone who posts to this site ever tried to live on $310 a week? (That’s the current federal minimum wage ($7.75) times 40, if you are lucky enough to have a fulltime job.) How were you able to buy food, housing and health care? I agree the increase in minimum wage would be a disaster, but I submit the current minimum wage is a disaster of a different kind. How would you propose to remedy this? Is further skill development a real option considering there are people out of work who already possess higher level skills? I am concerned about small business also, but small businesses don’t tend toward crime when they and their families don’t have enough to eat. Is there an alternative solution that will cause less social chaos?

I mean these questions respectfully. I think it would be of great benefit to the thinking of us all if you or a reader tried to formulate serious answers to my questions.

Thank you for what I perceive as fair treatment of the ideas in the speech.

AnotherJoe
AnotherJoe

Personally I have no issue with eviction moratoriums but would like it to be targeted. For example, Blackrock has access to unlimited free money thanks to the Fed. so they are buying huge number of rental units and houses and for all practical purposes becoming monopolies in many cities so no issue with them not getting a penny from their renters. Small landlords (a few units) should be helped with may be a loan for the duration to be re-paid if the renter stays and pays and forgiven otherwise. However, that will be impossible to implement. If I has my way I will ask congress to pass a law that limits the number of units owned by hedge funds. That by the way should bring house prices down

Lawyermoody
Lawyermoody

Unfortunately, the government is now required to be compassionate to people. There is really no way to end "compassion," because, in the end, we all deserve someone else to show compassion to us. The reality is that there is not enough money for the "government" to provide the proper amount of compassion. Those who receive "compassion" payments face the possibility that they will be on a fixed income paid by the government. The challenge those people face is that the currency borrowed to pay for their living expenses will become less valuable over time. This means that prices people on fixed income will pay will increase while their government check remains the same. The harsh reality is that retired and disabled people will gradually become poorer and poorer, all in the name of compassion.

76stillworking
76stillworking

It great to have people in mind for financial help and increased wages. But the outcome will be against the people as more products will fled to china and india for lower cost. Only service business will afford the 15/hr rate because consumer will be forced to pay more for the service

JoeJohnson
JoeJohnson

I'm pretty sure $15 minimum wage would be phased in and it can probably pass with support of liberal Republicans in the Senate.

Eddie_T
Eddie_T

"Look no further than point number 4 for the single worst item in the bill.

Not only is a $15 minimum wage a bad idea, Biden could not possibly have picked a worse time to try.

Small businesses were among the hardest hit in the pandemic, and here comes Biden telling these businesses they have to start paying workers $15 an hour. “

                                             -------------------

It will hurt some small businesses.....I think restaurants and hospitality most of all.....and that is regrettable.

However, I think giving 42% of America’s poorest workers a raise will actually be a net positive over the medium term. It’s a far better idea than UBI.

The corporate employers who pay minimum wage will pass through the cost of payroll increase to the consumers, and prices for things like meat will rise.

It’s inflationary in general , because all the money will be spent. But other than restaurants, I can’t think of too many small businesses that will fail over this. I can’t find help that’s worth anything now for $15.

xbizo
xbizo

guaranteed sick leave and hourly wage laws harken back to the 1950s dependence upon working at a factory. When do we get changes that address 21st century work? Free employers and employees from taxes on labor, lunch break rules, etc... Go to $15 per hour over five years but eliminate extra overtime pay. Right now people take on three jobs, where they could work for one company if we got rid of the archaic rules that make moany people part-time.

davebarnes2
davebarnes2

Don't worry. We won't get a stimulus check as our income is way too high thanks to Roth conversions.
But, trust me, we are stimulating the world economy (USA, Korea, China, Bulgaria, France, Chile, Argentina, New Zealand, Spain, Italy).

KidHorn
KidHorn

Renters collecting extra money for being unemployed and not paying rent are what's keeping Tesla stick up. We need stimulus or Tesla will crash. That would be a total disaster.

numike
numike

OH AND BY THE WAY There is NONE ZILCH ZERO COVID vaccine reserve. Trump admin already shipped it
"This is a deception on a national scale." https://arstechnica.com/science/2021/01/there-is-no-covid-vaccine-reserve-trump-admin-already-shipped-it/

Casual_Observer
Casual_Observer

It will be nice to have a executive branch that is functional again.

Six000mileyear
Six000mileyear

Increasing the minimum wage is to help collect more income taxes without having to vote on a bill with the word tax in it.

ToInfinityandBeyond
ToInfinityandBeyond

What happens when the moratorium on foreclosures and evictions ends? Won’t there be a huge overhang on the economy from months of missed rent and mortgage payments?

Felix_Mish
Felix_Mish

If you earn $10 year after year, your pay will home in on $10, absent force. Pay tracks earnings, if it can.

It seems to me that minimum wage laws mainly benefit those who are earning slightly above minimum wage. Someone who earns $10 but can be paid no less than $15 will soon find themselves out of a job. That eliminates competition for the person earning $16.

A secondary beneficiary group are those who design and build automation equipment.

A third beneficiary group are those in places lacking the forced $15 floor.

They all do well at the expense of those who cannot earn $15.

So, is this a problem to be fixed? And if so, how help those who do not earn $15 - who get the shaft?

  1. Wait for them to grow up and be trained? That is, don't let them work until that time.

  2. Move them to areas where the $15 floor is not enforced?

  3. Close the welfare trap through just this one more, just this one more, centrally planned policy? Again.

  4. Design and create jobs worth over $15 doable by those currently earning less?

  5. Training? But what of those for whom "training" won't cut it?

So, we're back to "What do you do when your work is automated?" Since that's been a big issue for 200 years, there should be some answers.

Mark52
Mark52

" the vaccine for free, regardless of their immigration status." Mish, what are you driving at talking about immigration status? This doesn't sound like you.

Lynn223NE
Lynn223NE

If the government really wanted to stimulate the economy they would lower our taxes.
As long as wages are 30 year stagnant and taxes are 200% to 400% inflated over wages, nothing will improve for the 30% in the middle class and the 50% in the lower class.

Most people in America today are spinning circles going from home to work, home to work just to pay taxes, insurance and costs of living. Nobody can afford to retire.

Lynn223NE
Lynn223NE

If the government really wanted to stimulate the economy, they would lower income and payroll taxes. As long as wages remain at 30 stagnant lows and property, insurance and costs of living are 200% to 400% inflated over wages, nothing will improve for the 30% in the middle class and 50% in the lower class.

Bunnylove
Bunnylove

With the mess of a country handed over to him, nothing he does will not be at least slightly ugly, without having to take a REAL hard hit on the economy (or economist call it, a "readjustment") , then the US become a 2nd rated country behind the EU (not crashing as fast as US since they have not been printing as much banknotes), have the US credibility devalued etc.
He is doing a short term stopgap before the world start crashing down on his shoulder the day he took office, and then he can try to navigate out of this mess via a soft landing of sort, at best. Perhaps IF he would listen to SOME experts this time, unlike the other administration, who thinks he knows-it-all in all subjects from COVID19 to Space force.

DanP66
DanP66

I'm a 54 year old veteran of the Gulf War and I work for the federal government. Life long patriot with a degree in economics and half a dozen certifications in IT and Program Management.

Honestly, I just do not care anymore. I'm done and I am out of here.

Not one of those crazy liberals screaming about how they are gonna move to Canada if Trump wins, I am a conservative who is just going to do it. Though, I am choosing Latin America over Canada. Already looking at homes online and I have plans to go down in March to look at property.

I'm going to retire in 9 yrs from full time work. Going to buy a property now that I can rent out while I wait to retire. Then, when I retire from full time work I am liquidating all of my assets here in the US and going. Already researched how to move my money and how best to bank and even keep that money in different currencies. Figure I will work remotely as a consultant part time until I am 67. At $170 or $200 an hour I could work 10 hrs a week and do very well.

Friend of mine and his wife have already done this are living in Chile. They took about $2 million with them from their savings, 401ks and the sale of their home. I have other friends that are planning to do the same. Some look at Mexico, others are looking at Columbia or Western Panama.

All of us say the same thing. This country is going no place good and we do not want to be here to see it. Easier to just stop caring and get out.


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