Lawmakers Debate Biden’s $1.9 Trillion COVID-19 Aid Plan : NPR

As impeachment fades into the rearview mirror, lawmakers will probably be targeted on President Biden’s proposed $1.9 trillion financial rescue package deal. Economists are debating that degree of federal spending.


What’s the precise amount of cash to get People via a number of extra months of the pandemic? President Biden is hoping that Congress approves COVID reduction now that they are completed with impeachment. A number of the cash would finance funds to People, $1,400 for most individuals. Cities, states and faculties would additionally get some cash. Earlier this month, the White Home financial adviser Jared Bernstein stated folks want all of it.


JARED BERNSTEIN: We’ve got to hit again arduous. We’ve got to hit again robust if we’ll lastly put this twin disaster of the pandemic and the financial ache that it has engendered behind us.

INSKEEP: As you’ll have heard, the administration is asking Congress in whole for $1.9 trillion. It politely turned down a name by some Republican senators to spend much less. However economists nonetheless have questions in regards to the price ticket. So let’s speak this via with NPR chief economics correspondent Scott Horsley. Good morning.

SCOTT HORSLEY, BYLINE: Good morning, Steve.

INSKEEP: Why would there be doubt about 1.9 trillion?

HORSLEY: It’s that price ticket. Probably the most outstanding critics is Larry Summers, who was Treasury secretary within the Clinton administration. He was additionally an financial adviser to former President Obama. Summers instructed NPR’s Weekend Version, it can be crucial for the federal government to go huge, however possibly he says not this huge.


LARRY SUMMERS: In case your bathtub is not full, it’s best to flip the tap on. However that does not imply it’s best to flip it on as arduous as you may and so long as you may. The query is not whether or not we’d like huge stimulus. The query is whether or not we’d like the most important stimulus in American historical past.

HORSLEY: Summers worries that spending this a lot cash on short-term reduction would make it more durable for the administration to make the form of long-term investments that it desires to in issues like infrastructure. He is additionally nervous {that a} rescue package deal this huge may overheat the financial system and set off one thing we have not seen in a very long time, Steve – inflation.

INSKEEP: Nicely, how nervous, if in any respect, is the administration about inflation?

HORSLEY: The administration is much more nervous in regards to the individuals who’ve misplaced jobs and in regards to the mother and father who cannot work ‘trigger their children aren’t in class. The newest congressional forecast predicts it is going to be 2024 earlier than we get again all the roles that had been misplaced final yr. And the administration says that is not ok. Treasury Secretary Janet Yellen instructed CNN she thinks the U.S. may very well be again to full employment subsequent yr if Congress passes the president’s rescue plan. And consider, Yellen was once the chair of the Federal Reserve, the place inflation was an enormous a part of her duty.


JANET YELLEN: I’ve spent a few years learning inflation and worrying about inflation. And I can inform you we’ve the instruments to cope with that danger if it materializes. However we face an enormous financial problem right here and super struggling within the nation. We have to deal with that. That is the most important danger.

INSKEEP: Let’s ask in regards to the reassurance she presents there. When she says we’ve the instruments to cope with the danger of inflation, what’s she imply?

HORSLEY: Historically, when the financial system overheats and that causes a soar in costs, the Fed tries to chill issues off by elevating rates of interest. And for many years, the Fed was actually aggressive about that, typically elevating charges preemptively simply in case costs would possibly go up. However now the central financial institution has actually modified its eager about that. In recent times, we noticed that unemployment can go quite a bit decrease than many individuals count on with out overheating and triggering inflation. And that was actually good for lots of people, particularly these on the backside of the earnings ladder. So the present Fed chair, Jerome Powell, says he is simply not too nervous about inflation, regardless that he says we may see some short-term value hikes later this yr.


JEROME POWELL: If the financial system reopens, there’s various financial savings on folks’s steadiness sheet. You might see robust spending progress, and there may very well be some upward stress on costs there. My expectation can be that that will probably be neither giant nor sustained.

HORSLEY: For a very long time now, inflation has been decrease than the Federal Reserve would love it to be. And the central financial institution says it can solely increase rates of interest as soon as we get again to full employment and inflation has been operating above 2% for some time.

INSKEEP: Scott, thanks for the insights. Actually admire it.

HORSLEY: You are very welcome.

INSKEEP: NPR’s Scott Horsley.

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