Biden’s $1.9 trillion challenge: Ending pandemic crisis faster
WASHINGTON — The Biden administration, with hundreds of billions of dollars to spend to end the COVID-19 crisis, has set aggressive benchmarks to determine whether the economy has fully recovered, including returning to historically low unemployment and helping more than 1 million Black and Hispanic women return to work within a year.
But restoring economic activity, which was central to President Joe Biden’s pitch for his $1.9 trillion stimulus package, faces logistical and epidemiological
challenges unlike any previous recovery. Infectious new variants of the virus are spreading. Strained supply chains are holding up the distribution of rapid COVID-19 tests, which could be crucial to safely reopening schools, workplaces, restaurants, theaters and concert venues.
Then there are questions of whether the money can reach schools and child care providers quickly enough to make a difference for parents who were forced to quit their jobs to care for their children.
The money from the rescue plan “will absolutely allow us to pull forward that end date,” said Charlie Anderson, the director of economic policy and budget for the White House’s coronavirus response team. “It’s very hard to tell how much, but I can tell you it will absolutely supercharge what we’re doing.”
Privately, Biden’s aides are tracking health and economic data — like the capacity levels of day care centers — to gauge their success. They are also watching broad targets, like a return to an unemployment rate near 4 percent, which would be just above the nation’s pre-pandemic rate, by next year. Private forecasters already expect the rate to fall to 4 percent in 2022. Biden has promised the economy will return to “full employment,” which is likely a rate lower than 4 percent, next year.
Similar promises came back to bite Biden in 2009, as vice president, when he oversaw a considerably smaller economic stimulus package signed by President Barack Obama to lift the country from the Great Recession. Shortly before he and Obama took office that January, their advisers predicted the measure would keep unemployment from rising above 8 percent — a projection that haunted the administration as the economy slogged on for years.
This recovery is showing more favorable signs for the Biden administration. Economic optimism is rising as the pace of vaccinations steadily increases. Unemployment has already fallen from its pandemic peak of 14.8 percent in April to 6.2 percent in February. Federal Reserve officials expect the unemployment rate to slip below 4 percent by next year and the economy to grow faster this year than in any year since the Reagan administration, thanks in part to Biden’s rescue package.
Federal Reserve Chair Jerome Powell said last week that federal spending to combat the crisis was “going to wind up very much accelerating the return to full employment.”
He added, “It’s going to make a huge difference in people’s lives, and it has already.”
Plenty of risks
But risks remain. For the economy to fully bounce back, Americans need to feel confident in returning to shopping, traveling, entertainment and work. No matter how much cash the administration pumps into the economy, recovery could be stalled by the emergence of new variants, the reluctance of some Americans to get vaccinated and, in the coming weeks, spotty compliance with social distancing guidelines and other public health measures before a critical mass of Americans is inoculated.
“We’re being really cautious about our expectations about the speed” of the economic rebound, said Heather Boushey, a member of the White House’s Council of Economic Advisers. “Part of this is establishing trust with the American people that we contain the virus, and that it’s safe, and then the economic activity will come up.”
Americans will also have to be willing to change their habits. As new infections have declined, so too has coronavirus testing. But public health experts say more testing — not less — will be critical for the economy to recover.
When Biden ran for office, and again after he was sworn in, he promised to create a “pandemic testing board,” akin to the wartime production board that President Franklin D. Roosevelt created to help bring the country out of the Great Depression.
Expanding tests
His coronavirus testing coordinator, Carole Johnson, said the board, composed of officials from across government agencies, had been meeting to discuss how to work with the private sector to expand testing capacity, and to lay out plans to spend tens of billions of dollars from the stimulus bill for testing and other mitigation measures.
“We know that we’re going to continue to need to grow as we go forward,” she said of the nation’s testing capacity.
Biden made grand promises in pushing his American Rescue
Plan to swift passage in Congress this month.
Fulfilling the pledge
Biden got virtually everything he wanted. Now administration officials must make good on his vow.
The legislation he signed centers on $1,400 direct payments to low- and middle-income Americans, expanded unemployment benefits, aid to renters facing eviction and a variety of programs to help the poor.
But Congress will not continue borrowing trillions of dollars to tide citizens over indefinitely. The economy will not fully rebound from the recession until the pandemic is over.
To that end, hundreds of billions of dollars in the bill are earmarked to speed vaccinations, bolster testing, help businesses return to full capacity sooner and ease the return to work for Americans — disproportionately women of color — who were forced to leave their jobs to care for young children.
Those provisions include nearly $30 billion to ramp up vaccine deployment, support struggling community health centers and hire 100,000 public health workers.
It also has nearly $50 billion for more COVID-19 testing, $122 billion for schools and both direct spending and expanded tax credits meant to increase the availability of child care.
The rescue plan includes nearly $48 billion for the administration to expand testing, contact tracing and other measures to track and contain the spread of the virus.