Fiscal Policy: Veering Left and Moving Fast

Congress has moved fast on a fiscal stimulus package. This surprised me in some ways. In my last blog post, I talked about how the 50/50 Senate split might push policy toward the center. That may still happen with other parts of President Biden’s agenda, but Democrats appear to be steering fiscal policy to the left.

The House and the Senate have passed identical budget resolutions that authorize deficit spending for President Biden’s full $1.9 trillion fiscal stimulus proposal. I had expected a smaller bipartisan deal. With this approach, it looks like the Democrats will attempt to use their narrow majority to pass President Biden’s proposal on a party-line basis. This approach is not without risks.

Racing against the clock

Congressional leaders are aiming to pass the final legislation by March 13, when extended unemployment benefits expire, to avoid a lapse in the benefits. (These benefits were renewed through March 13 in the fiscal package passed at the end of last December.)

The budget resolution process includes many different committees and steps. It’s possible for a final package to pass by March 13, but it might take until late March if things do not go smoothly.