Biden's $1.9 trillion stimulus plan "passed" the House today, but the real test is next week

This article is from Wall Street Watch, authored by Xu Chao

Biden's $1.9 trillion COVID-19 stimulus bill will be voted on in the House of Representatives this Friday, and its passage is a foregone conclusion. However, the bill will face significant challenges in the Senate next week, with some core provisions in dispute.

Currently, the Democrats control the House of Representatives with a 221:211 majority, and House Speaker Nancy Pelosi is making every effort to push the bill through, after which it will be sent to the Senate.

The Senate is evenly split with a 50:50 ratio between the two parties. Under normal procedures, the stimulus plan needs to achieve a supermajority (i.e., 60 votes) to pass. However, Democrats will utilize the budget reconciliation process (which requires only 51 votes), with Senate President Vice President Kamala Harris casting the crucial tie-breaking vote.

In the Senate, the existing stimulus proposal may face significant modifications. The Congressional Budget Office previously indicated that the current proposal's cost slightly exceeds the $1.889 trillion deficit cap set by both chambers for the fiscal year 2021. The bill must be trimmed to use the expedited reconciliation process. The first target is the provision to raise the minimum wage to $15 per hour.

Even within the Democratic Party, there is controversy over raising the minimum wage. Some Democratic senators have explicitly stated their opposition.

On Thursday, the independent arbiter responsible for interpreting Senate rules ruled that Democrats cannot include the $15 per hour minimum wage in the $1.9 trillion COVID relief package. This means that an increase in the minimum wage will require bipartisan support in the Senate.

After the ruling on Thursday, Democrats expressed disappointment but stated they would not give up. House Speaker Pelosi indicated that House Democrats believe raising the minimum wage is essential, and they are determined to take any possible action to secure a $15 minimum wage.

White House Chief of Staff Klain, representing President Biden, stated that if the $15 minimum wage is excluded, alternative solutions will be sought.

The Republicans also have their version of a minimum wage bill. Some Republican senators have proposed raising the wage to $10 per hour. However, this bill includes a provision that would require all employers to verify employee identity (E-Verify) to ensure that only "legally authorized workers" receive the pay increase, which will face strong opposition from Democrats.

Market analysts believe that the $15 minimum wage has been a focal point of contention between the two parties in the U.S., and if the stimulus bill is scaled back or delayed again, the market will face the risk of being sold off once more.

Source link: https://wallstreetcn.com/articles/3621649