US president-elect Joe Biden has just outlined the details of a major new coronavirus stimulus package in a move likely to comfort investors.
The announcement comes just 5 days before the former vice president is set to take the oath of office and be officially sworn in as president.
Mr Biden made the announcement today. In this, he detailed how the package, reportedly dubbed the 'American Rescue Plan' and estimated to cost approximately US$1.9 trillion ($2.45 trillion), will be deployed.
According to reporting in the Australian Financial Review (AFR) today, the package will primarily consist of a new fresh round of stimulus cheques of US$1,400 each. These will supplement the US$600 round of cheques that were sent out just after Christmas.
Those came after President Donald Trump signed a bipartisan relief bill. These new cheques will go to most American families earning under an income threshold.
A new stimulus package for the US economy
The package will also include the following provisions:
- An unemployment insurance boost of US$400 each
- A $20 billion boost to the national vaccine program
- A rise in the federal minimum wage to US$15 per hour, up from the current US$7.25 per hour level
- Grants and loans for small businesses, estimated to cost US$440 billion
- Emergency funding for state, local and territorial governments, estimated to cost US$350 billion
- 14 paid weeks of sick and family leave for caregivers
- Tax credits for families – reportedly consisting of "up to" US$4,000 for one child, or US$8,000 for 2 or more children
President-elect Biden's Democratic Party won an unexpected majority in the US Senate earlier this month. It did so by sweeping the 2 US Senate seats of the conservative Southern state of Georgia. It already held control of the House of Representatives under Speaker Nancy Pelosi.
As such, there is more likelihood of most, if not all, of the provisions of this package becoming law than if the Republican Party had maintained its previously-held majority. It was the Republican Senate that denied consideration of the US$2,000 cheques over Christmas to begin with. That was despite the objections of Democrats, as well as President Trump.
The Senate will be equally divided between the 2 parties once the new senators are sworn in. However, under the US constitution, the vice president breaks all senate ties, meaning that the Democrats will be in effective control until at least 2022. It will be interesting to see how the US markets react to this new round of stimulus spending overnight.
