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Columbus, Ohio Mall: Republicans show reluctance to approach Biden
Photo: Bloomberg / Bloomberg via Getty Images
One of the most powerful men in Joe Biden's administration will not be sitting at the long mahogany table in the White House cabinet room: Joe Manchin does not have an administration job.
But it will depend on the 73-year-old Senator from West Virginia whether Biden's first major bill has a chance - or whether it fails at the start.
More on that in a moment.
The future President Biden wants to support the US economy with another 1,900 billion dollars in state money.
His "rescue plan for America" contains everything that is dear to the Democrats but has failed because of the majority of Republicans to date:
an additional stimulus check for $ 1,400 for all Americans,
Billions to fight the pandemic
and finally, support for the states and communities torn by the crisis.
Most economic experts support the move.
"The economy clearly needs additional help from Washington," explains Chris Rupkey from MUFG Union Bank: "Otherwise there is a risk that real gross domestic product will shrink in the first quarter of 2021."
While Covid infections are increasing and vaccination logistics are jarring, the upswing has stalled.
In December employment fell for the first time since spring.
Almost a million people applied for unemployment benefits for the first time in the most recent reporting week.
Economists alarmed that Americans' propensity to spend seems to be waning.
In December, retail sales fell for the third year in a row.
And the development of the pandemic is going "from bad to worse," warns the head of the International Monetary Fund, Kristalina Georgieva.
“We need more stimulus.
Fortunately, the US has the fiscal space for it, ”she told the Washington Post.
"The original sin of Obama's economic policy was the too weak stimulus in 2009"
Biden sees it the same way.
"We have to act, and we have to act now," he appealed when he presented his plans a week before he took office.
The newcomer to the White House experiences a kind of déjà vu.
When Barack Obama and his deputy took over the leadership of the nation in 2009, the economy was also in crisis.
In retrospect, many Democrats believe it was a mistake that the Democrat spilled instead of plopped on economic aid to get the Republicans to approve.
"The original sin of Obama's economic policy was the too weak stimulus in 2009," complains Nobel Prize winner Paul Krugman.
This time the slogan had to be: "To hell with the torpedoes, full speed ahead" - an allusion to an American civil war hero who kept track of the sea battle despite the powder mist.
But it is doubtful whether Biden will succeed in overrun the opponent with sheer courage.
First of all, the impeachment proceedings against Donald Trump threaten to delay the parliamentary deliberations on his economic law.
And Republicans show little willingness to take their outstretched hand.
After 35 years in office in the Senate, it should be clear to Biden that his plan would not be passed "quickly," warned the conservative Senator Marco Rubio, not without self-interest.
He demands that instead of the whole package, only the consumer checks that he supports are approved.
The decisive voice
At this point, however, Manchin comes into play: The democrat, who calls himself a "moderate conservative", is seen as an opponent of helicopter money.
When he was quoted accordingly in early January, the stock market prices plummeted.
Because nothing works without Manchin.
With 50 seats plus the casting vote of future Vice President Kamala Harris, the Democratic majority in the Senate is wafer-thin.
"Manchin's vote is likely to be decisive for any legislation that the new administration brings into Congress," predicts Robert Litan of the Brookings Institution.
Many in the conservative camp are also rejecting another round of checks, the cost of which the independent Committee for a Responsible Federal Budget has estimated at $ 464 billion.
Michael Strain from the conservative American Enterprise Institute also criticizes that families with a six-figure annual income are subsidized.
According to the committee, applying the previous rules, a family of five with an income of $ 250,000 would still get $ 5,000.
Others worry that the action will fizzle out if the money goes into the account instead of into consumption.
The savings rate in the US is higher than it has been in decades.
Will it come down to a smaller package?
The cash payments are by no means the only point of contention in Congress.
The Republicans are opposed to aid to the states, and there will also be resistance to Biden's demand for the expansion of state health insurance and the increase in the minimum wage to $ 15 an hour.
Biden's program was "a takeover of the American economy by the left," grumbled budget expert Brian Riedl from the free-market Manhattan Institute, which advises Republican politicians.
Biden's crux: To prevent the Republicans from being able to block the law in the Senate permanently, it would not only need a simple majority, but even 60 votes.
Such a cross-party agreement is not foreseeable.
"We don't expect ten Republicans to support a $ 1.9 trillion aid package," Goldman Sachs chief economist Jan Hatzius warned soberly in a research report.
Many Democrats are therefore urging their president to use "reconciliation", a procedure with which the 60-vote quorum can be circumvented.
The Republicans pushed through their tax law in 2017, and Obama ultimately got his stimulus plan through.
But the instrument cannot be applied indefinitely or to all items of expenditure.
It is therefore more likely that Biden will end up agreeing to a compromise that will shrink his stimulus package considerably and postpone dream projects from the left.
Goldman Sachs is ultimately assuming a volume of 1.1 trillion dollars, or five percent of American economic output.
For the future president, the "rescue plan for America" is in any case only the first step.
In February he wants to present another billion-dollar plan for investments in infrastructure, industry, research, education and the climate.
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