The prospect of a dual victory in Georgia's Senate runoffs is the clearest sign yet that President-elect Joe Biden's sweeping agenda, which includes a massive green infrastructure plan, another Covid-19 relief package, and raising the federal minimum wage to $15, will get serious consideration on Capitol Hill.
Democrats picked up at least one seat after Raphael Warnock bested incumbent senator Kelly Loeffler by about 2 percentage points. As of Wednesday afternoon, Democratic challenger Jon Ossoff prevailed in his race against Georgia's other incumbent, Senator David Perdue, with a less than 1 percentage point margin.
"The Georgia election results breath new life into President-elect Biden's agenda," says Karen Kerrigan, president of the Small Business & Entrepreneurship Council, a nonpartisan advocacy group in Vienna, Virginia. As such, she adds that Americans can likely expect another round of stimulus, with additional support for small businesses.
The timing is good. About four million--mostly small--American businesses are expected to have closed permanently in 2020, says Ray Greenhill, president and founder of Oxxford Information Technology, an information services firm in Hagaman, New York, which tracks about 32 million businesses. Through the third quarter, roughly 3.4 million small businesses had closed in 2020.
While Congress recently greenlit a new $900 billion Covid-19 relief package, which includes $284 billion for the Paycheck Protection Program (PPP), a forgivable loan program directed at struggling small businesses, and millions more in tax incentives and reduced forgiveness filing constraints, the measures are largely seen as a Band-Aid for businesses.
"PPP is a fine program if the disruption is going to last two or three months," says John Lettieri, CEO of the Economic Innovation Group, a Washington, D.C., research group. "It's a complete mismatch against a year-plus-long crisis--especially when [it concerns] small businesses. They're not thinking about things in terms of week-to-week increments; they have to make decisions that go beyond the horizon of the relief." He suggests a more apt program would involve longer-repayment terms, low-interest rates, and flexible-uses.
A future stimulus package would offer assistance to state and local governments, which were left out of the latest bill. It would likely also include an additional unemployment assistance, which was recently extended until March 14. And some Americans could also expect additional economic impact payments--that is, those $2,000 checks could indeed be in the future, which may boost consumer spending.
Kerrigan adds that she expects that another round of stimulus would lend more support for minority and women-owned businesses and very small businesses that have missed out on loan programs.
Besides additional stimulus, Biden's agenda includes a lofty, job-creating, $2 trillion green infrastructure plan to create a zero-emissions energy sector by 2035. He is also looking to weatherize millions of homes and upgrade four million buildings to boost energy efficiency. The plan further calls for shifting major cities more toward public transportation--although the pandemic has put a big dent in demand.
He's also expected to push for incrementally raising the federal minimum wage to $15 per hour, up from the current $7.25, although many states are already well above the federal minimum. Changes to the U.S. health care system could also be in the offing. Biden has proposed reducing prescription drug prices and expanding the eligibility age for Medicare to 60 from 65. He further proposed a government-administered insurance program, or a "public option," to compete with private insurers. The public option would be offered, premium-free, to Americans who live in states that don't have access to Medicaid benefits.
Notably, Biden also favors rolling back several key aspects of Trump's biggest legislative accomplishment--the Tax Cuts and Jobs Act (TCJA) of 2017. He would hike the corporate tax rate to 28 percent from 21 percent. Prior to the TCJA, the top corporate tax rate was 35 percent; but the effective rate in 2019 was 24.6 percent. Garrett Watson, an analyst from the Tax Foundation, notes that when you tack on the taxes paid on dividends and capital gains, the rate may be higher. And Biden wants to raise the top individual income tax rate to 39.6 percent from 37 percent for those with incomes above $400,000. That could directly affect pass-through entities like limited liability companies and S Corps.
Biden has further discussed establishing a "Made in America" tax credit of 10 percent on activities that restore U.S. production, and revive existing or closed facilities--anything that expands manufacturing jobs. The measure would serve as a counterpoint to a new 10 percent surtax on corporations that offshore manufacturing and service jobs to foreign nations that then serve American consumers.
Biden's path won't be without bumps. The Democratic majority in the senate will be narrow, with a 50/50 split and Vice President Kamal Harris serving as the tiebreaker. To overcome a filibuster, the Democrats would need 60 votes--rather than a simple majority of 51--all but ensuring a more moderate agenda, as Democrats may need to win over Republicans to get much of anything passed.
It may be helpful to remember that when Barack Obama took office in 2008, Democrats controlled both the House and Senate. And he had a filibuster-proof 60-vote majority in the Senate, notes Ronil Hira, an associate professor of political science at Howard University. "Even then he had difficulty getting things passed," says Hira. Obama's stimulus law--the American Recovery and Reinvestment Act of 2009--was less than many liberals sought. Hira also notes that "the Affordable Care Act dropped the public option, and immigration reform was left out in the cold."
What's more, the House's Democratic lead thinned out in the 2020 election, making passage of bills in that chamber more cumbersome too.
Still, the Senate minority is less powerful than it used to be. The filibuster no longer applies to judicial nominations, for instance. And it doesn't apply to "reconciliation" or budget bills.
"That means that any spending or anything tax related can get through," says Robert Litan, an economist and nonresident senior fellow at the Brookings Institution, a nonpartisan think tank in Washington. "So [expect a] 'yes' on climate infrastructure and a number of his other spending proposals, and perhaps much of his tax agenda."