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Treasury Secretary Janet Yellen said yesterday that she supports President Biden's plan for a large stimulus package, currently proposed at $1.9 trillion, calling it the best way to get the U.S. economy back to pre-pandemic levels, The Hill reported. Speaking on CNN's "State of the Union," Yellen explained that while the president was committed to working with "all members of Congress," the administration was more interested in passing a plan that addressed all of the needs brought forth by COVID-19. "There's absolutely no reason we should suffer through a slow recovery," Yellen said Sunday, adding: "I would expect if this package is passed, that we would get back to full employment next year." When asked whether Biden would support a plan passed with zero Republican votes, as well as concerns from moderate Democrats that the cutoff for direct relief payments in the plan is too high, Yellen appeared to side with progressives who have warned that Biden should worry about going too small, rather than too big, with the proposal. "We need a big package, and we need to get this done quickly," Yellen said. "[I] know the details need to be worked out, and the president is willing to work with Congress," Yellen continued, while adding of the calls from some Democrats to lower the cutoff for direct payments to $50,000 for individuals: "Middle class families need help too." Yellen's comments come amid a resurgent effort from progressives in both the House and Senate to urge the administration against heeding calls from centrists such as Sen. Joe Manchin (D-W.V.) to lower the cutoffs for direct payments in the stimulus package. Democrats appear to be ready to pass the package with little or no Republican support after a proposal offered by GOP senators last week for a new stimulus package was rejected during a meeting with the president as too small.

The Senate voted 51-50, after Vice President Kamala Harris broke her first tie, to adopt a budget blueprint for President Joe Biden’s $1.9 trillion virus relief package — following nearly 15 hours of wading through amendments from both parties, Bloomberg News reported. The House had already adopted its budget resolution but will likely have to vote again Friday to agree on the Senate’s language. Once that’s done, Democrats will be able to craft a relief bill in the coming weeks that can pass without any Republican votes under special budget rules — though the White House, moderates like Democratic Senator Joe Manchin of West Virginia and others still say they want a bipartisan final product. House and Senate committees would have until Feb. 16 to write the stimulus legislation under the instructions in the budget. The final action early Friday followed an all-night marathon of votes on amendments known as a vote-a-rama. Most of the non-binding measures were intended more to make points on hot-button issues like taxes, abortion, immigration and schools that had little or sometimes nothing to do with pandemic aid. There were 41 roll call votes during the process.

President Biden urged Senate Democrats in a call yesterday to “go big” and move quickly on a COVID-19 relief bill, signaling that he is rejecting a $618 billion proposal sponsored by 10 GOP senators as “too small” even though he is open to some of their ideas, The Hill reported. “It was clear,” said Sen. Tim Kaine (D-Va.) after the call. “Go big and be prompt because the American public is really hurting and really needs this.” Biden told Democrats that his clear preference is for Congress to pass a $1.9 trillion package, despite concerns voiced by Republicans about the impact on the deficit. Kaine said Biden didn’t close any doors to working with Republicans but he wants Democrats to move a large package immediately, which means it’s almost certain to need to move under a special process known as budget reconciliation to be able to pass with a simple majority vote. Read more.

In related news, Sen. Dick Durbin (D-Ill.) and Rep. Cindy Axne (D-Iowa) on Tuesday introduced a bill aimed at providing tax relief to people who received unemployment benefits last year amid the coronavirus pandemic, The Hill reported. The legislation would exempt from federal income taxes the first $10,200 in unemployment benefits that taxpayers received last year. Both people who received unemployment benefits through federal programs and people who received benefits through state programs would be eligible for the tax relief, according to a news release from the lawmakers. Read more.

A group of Democratic senators proposed new legislation yesterday that would provide relief to individual debtors who file for bankruptcy due to medical costs or who have lost their jobs and health insurance, Law 360 reported. The Medical Bankruptcy Fairness Act of 2021 was proposed by Sen. Sheldon Whitehouse (D-R.I.) and co-sponsored by Sens. Elizabeth Warren (D-Mass.), Sherrod Brown (D-Ohio), Tammy Baldwin (D-Wis.), and Richard Blumenthal (D-Conn.). It would streamline bankruptcy procedures for individual debtors whose financial troubles were caused by medical debt or public health-related shutdowns. Specifically, the bill would eliminate a requirement that debtors undergo credit counseling when they file for bankruptcy, which Sen. Whitehouse said makes little sense for people seeking court protection because of unanticipated medical costs that are largely out of their control. It also would significantly expand the dischargeability of student loan debt, which currently requires a debtor to pass a high bar of hardship to obtain. An increase in the protected amount of home equity to $250,000 for an individual debtor is also included in the proposal. Whitehouse has proposed similar legislation at least three times, with measures introduced in 2014, 2016 and most recently in July 2020 failing to come to a vote in the Senate. Warren was a co-sponsor of all three of the previous efforts.

A group of Senate Republicans outlined their roughly $618 billion coronavirus-relief offer Monday, including a round of $1,000 direct checks for many adults, as Democrats began a process that would allow them to pass President Biden’s $1.9 trillion plan along party lines, the Wall Street Journal reported. The 10 Republican senators met with Biden yesterday to discuss their proposal, which would provide $300 a week in enhanced federal unemployment benefits through June, versus the $400 a week through September in the Biden plan. The GOP proposal also outlines $20 billion each for child care and schools — both lower than the Biden proposal — as well as $50 billion for small-business relief and $160 billion for vaccines, testing and protective equipment, according to a summary released yesterday. The proposal omits measures favored by many Democrats, such as aid for state and local governments and a plan to raise the federal minimum wage to $15 an hour. The meeting lasted roughly two hours, and Sen. Susan Collins (R-Maine) said that the two sides explained their proposals further and agreed to keep talking. Nine senators joined in person, with Sen. Mike Rounds (R-S.D.) attending remotely.

Academic economists who have studied the Paycheck Protection Program have concluded that it has saved relatively few jobs and that, at a cost of more than half a trillion dollars, it has been far less efficient than other government efforts to help the economy, the New York Times reported. “A very large chunk of the benefit went to a very small share of the firms, and those were probably the firms least in need,” said David Autor, an M.I.T. economist who led one study. The divergence in views over the program’s economic payoff stems in part from ambiguity about its goals: saving jobs or saving businesses. Using different methodology than the Treasury economists, Mr. Autor says the Paycheck Protection Program saved 1.4 million to 3.2 million jobs. Other researchers have offered broadly similar estimates. Given the program’s cost, saving jobs on that scale doesn’t necessarily qualify as a success. Unemployment benefits also provide income, at far less expense, and programs like food assistance and aid to state and local governments pack a larger economic punch, according to many assessments. And because the paycheck program was designed to reach as many businesses as possible, much of the money went to companies that were at little risk of laying off workers, or that would have brought them back quickly even without the help. Many policy experts on Wall Street and in Washington — as well as businesses and banks on Main Streets across the country — say the program’s merits should be assessed instead on what it did to save businesses. On that basis, they say, it helped prevent a greater calamity and fostered economic healing. Read more. 

In related news, small businesses in Nebraska, Oklahoma and other rural states have been the most successful at getting federal pandemic relief in the $284 billion round of aid that opened this month, buoyed by a new rule that authorizes loans to many farms that didn’t qualify before, Bloomberg News reported. Measured by their share of the nation’s small-business payroll, four states, also including North Dakota and Wyoming, got more than twice their share of Paycheck Protection Program loans, based on an analysis of data from Jan. 11 to Jan. 24 released by the Small Business Administration this week. Lenders and applicants say that the process is simpler but slower than last year. Overall, $35 billion of forgivable loans were approved in the first two weeks of the January rollout, a fraction of the $349 billion disbursed in the first 13 days of the program last April. The latest PPP funding included rules aimed at fixing the program’s flaws: Restaurants can draw more debt and applications are more deeply scrutinized for fraud. One change benefited many small farmers and ranchers shut out last year. The Nebraska Farm Bureau, the largest member of the American Farm Bureau, and other agricultural groups successfully lobbied Congress to allow farm owners without paid employees to get aid even if they didn’t earn a net profit. The special rule for farmers was the result of a bipartisan effort led by Representative Ron Kind, a Wisconsin Democrat. “We are helping folks that could’ve used the help before but didn’t qualify,” said John Hansen, president of the Nebraska Farmers Union, which represents over 4,000 family farms and ranches. “The SBA is glad that newly eligible audiences are speaking with their lenders to participate in the Paycheck Protection Program to secure funding that keeps their workforce employed and on payroll during the pandemic,” the agency said in a statement. Read more. 

President Biden and his top economic aides brushed aside criticism from Republicans on Friday about the administration’s $1.9 trillion stimulus package and vowed to forge ahead with the proposal, saying the bill was critical for a flagging economic recovery and overwhelmingly popular with voters, the New York Times reported. The comments came as Biden was briefed by aides on the need for more fiscal help and the state of the economy, and as new analysis from the Brookings Institution suggested the Biden proposal, if enacted, would vault the economy above its prepandemic path by the second half of this year. A team of top economic officials, including Treasury Secretary Janet L. Yellen, met with Mr. Biden and Vice President Kamala Harris in the Oval Office on Friday to underscore the challenges facing an economy that recorded decelerating growth at the end of last year. They were joined by Brian Deese, the director of the National Economic Council, and Jared Bernstein and Heather Boushey of the Council of Economic Advisers. “The price of doing nothing is much higher than the price of doing something and doing something big,” Yellen said before the briefing. “We need to act now. The benefits of acting now and acting big will far outweigh the costs in the long run.”