15 January 2021 | Joe Biden proposes 1.9 trillion dollar package
To pass this package, the incoming Democratic administration will need either to negotiate with the Republicans or go for the reconciliation process where a simple majority in the Senate is enough. However, the reconciliation route can only be used three times per year. Given that the Republicans will likely try to whittle down the deal to something of far less impact, the odds are that they will go this way after a week or two of negotiations. Nonetheless, not all items can go through the reconciliation process so some give and take is a certainty. For example, the doubling of the Federal minimum wage is unlikely.
What does it mean?
Markets have been hesitant to welcome such a deal, but it is a significant step forward for a US economy that is slowing down, as measured by the recent labor market data and the weak retail sales.
