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World

Covid rescue plan clears hurdle as US economy shows gains

  • "This agreement allows us to move forward on the urgently needed American Rescue Plan," White House spokeswoman said.
06 Mar 2021

WASHINGTON: US Democrats pushed ahead with President Joe Biden's massive Covid-19 relief package early Saturday after reaching a compromise on unemployment benefits and setting the $1.9 trillion stimulus bill on a path towards a final vote.

Negotiations in the evenly divided Senate had frozen the chamber's action for some nine hours before the Democrats reached agreement with moderate Senator Joe Manchin, who had balked at the scale of the benefits.

"This agreement allows us to move forward on the urgently needed American Rescue Plan," White House spokeswoman Jen Psaki said.

Votes on more amendments to the bill were set to occur through the night and into Saturday, with a final vote expected some time this weekend.

The breakthrough came against a backdrop of strong US economic data signaling that the world's largest economy may finally be healing.

They included better-than-expected hiring in February as businesses battered by the pandemic began recruiting again.

Payrolls jumped by 379,000 last month, which was almost double expectations and pushed the unemployment rate down slightly to 6.2 percent, the Labor Department reported.

The vast majority of the gains were in the leisure and hospitality sector, which was devastated in the pandemic's early months.

Yet the economy was still short 9.5 million jobs compared with February 2020, before the pandemic began, the report said.

Biden said the data underscored the need for lawmakers to approve his plan for nearly $1.9 trillion in aid, and his economic advisers said the current pace of job gains meant it would take two years to recover to pre-pandemic levels.

"We can't go one step forward and two steps backward," Biden said at the White House. "The rescue plan is absolutely essential to turning this around."

But on Friday the whole bill had appeared to be under threat.

The Senate impasse was over the amount and duration of supplemental unemployment insurance benefits for people left jobless during the pandemic.

Democrats had struggled to keep Manchin's support for expanded unemployment aid in the measure, but ultimately he agreed to a compromise that reduced jobless benefits from $400 to $300 but extended them to September 6.

It also provides for tax breaks of up to $10,200 for those receiving unemployment, but only for families making less than $150,000.

"We have reached a compromise that enables the economy to rebound quickly while also protecting those receiving unemployment benefits" from being hit with unexpected tax bills, Manchin said in a statement. The amendment was later passed along party lines by 50-49.

An effort to include a national minimum wage hike to $15 an hour -- a Biden priority -- failed, however.

Biden's proposal would be the third major stimulus package to help the economy weather the coronavirus crisis.

Republican opponents have argued the latest plan is excessive, since the economy has already started to recover.

But with the Manchin hurdle overcome, Democratic unity could see the measure across the finish line.

Early Saturday the chamber was resuming an endurance test known as a vote-a-rama, which could see dozens of votes on amendments to the bill.

Republicans moved to adjourn but Democrats, perhaps eager to wear down their opponents, hung together and voted down the motion so they could plow ahead.

"Make no mistake: we are going to continue working until we get the job done," Democratic majority leader Chuck Schumer said.

With the Senate split 50-50, Democrats seeking guaranteed passage can afford no defections. In the event of a tie, Vice President Kamala Harris would cast the deciding vote.

US unemployment was at a record low before the pandemic began but spiked to 14.7 percent last April after Covid restrictions were imposed.

Joblessness has since declined, but at an increasingly slow pace.

The sentiment after the February report was much more upbeat, with Gregory Daco of Oxford Economics calling it "an early blossom for employment."

But outside the strong hiring by restaurants and bars, other sectors saw smaller gains, with temporary health services adding 53,000 jobs and health care and social assistance adding 46,000.

Some industries saw further job losses, including education and construction.

The report did little to change the dynamic in the Senate, where Democratic leader Schumer continued to press for the passage of Biden's proposal, arguing the economy remained in the doldrums.

"If you just look at a big number, you say, everything is getting a little better," he said Friday. But "it's not for the lower half of America."

But Republican minority leader Mitch McConnell decried the bill as "a parade of left-wing projects" and said "our country's already set for a roaring recovery."

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