Biden team warns there is ‘no substitute’ for $1.9tn stimulus bill

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Joe Biden’s administration has taken its first steps to revive the flagging US economy but warned the moves were “not a substitute” for another large stimulus package, as it increased the pressure on Congress to pass a $1.9tn Covid-19 relief bill.

The US president on Friday signed two executive orders to broaden access to food stamps and unemployment benefits, while beginning a process to introduce a mandatory $15 per hour minimum wage for federal contractors.

While the measures are a signal of intent from the president, they underscore the extent to which his ability to boost the economy depends on securing the support of a divided Congress for his stimulus bill.

Brian Deese, the new director of the National Economic Council, said: “I want to be very clear: these actions are not a substitute for comprehensive legislative relief, but they will provide a critical lifeline to millions of families.”

At a press conference on Friday, Mr Deese warned the US risked “an even more serious” economic crisis unless it approved the $1.9tn relief plan, which the administration hopes to follow with even more fiscal support. He said he would be meeting a group of senators to discuss the legislation on Sunday.

The Biden administration has made the relief plan a top priority for his first week in office. It includes more direct cheques to individuals, aid to cash-strapped states and an extension of jobless benefits.

“The bottom line is this: we’re in a national emergency. We’ve got to act like we’re in a national emergency,” Mr Biden said as he signed the executive orders later in the afternoon.

But the stimulus package faces significant obstacles in the Senate, where many lawmakers, especially Republicans, are sceptical of the need for additional fiscal support. Another complicating factor is that the upper chamber of Congress is likely to be consumed by Donald Trump’s impeachment trial, which means Mr Biden’s team may struggle to get a large package approved quickly.

“We’re not gonna get Republican votes for something in that price range,” said John Thune, the Republican senator from South Dakota and a member of his party’s leadership. “It’s not targeted and we said all along we want something . . . targeted, we want to be fiscally responsible and we’re gonna continue to maintain that.”

The executive actions signed by Mr Biden would expand access to food stamps and allow workers who left their jobs for health and safety reasons to receive unemployment benefits.

The Democratic president also moved to start work on an executive order that would require federal contractors to pay a $15 per hour minimum wage, along with emergency paid leave, heralding a big battle over with Republicans and some business groups over pay for low earners.

Mr Biden had already been pushing for passage of an overarching $15 per hour minimum wage within his $1.9tn stimulus, and it was a key plank of his campaign. But given the slim chances that he will be successful in getting it into the legislation, he is trying to take as many steps as he can to lift salaries without congressional approval.

As well as laying the groundwork for a $15 minimum wage to apply to federal contractors, Mr Biden also instructed government agencies to review which of their workers earn less than $15 per hour and offer solutions to boost their pay.

The US federal minimum wage has been stuck at $7.25 per hour since 2009, although many states and cities have been gradually raising their own minimums.

Even as Mr Trump won Florida in the 2020 presidential election, the Republican-governed state approved a ballot initiative gradually raising its own minimum wage to $15 per hour — a measure which had gained widespread bipartisan backing.

Republican lawmakers in Washington are resisting the president on the issue. “Mandating a $15 federal minimum wage would wipe out small businesses hanging by a thread,” Chuck Grassley, the Iowa Republican, said on Friday.

“It would cut into already contracted business income, forcing local retailers and restaurants to stop hiring and forget about reopening or expanding a small business,” he added.