AGF Management : Biden to Unveil Relief Bill Tonight; Senate Doesn’t Have the Votes — Yet — to Convict

Insights and Market Perspectives

Author: 8

January 14, 2021

Biden to Unveil Relief Bill Tonight;
Senate Doesn't Have the Votes - Yet - to Convict
January 14, 2021
JOE BIDEN WILL UNVEIL his initial covid relief package at 7:15 this evening in Wilmington, Delaware. We still think he will 'go big.'

THE BIDEN CAMP APPARENTLY HAS DECIDED on a strategy - first get a covid package, with another check to people, an extension of unemployment benefits, aid to state and local governments, relief for small business, and more funding for vaccines. The next bill, focusing on infrastructure, will have to wait.

THE FINANCIAL MARKETS are eager to see the price tag of this initial bill; that figure has been closely guarded by Biden's aides. We think it will cost well over $1 trillion, perhaps in the $1.7 to $2.2 trillion neighborhood.

THAT COULD SEND BOND YIELDS HIGHER and will anger Republicans who have suddenly found religion on deficits. But Biden has the votes for such a package in the House and he will use reconciliation, if necessary, to pass it in the Senate.

BIDEN MAY HAVE TO COME UP with offsetting revenues in the reconciliation process, and a likely place to start could be hiking corporate taxes, an option that's coming, but probably not tonight.

THERE'S A CLEAR NEED FOR A COVID RELIEF BILL, but at some point the markets - not just anti-deficit Republicans - will begin to focus on red ink. This year's deficit could exceed $3 trillion, as it did in fiscal 2020.

BIDEN WILL GET HIS FIRST BILL, to be unveiled tonight, but enactment of a second huge spending package later this year will be more difficult - especially if the economy is humming by spring.
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IMPEACHMENT - ON TO THE SENATE: Yesterday's vote to impeach Donald Trump seemed anti-climatic, since the Senate won't begin debate to convict him for at least another week, well past his departure from Washington.

WE DON'T SENSE GREAT ENTHUSIASM among Senate Republicans for a trial - actually, we don't sense great enthusiasm in the Biden camp for a time-consuming, divisive process lasting well into February. Biden has other priorities.

PERHAPS A DOZEN REPUBLICANS will vote to convict, but the magic number probably will be 17, and pro-impeachment forces aren't there yet. What could change the outlook? An outrageous package of new presidential pardons could inflame the Senate, as could violence on Inauguration Day, or disclosures on whether the Jan.6 riot was an inside job.

THERE'S PLENTY OF BUZZING about who actually is complicit in the riots - possibly a handful of Republican House members, perhaps factions in the Capitol police force. If there are disclosures that there was coordination with anyone in the White House, Trump would be quickly convicted by the Senate.

A FOCUS ON RUDY: Trump reportedly has shut out Rudy Giuliani, who has submitted steep legal fees that the White House will not pay. Our unsolicited advice to Trump: be nice to Giuliani, grant him a pardon, pay his legal bills, because Rudy knows where all the bodies are buried.

The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

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