WASHINGTON — The Biden administration, with hundreds of billions of dollars to spend to end the COVID crisis, has set a series of aggressive bench marks to determine whether the economy has fully recovered, including returning to historically low unemployment and helping more than 1 million Black and Hispanic women return to work within a year.
But restoring economic activity, which was central to President Joe Biden’s pitch for his $1.9 trillion stimulus package, faces logistical and epidemiological challenges unlike any previous recovery. Infectious new variants of the virus are spreading. Strained supply chains are holding up the distribution of rapid COVID-19 tests, which could be critical to safely reopening schools, workplaces, restaurants, theaters and concert venues.
Then there are questions of whether the money can reach schools and child care providers quickly enough to make a difference for parents who were forced to quit their jobs to care for their children.
The money from the rescue plan “will absolutely allow us to pull forward that end date,” said Charlie Anderson, the director of economic policy and budget for the White House’s coronavirus response team. “It’s very hard to tell how much, but I can tell you it will absolutely supercharge what we’re doing.”
Privately, Biden’s aides are tracking health and economic data — like the capacity levels of day care centers — to gauge their success. They are also setting broad targets, like a return to a 4% unemployment rate, which would be just above the nation’s pre-pandemic rate, by next year.
Similar promises came back to bite Biden in 2009, as vice president, when he oversaw a considerably smaller economic stimulus package signed by President Barack Obama to lift the country from the Great Recession. Shortly before he and Obama took office that January, their advisers predicted the measure would keep unemployment from rising above 8% — a projection that haunted the administration as the economy slogged on for years.
This recovery is showing more favorable signs for the Biden administration. Economic optimism is rising as the pace of vaccinations steadily increases. Unemployment has already fallen from its pandemic peak of 14.8% in April to 6.2% in February. Federal Reserve officials expect the unemployment rate to slip below 4% by next year and the economy to grow faster this year than in any year since the Reagan administration, thanks in part to Biden’s rescue package.
The Federal Reserve chair, Jerome Powell, told reporters last week that federal spending to combat the crisis was “going to wind up very much accelerating the return to full employment.”
He added, “It’s going to make a huge difference in people’s lives, and it has already.”
But risks remain. For the economy to fully bounce back, Americans need to feel confident in returning to shopping, traveling, entertainment and work. No matter how much cash the administration pumps into the economy, recovery could be stalled by the emergence of new variants, the reluctance of some Americans to get vaccinated and, in the coming weeks, spotty compliance with social distancing guidelines and other public health measures before a critical mass of Americans is inoculated.
“We’re being really cautious about our expectations about the speed” of the economic rebound, said Heather Boushey, a member of the White House’s Council of Economic Advisers. “Part of this is establishing trust with the American people that we contain the virus, and that it’s safe, and then the economic activity will come up.”
Americans will also have to be willing to change their habits. As new infections have declined, so too has coronavirus testing. But public health experts say more testing — not less — will be critical for the economy to recover. When Biden ran for office, and again after he was sworn in, he promised to create a “pandemic testing board,” akin to the wartime production board that President Franklin D. Roosevelt created to help bring the country out of the Great Depression. Biden described the approach as a “full-scale wartime effort.”
His coronavirus testing coordinator, Carole Johnson, said the board, composed of officials from across government agencies, had been meeting to discuss how to work with the private sector to expand testing capacity, and to lay out plans to spend tens of billions of dollars from the stimulus bill for testing and other mitigation measures.
“We know that we’re going to continue to need to grow as we go forward,” she said of the nation’s testing capacity.
Biden made grand promises in pushing his American Rescue Plan to swift passage in Congress this month.
“This is what this moment comes down to,” he said in February. “Are we going to pass a big enough package to vaccinate people, to get people back to work, to alleviate the suffering in this country this year? That’s what I want to do.”
Biden got virtually everything he wanted. Now administration officials must make good on his vow.
The legislation he signed centers on $1,400 direct payments to low- and middle-income Americans, expanded unemployment benefits, aid to renters facing eviction and a variety of programs to help the poor. The president and his aides have said that spending is intended to help the most vulnerable people in the country stay in their homes and keep food on the table.
But Congress will not continue borrowing trillions of dollars to tide citizens over indefinitely. The economy will not fully rebound from the recession brought on by the virus until the pandemic is over.
To that end, hundreds of billions of dollars in the bill are earmarked to speed vaccinations, bolster testing, help businesses return to full capacity sooner and ease the return to work for Americans — disproportionately women of color — who were forced to leave their jobs to care for young children.
Those provisions include nearly $30 billion to ramp up vaccine deployment, support struggling community health centers and hire 100,000 public health workers. It also has nearly $50 billion for more COVID-19 testing, $122 billion for schools and both direct spending and expanded tax credits meant to increase the availability of child care.
In keeping with Biden’s focus on racial equity across a wide range of policy endeavors, administration officials say they will look at how quickly women of color rejoin the labor force to gauge how well equity efforts are working.
None of that spending is guaranteed to immediately change the course of the crisis. Schools, for example, are not required by the legislation to spend their additional dollars to reopen sooner, although administration officials are confident the money will help more students return to in-person learning in the coming months.
Sometime next month, vaccine distribution will enter a new phase. The supply of doses will exceed the number of people looking for shots and public officials are likely to focus more on convincing reluctant Americans to agree to be vaccinated.
Perhaps no spending effort will challenge the administration as much as increased testing.
Right now, testing is largely used as a diagnostic tool to detect whether someone is infected. Moving forward, testing is expected to function more as a screening tool that helps Americans feel more comfortable returning to normalcy.
The rescue plan includes nearly $48 billion for the administration to expand testing, contact tracing and other measures to track and contain the spread of the virus.
The administration has not said how it will spend all of that money, although the Department of Health and Human Services announced Thursday that it would invest $10 billion in coronavirus screening for schools, with the goal of returning to in-person learning by the end of the school year. An additional $2.25 billion will go toward coronavirus testing in underserved communities.
“We’re going to need widespread testing for this virus probably for the next several years,” said Dr. Ashish K. Jha, dean of the Brown University School of Public Health. “Right now, it’s all about just management of disease. But over time, as the pandemic gets under control, there are a whole series of things we want to do where testing will add a layer of confidence — everything from getting on an airplane to going into a restaurant to going to a concert.”
But there are obstacles to that plan, including a shortage of the kind of rapid tests that are necessary to screen a large population. Michael Mina, an immunologist and epidemiologist at Harvard University, said onerous Food and Drug Administration regulations were delaying the approval of new rapid antigen tests that could fill that gap.
“I feel very firmly that the Biden administration is hampered by a regulatory framework that is not in a position to actually tackle this pandemic, that is holding up the tools that are required to effectively curb transmission, to keep schools and businesses safe,” he said.
Biden, who criticized his predecessor President Donald Trump for interfering with the work of the FDA, is hardly in a position to intervene in a regulatory matter. But his coronavirus testing coordinator, Johnson, said in an interview that the administration was closely tracking the supply chains for tests to determine what it could do to ensure widespread testing at schools become a reality.
“We make policy decisions informed by where the supply is,” she said.
Administration officials are also closely tracking the CDC’s infection data to guide their spending decisions and determine how to measure success. The uncertainty in the models based on that data, they say, underscores the challenge ahead of them: Four weeks from now, the nation could have as many as 511,000 new weekly cases — or as few as 138,000.