What the Runoff Election Could Mean for Your Finances

President-elect Joe Biden at a campaign rally in Atlanta with Democratic candidates for the U.S. Senate.
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Minimum wage hikes, $2,000 stimulus checks, student loan forgiveness, and tax hikes for the wealthy are at stake in Tuesday’s runoff U.S. Senate elections in Georgia, with the balance of power in Congress undoubtedly determining the ability of President-elect Joe Biden to carry out his economic plans.

The two contests between Democrats Jon Ossoff and Raphael Warnock and Republican incumbents David Perdue and Kelly Loeffler will decide who is in charge of the Senate and, in some sense, the government and the course of our economy.

If the Democrats win both races, they will control the Senate (thanks to Democratic Vice President-elect Kamala Harris providing a tie-breaking vote in 50-50 deadlocks) as well as the House of Representatives, and Biden’s Democratic party will have a clearer path to advance his agenda. On the other hand, if the Republicans win at least one of the two races, they will retain their majority in the Senate and be in a strong position to block Biden’s plans.

“We can probably expect the Republicans to keep reasonably solid and close their ranks in opposition,” said Daniil Manaenkov, an economic forecaster for the University of Michigan. ”We shouldn’t expect too many concessions except on things that are very popular.”

Manaenkov said a Republican-held Senate this year would probably not be quite as obstructionist as the one that Democratic President Barack Obama faced, but would nevertheless restrain Biden’s ambitions. On the other hand, even two Democratic victories in Georgia don’t guarantee smooth sailing for Biden’s agenda because he would need every Senate Democrat to support him in order to overcome Republican opposition, Manaenkov said.

“There are a lot more factions among the Democratic Party that have somewhat different interests,” Manaenkov said, predicting that conservative Democrats such as Joe Manchin of West Virginia would wield outsized power in a 50-Democrat Senate.

Here are several key items on Biden’s economic agenda, according to his campaign platform and recent speeches:

$2,000 Stimulus Checks 

Although many Americans have already received their $600 pandemic relief payments, Biden and Democratic lawmakers want to bump that amount up to $2,000 per taxpayer. A bill to do so passed the House, but the proposal has stalled in the Senate. 

Speaking at a Monday rally in Georgia, Biden told supporters a Democratic victory in the Senate runoffs would “put an end to the block in Washington on that $2,000 stimulus check. That money will go out the door immediately, to help people who are in real trouble.” 

Future Relief Bills and Unemployment Benefits

Biden has called the most recent pandemic relief bill “just a first step” in addressing the COVID-19 crisis, indicating he will push for additional government relief. 

With Republican control of the Senate, though, it may be harder to get support for unemployed workers and for state and local governments whose budgets have been crushed by the pandemic, said Diane Whitmore Schanzenbach, director of the Institute for Policy Research at Northwestern University.

Unemployment programs established by the CARES Act were extended in the latest rescue package until March 14, meaning any extension beyond could have to go through another tortured process such as the one that led to the latest relief bill, she said. 

“It wasn’t extended for that long,” Schanzenbach said. “We are still going to be in the thick of this crisis” when those programs expire. If the Democrats win control of the Senate, pandemic unemployment programs may not only be extended, but unemployment benefits could be permanently expanded to people such as gig workers who were left out of the fold before, according to Manaenkov. 

$15 Minimum Wage

On the campaign trail, Biden said he wants to increase the federal minimum wage to $15 from $7.25 an hour and extend it to workers who are currently exempt, such as farm workers and domestic workers. His plan would also link the rate to the median hourly wage so that lower-wage workers can keep up with middle-income workers and it would eliminate the lower minimum wage for tipped workers and those with disabilities.

“If Democrats win in Georgia today and take back the Senate, we will increase the minimum wage from a starvation wage of $7.25 an hour to a living wage of at least $15 an hour,” Vermont Sen. Bernie Sanders, who caucuses with the Democrats, wrote in a Facebook post on Tuesday.

The $7.25 applies in roughly 20 states that have the same or lower state-imposed minimum wage (or no state wage at all). Others have higher minimums, though there is a wide range, with only eight states and Washington, D.C. enacting increases that will ultimately raise it to $15.

Manaenkov considers a $15 minimum wage a long shot to pass a narrowly divided Senate, but said “something like $12 is probably doable.” 

Student Loan Forgiveness and Reform

Biden has proposed forgiving at least $10,000 in federal student loans per borrower and making income-based repayment plans more generous, exempting borrowers making less than $25,000 from any payments on their undergraduate federal student loans and setting repayment rates for everyone else at 5% of their discretionary income over $25,000. (Current federal income-based repayment programs have a repayment rate that is at least double that—10% to 20%—without excluding the first $25,000.)

His education agenda also includes a goal to make public colleges and universities tuition-free for families making less than $125,000.

Additionally, even if the Republicans win in the Georgia runoffs, Biden’s administration could extend the current reprieve for borrowers with federal student loans, suspending principal and interest payments beyond Jan. 31. 

Labor Laws

Biden supports the Protecting the Right to Organize Act, a bill that would give bargaining rights to public service and federal government workers and take other steps to make it easier for workers to organize unions.

Republicans in the House Committee on Education and Labor have called the legislation “a radical union boss wish list,” and it is sharply opposed by business groups such as the Chamber of Commerce, which said it would ensnare employers in labor disputes and force individuals to pay union dues whether they want to or not.

Tax Changes

Biden has vowed to raise taxes on corporations and wealthy individuals, and close various tax loopholes, at least partially reversing the tax cuts pushed through under Republican President Donald Trump. He has also proposed expanding the child tax credit, as well as tax credits for families to pay for health insurance and child care, among other things.

Reversing Trump’s tax cuts is one of the items that Biden will likely be able to pass quickly with a Democratic Congress, Manaenkov said