© Getty ImagesGOP relief plan would not return economy to pre-pandemic levels: study
The COVID-19 relief proposal put forth by a group of 10 Senate Republicans would not return the U.S. economy to pre-pandemic levels, according to a study released Wednesday by the Brookings Institution.
The same study found that President Biden's relief plan would boost growth to rates seen before the pandemic took hold.
Researchers at Brookings analyzed both the $618 billion GOP proposal and Biden's $1.9 trillion pitch and found that the Republican plan would boost gross domestic product (GDP) by 1.6 percent in the last quarter of this year and 0.8 percent in the same three-month period of 2022, a significant boost over current estimates.
Those gains, however, would not put the economy back on its pre-pandemic path.
"This would leave GDP about 0.8 percent below its pre-pandemic trajectory at the end of both 2021 and 2022," the authors wrote.
Biden's proposal, on the other hand, would boost fourth quarter GDP by 3.6 percent in 2021 and 2.1 percent next year.
Still, the study warned that there was some cause for concern with the faster growth rate.
The initial boost to the economy would overshoot the pre-pandemic trajectory, which in turn could lead to inflation, some degree of which the Federal Reserve has indicated would be acceptable.
"However, the temporary surge in economic activity would also create a risk that the return of GDP back down to potential could create a difficult economic period after 2021," the study noted.
A slowing economy heading into the 2022 midterm elections would pose more risks for Democrats as they defend their razor-thin majorities in Congress.
The Brookings analysis is the second study released this week finding that Biden's proposal would put the economy back on its pre-pandemic trajectory. S&P Global on Monday said that implementing Biden's bill would right the economy by this summer.
Congressional Democrats have dismissed the GOP proposal as far too small for what the country needs to respond to the pandemic and economic slowdown. The Senate on Tuesday took the first steps toward advancing a relief bill through the budget reconciliation process, which would allow them to sidestep a GOP filibuster and pass the bill along party lines in each chamber.
But doing so will require the support of all 50 Democrats in the Senate. Sen. Joe Manchin (D-W.Va.) has already raised concerns with a key component of Biden's relief plan - raising the federal minimum wage to $15 an hour.