‘It’s everything:’ Here’s how a pair of Senate races in Georgia in January could decide whether Congress enacts a $3.4 trillion stimulus plan

Warnock and Ossoff
Democratic candidate for Senate Jon Ossoff, right, and Democratic candidate for Senate Raphael G Warnock, left, arrive before they speak to a crowd during a "Get Out the Early Vote" event at the SluttyVegan ATL restaurant on Tuesday, Oct. 27, 2020, in Jonesboro, Ga.
  • The shape and size of a stimulus plan is on the line in the Georgia runoffs on January 5.
  • "It's everything," policy expert Heidi Schierholz said in an interview.
  • A slim Democratic majority in the Senate could use a legislative maneuver to pass a $3.4 trillion coronavirus aid plan without Republican votes.
  • Visit Business Insider's homepage for more stories.

President-elect Joe Biden is on course to assume office on January 20, but the balance of power in Washington is still unresolved with a pair of Senate runoffs in Georgia just two weeks before Biden's inauguration. 

In one race, Democrat Jon Ossoff is challenging Republican Sen. David Perdue, while Republican Sen. Kelly Loeffler is facing off against Democrat Raphael Warnock in the second runoff. The results will determine which party controls the Senate in an extraordinary period of public health and economic challenges  — and how many federal dollars are pumped into the economy early next year. 

The scope of another economic aid package in on the ballot as Georgians cast their votes on January 5. Democrats and most Republicans agree one is needed, but they have clashed for months over its size and the level of federal support necessary to support an economic recovery many economists say is weakening. Unemployment claims ticked up last week for the first time since early October.

Neither side has budged since Biden defeated President Donald Trump in the election on November 3 and the gulf between the two parties may only be widening in the lame-duck session. The president-elect this week praised the expansive Heroes Act which the House passed in May, even as Republicans have rejected it for months as a progressive wishlist.

Now Democrats are pinning their hopes on winning both races in the state and gain a threadbare majority, leaving Vice President-elect Kamala Harris to cast tie-breaking votes. Under that scenario, Democrats could use a legislative maneuver to pass pandemic-relief and other tax and spending measures with a simple majority and no GOP votes. 

"It's everything on stimulus," Heidi Schierholz, policy director of the left-leaning Economic Policy Institute, told Business Insider. "It's everything because if there is a Democratic-controlled Senate, they will be able to get a sizable package through reconciliation."

She continued: "Without that, it will come down to Senate Republicans on what a relief package, if any, looks like. They've given plenty of signals where they are on that."

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The GOP supports a much smaller relief plan than the $3.4 trillion package that Democrats and Biden are seeking. Republicans continue to push for a slimmer $500 billion measure they rolled out twice in September and October, despite a recent surge of virus cases nationwide that are causing states to reinstate restrictions and business closures.

Ossoff recently slammed Perdue for supporting the plan, which would reduce federal unemployment benefits from the previous $600 a week to $300 and omit direct payments.

"Sen. David Perdue fought against $1,200 stimulus checks for workers, and led the fight to cut unemployment insurance — while at the same time he gave billions to his corporate donors," Ossoff said in a tweet earlier this month. He's previously expressed support for many of the Democratic legislation's provisions, including on implementing an eviction moratorium and aiding strapped state and local governments.

Democrats favored robust federal action throughout the pandemic, particularly progressives.

"Can we please get people stimulus checks and mortgage relief and rent forgiveness and small business support and free testing and hazard pay and healthcare for the uninsured (& underinsured) in the middle of a pandemic or is that too socialist too?" Democratic Rep. Alexandria Ocasio-Cortez said on Twitter last week.

Yet regardless of the outcome in the hotly contested races, Democrats may be compelled to scale back their ambitions. Elizabeth Pancotti, senior policy advisor for Employ America, a nonprofit organization, told Business Insider that Democrats may need to cater to "middle of the road, conservative Democrats" by trimming the price tag of pandemic relief legislation next year.

"Should Georgia go into Democrats' favor, I think there will be concessions still made because there will only be 50 votes," she said. "If they lose Georgia, I think off the table are the really expensive line items, like the $600 federal unemployment benefit. Where there would have been a round or two of [stimulus] checks, the phase-out may be lower."

Biden campaigned on levying higher taxes on wealthy individuals and businesses, an agenda that Republicans are virtually certain to block if they hold onto the Senate. 

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