Biden's Stimulus: What You Need to Know Now

Monday, March 8, 2021

Democrats Near the Finish Line on Covid Relief Bill

Democrats have two steps left in passing their $1.9 trillion Covid relief bill and delivering President Joe Biden his first major legislative win — a historically large, deficit-financed package that promises to send $1,400 direct payments to millions of Americans while expanding pandemic aid and a host of federal safety net and health care programs.

The Senate’s passage of the bill on Saturday in a 50-49, party-line vote sends the legislation back to the House, which is set to vote this week to approve the changes made on the other side of the Capitol. Democrats, with a narrow majority in the House, are expected to be able to pass the package and send it on to Biden’s desk for his signature. Democrats have been pressing get the aid bill signed into law ahead of the scheduled expiration of enhanced unemployment benefits on March 14.

Biden on Saturday called the Senate vote one "one more giant step forward" in delivering on his promise that help for the American people was on the way. "It obviously wasn’t easy, it wasn’t always pretty, but it was so desperately needed — urgently needed," Biden said.

He dismissed concerns that progressives might be frustrated by some of the changes made by the Senate to ensure the support of Sen. Joe Manchin (D-WV), a key centrist vote.

The Senate bill stripped out an increase in the federal minimum wage to $15 an hour. It also limited the number of people eligible for the so-called stimulus checks by having the payments phase out more quickly (see below for more). Under a compromise reached Friday, it also kept supplemental federal jobless benefits at $300 a week instead of raising them to $400, as the House bill had done. The benefits will last an extra week, through September 6, as part of the Senate change and the first $10,200 in unemployment payments this year won’t be taxable.

Read more about what’s in the bill here or here.

"I don’t think any of the compromises have in any way fundamentally altered the essence of what I put in the bill in the first place," Biden said.

Rep. Pramila Jayapal (D-WA), chair of the Congressional Progressive Caucus, similarly downplayed the changes in a statement Saturday. "Importantly, despite the fact that we believe any weakening of the House provisions were bad policy and bad politics, the reality is that the final amendments were relatively minor concessions," she said. "The American Rescue Plan has retained its core bold, progressive elements originally proposed by President Joe Biden and passed in the House relief package."

Republicans remained firm in their opposition to the package. "The Senate has never spent $2 trillion in a more haphazard way, or through a less rigorous process," Senate Minority Leader Mitch McConnell (R-KY) said in a speech before the final vote.

What you need to know about the $1,400 "stimulus checks": Individuals earning less than $75,000 and couple making less than $150,000 are eligible for the full $1,400 relief payments, plus an additional $1,400 per dependent. The payments phase out completely for individuals who earn more than $80,000 a year and married couples earning more than $160,000. Payments would reach 86% of adults and 85% of children, including everyone in the bottom 60% of income earners, according to estimates from the left-leaning Institute for Taxation and Economic Policy. "People could start seeing the $1,400 stimulus payments hit their bank accounts within days of Biden signing the bill -- which is expected to happen soon after the House votes on Tuesday," CNN says.

You can calculate how much you’ll get here.

The Senate sets a record: As we told you Friday, Senate consideration of the Covid packageran into a prolonged delay as Manchin held off on agreeing to a deal changing the details of the enhanced unemployment benefits in the bill. As Democrats worked to resolve the impasse, they held open a vote on an amendment to the package for 11 hours and 50 minutes, setting a new record for the longest vote in the chamber’s history. The final Senate vote came after some 25 hours of debate.

What’s next: Final passage of the American Rescue Plan is expected Tuesday or Wednesday, and Biden will deliver his first prime-time address to the nation on Thursday.

Covid Relief Bill Includes Major Tax Cuts

The Senate version of the American Rescue Plan will cut taxes by about $3,000 on average this year, according to a new analysis by the Tax Policy Center. Families with children will see an even larger tax cut of more than $6,000, TPC’s Howard Gleckman wrote Monday.

The tax provisions modeled by the TPC include the economic impact payments (EIPs) of up to $1,400 per person and the expansion of child tax credits. "By far the single biggest tax cut in the Senate bill is the next installment of the direct EIPs," Gleckman said. "They cut household taxes by an average of about $2,300, representing more than two-thirds of the overall tax cut."

Low and moderate-income households would receive nearly 70% of the benefits — a marked contrast with the 2017 Tax Cuts and Jobs Act, which delivered nearly half of its benefits to the wealthiest 5%. "As they say, elections have consequences," Gleckman said. "And few bills show that contrast as much as the Republican’s TCJA and the Democrats’ ARP."

A ‘Shower’ of Cash That Will Cut Poverty by a Third

The Democrats’ Covid relief bill "represents one of the most generous expansions of aid to the poor in recent history, while also showering thousands or, in some cases, tens of thousands of dollars on Americans families navigating the coronavirus pandemic," The Washington Post’s Heather Long, Alyssa Fowers and Andrew Van Dam reported over the weekend.

The plan focuses largely on low- and middle-income Americans, along with state and local governments, while providing relatively little for corporations and the wealthy. The surge in spending will drive household incomes to their highest levels in many years and cut poverty by about third, experts say.

Indivar Dutta-Gupta of the Georgetown Center on Poverty and Inequality told the Post that the legislation "likely represents the most effective set of policies for reducing child poverty ever in one bill, especially among Black and Latinx children. The Biden administration is seeing this more like a wartime mobilization. They’ll deal with any downside risks later on."

$2.2 trillion for workers and families: The numbers are staggering in aggregate, with households ultimately receiving $2.2 trillion in aid from the various relief bills last year and this year – equal to the annual cost of Social Security, Medicare and Medicaid combined.

The gush of money will be short-lived, however, with most of it expiring after this year. "That could be an abrupt awakening for Americans who have grown accustomed to financial support since Congress moved swiftly to create a stronger safety net at the start of the pandemic a year ago," Long and her coauthors said.

Deficit Tops $1 Trillion in Five Months: CBO

The federal budget deficit topped $1 trillion in the first five months of the 2021 fiscal year, the Congressional Budget Office announced Monday.

The deficit from the beginning of October through the end of February came to $1.048 trillion, CBO said, an increase of $423 billion over the first five months of the 2020 fiscal year.

Spending was 25% higher, while revenues were up by 5%. About three quarters of the increase in spending was related to three types of programs established in response to the Covid-19 pandemic: unemployment benefits, refundable tax credits, and the Paycheck Protection Program for small businesses.

Number of the Day: 4.1%

Analysts at Goldman Sachs think the economy is headed for a powerful rebound that will send the unemployment rate down to 4.1% by the end of the year, down from the current 6.2% rate. "The main reason that we expect a hiring boom this year is that reopening, fiscal stimulus, and pent-up savings should fuel very strong demand growth," Goldman economist Joseph Briggs wrote in a note to clients. While Goldman’s outlook offers one of the lowest estimates on unemployment, Briggs said that there is room for even stronger economic results, pushing the unemployment rate below 4% by year end.

Treasury Secretary Janet Yellen on Monday stressed the need to get the economy back to full employment quickly. "I think there’s a prospect with an all-out effort on vaccination and reopening schools that we can really get the labor market back on track this year or next year to avoid what we had after the financial crisis, which was almost a decade before the economy ever got back to full employment," she said.

What the Covid Vote Means for Biden’s Next Big Package

The Senate process highlighted just how powerful moderates in the chamber, especially Manchin, are now — and could continue to be as Biden looks to follow up on the rescue plan with an even larger infrastructure and climate change bill, among other items on his agenda.

"This was sort of a loose group of senators who are basically still concerned about the deficit, concerned about expenditures, and trying to ensure if we’re going to be spending $1.9 trillion that it’s directed to the people who need the most," Sen. Angus King (I-ME), a moderate who caucuses with Democrats, told The Washington Post.

The Post’s Tony Romm and Jeff Stein report that centrists at one point this week floated a proposal to cut the $1,400 relief payments, limit who could get them and reduce the additional payments for families with children. That proposal was rejected by other Democrats.

Manchin is already trying to exert his influence on the next big legislative package, telling Axios that he’ll insist Republicans have more of a role in the infrastructure and climate legislation — and that he’ll push for tax increases to pay for the entire costs of the plan, which could be as large as $4 trillion.

Manchin says that he’ll push for the next package start out going through regular order rather than the reconciliation process Democrats used on Covid relief to be able to pass the bill by a simple majority vote. "I am not going to get on a bill that cuts them out completely before we start trying," Manchin said, referring to Republicans.

Manchin also told Axios that he’s concerned that the rapidly growing national debt will lead to "a tremendous deep recession that could lead into a depression if we're not careful."

His pressure on the infrastructure package could result in substantial changes. "If the infrastructure package needed the support of 10 Republicans along with all the Democrats," Kata Riga at Talking Points Memo writes, "it would likely be a much smaller package, stripped of some of the Biden administration’s priorities. Biden campaigned on infrastructure improvements married to climate change measures, an issue area that tends to invite scorn from Republican lawmakers."

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Biden's Stimulus: What You Need to Know Now