Democrats’ $1.9 trillion relief package includes stimulus payments, jobless benefits, vaccine funding and more
Democrats in Congress are racing to meet a mid-March deadline for President Biden’s coronavirus relief package before existing benefits like enhanced unemployment insurance expire. Here’s an overview of the $1.9 trillion legislation, which they are looking to pass with only Democratic votes. The package includes some elements, such as a $15 minimum wage, that might not survive intraparty negotiations or Senate rules.
What is the overall size of the package?
The House and Senate passed a budget resolution earlier this month that allows them to craft a $1.9 trillion relief package. The size of the package has stayed the same since it was unveiled by President-elect Biden during the transition period, and after he rebuffed a proposal by a group of 10 Republicans who argued for a $618 billion bill.
The Biden administration says the package is the right size and that the economy needs relief on that scale in order to bring down real unemployment rates that the Federal Reserve estimates to be around 10%—accounting for misclassifications in government dataand people who have exited the labor force—and to alleviate the economic hardship faced by millions whose lives and jobs have been disrupted.
“We think it’s very important to have a big package that addresses the pain this has caused,” Treasury Secretary Janet Yellen said recently.
But Republicans have pointed to falling infection rates and unspent funds from previous relief packages as a reason to wait on any further stimulus. Meanwhile, many private economists have raised their growth outlooks for the year.
How big are the stimulus checks?
The package includes a third round of economic impact payments to individuals. The current House legislation contains $1,400 checks for individuals making less than $75,000 annually, and phased out amounts for people with higher incomes. Married couples who file taxes jointly can receive two $1,400 checks if their combined income is below $150,000.
Children and adult dependents would be eligible for the full $1,400. Those adult dependents, including disabled adults and college students, weren’t eligible for the first two rounds of checks. This round of payments would total $422 billion.
What about unemployment payments?
Enhanced unemployment benefits totaling $300 a week are set to expire on March 14, creating a de facto deadline for Congress to act. The House package would extend the benefits until Aug. 29 and bump up the weekly amount to $400.
What is included for vaccines and testing?
The package contains tens of billions to facilitate the vaccine rollout. It allocates $8.75 billion to federal, state, local, territorial and tribal public-health agencies for distributing, administering and tracking vaccinations, with some funds specially dedicated to making sure the vaccination process reaches underserved communities.
Vaccine development would also get a boost, with around $20 billion going to federal biomedical research for vaccine and therapeutic manufacturing and procurement, along with around $3 billion for a strategic national stockpile of vaccines. Another $25 billion would be spent on testing, contact tracing and reimbursing hospitals for lost revenue related to the pandemic.
How does it expand tax credits for children?
The package makes a significant change to the social safety net through the tax code that could have an impact on child poverty rates and potentially form a pillar of Mr. Biden’s economic legacy. The plan would raise the $2,000 Child Tax Credit to $3,000, set the credit at $3,600 for parents of children under age 6 and make parents of 17-year-olds eligible. It would also make the credit fully refundable, so low-income households would get the full benefit, no matter how little they earn. For a household with a 4-year-old and 7-year-old that doesn’t earn enough to pay income taxes, the plan would boost their maximum child tax credit to $6,600 from $2,800.
While the package would make the child tax-credit changes only for one year, it is broadly expected that Democrats will seek to make them permanent in the future. Mr. Biden’s administration was eager to engage with Republicans on enhancing the child tax credit, but ultimately it didn’t go along with Utah Sen. Mitt Romney’s plan that would have expanded the credit but also repeal or cut some other benefits, like the Temporary Assistance for Needy Families program and food stamps.
While some Democrats floated the idea of including a repeal of the cap on state and local tax deductions as part of the bill, it hasn’t been included at this point.
What are the hurdles for the minimum-wage increase?
Raising the federal minimum wage to $15 an hour over five years and gradually eliminating the tipped wage is perhaps the most contentious part of the package among Senate Democrats. The House has included the increase in its package.
In the Senate, the effort faces two distinct but related hurdles. First, the Senate parliamentarian must rule on whether a minimum-wage increase constitutes a “budget item” allowed under the arcane rules of the reconciliation process that allow it to be passed with a simple majority. Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona have expressed misgivings about the level of increase, especially as it would apply in states where the cost of living is lower. Mr. Biden has publicly expressed his doubts that the wage increase will be included in the final package, but Senate Budget Committee Chairman Bernie Sanders disagrees, saying he feels confident the measure can remain in the legislation.
How much funding is included for schools?
The plan contains around $130 billion in funds for K-12 schools. The money would go to school districts to pay for reducing class sizes to accommodate social distancing, improving ventilation, hiring more janitors and providing more personal protective equipment. Republicans have criticized the package for not directly tying funds to schools reopening.
How much state and local aid is there?
The bill would provide $350 billion to state and local governments whose coffers have been hit by a loss of tax revenue during the pandemic, causing many to plan cuts to services and warn of tax increases to allow them to balance their budgets. Republicans have slammed the aid as “blue state bailouts,” rewarding Democratic states for poor financial decisions. But the aid would go to governments in every state and territory, and some conservative economists, like Michael Strain of the American Enterprise Institute, have argued that some relief for state and local governments is necessary, if not the amount proposed by Mr. Biden.
Will Republicans support the proposal?
While a small cadre of Republicans has engaged with the White House on the substance of the relief bill, few if any are expected to vote for the final package—and Democrats can pass it without their support. Some, like Sen. Shelley Moore Capito of West Virginia, have pointed to the effect that the package will have on federal budget deficits, and she and others have favored a more narrowly tailored bill that would facilitate the vaccine rollout and provide less-generous stimulus checks and unemployment benefits.
Republicans have used the budget-resolution amendment process to inflict political damage on Democrats and expose their differences on issues like providing aid to undocumented immigrants and raising the minimum wage. But they have been unable to strike many blows against support for the overall package, which enjoys strong approval in polls and has so far kept congressional Democrats united on its top-line priorities.