Stimulus Checks and More: Congress Set to Pass Covid Relief

By Yuval Rosenberg

Congress Set to Pass $900 Billion Covid Relief Deal and $1.4
Trillion Spending Package

More help, at long last, is on the way.

After months of partisan gridlock and inaction — even as
hundreds of thousands of Americans were dying due to Covid-19 and
millions more were
falling into poverty — congressional leaders have
finally agreed on another $900 billion coronavirus relief
package.

On Monday afternoon, mere hours ahead of planned votes,
lawmakers released the text of the legislation, 5,593 pages
combining pandemic relief and $1.4 trillion in funding for
government operations for the full 2021 fiscal year.

“We’re going to stay here until we finish tonight,” Senate
Majority Leader Mitch McConnell (R-KY) said. The House and Senate
late Sunday passed a one-day stopgap government funding measure,
averting a partial shutdown and allowing more time for the
legislative text to be finalized and passed.

The deal came together after lawmakers settled a last-minute
clash over the Federal Reserve’s emergency lending
authority.

The House is now expected to vote on the package Monday night,
followed by the Senate. Congress is also set to approve a
week-long stopgap spending measure to give
lawmakers time to get the massive year-end legislation printed and
signed into law by President Trump.

Here’s what in the Covid relief package, what isn’t, and what it
all means:

What’s in the Relief Bill

The Committee for a Responsible Federal Budget has
provided a
preliminary analysis of its provisions based on
legislative summaries and press releases: 

“Stimulus checks” – as soon as next week: Individuals
earning up to $75,000 a year will receive $600 payments, including
both adults and children, with amounts declining above that income
level, at a total cost of $166 billion.

Treasury Secretary Steven Mnuchin said Monday that Americans
will start seeing those payments within days. “This is a very, very
fast way of getting money into the economy,” he
told CNBC. “Let me emphasize: People are going to
see this money at the beginning of next week.”

But while direct-deposit payments will arrive quickest and could
hit bank accounts as soon as next week, checks sent by mail could
reportedly take until late January to start reaching Americans’
mailboxes.

Unemployment benefits: Temporary unemployment aid
programs (Pandemic Emergency Unemployment and Pandemic Emergency
Unemployment Compensation) will be extended for 11 weeks, through
March 14, and state unemployment payments will be enhanced by $300
per week for the same period of time, at a cost of $120
billion.

Small business aid: The deal revives the Paycheck
Protection Program, which provides forgivable loans to small
businesses to keep staff on the payroll, at a cost of $284 billion.
Arts and entertainment venues are slated to receive $15 billion,
and the Economic Injury Disaster Loan Advances programs gets $20
billion. Total cost of small business assistance: $325 billion.

Education: Education grants will provide $54 billion for
K-12 schools and $20 billion for higher education. Total cost of
education assistance: $82 billion.

Health care: The package includes $63 billion for health
care, including money for Covid-19 testing, tracing and mitigation
($22 billion); vaccine procurement ($20 billion); vaccine
distribution ($9 billion); and support for health care providers
($9 billion).

Transportation: The airline industry gets $16 billion for
payrolls, while airports get $2 billion and Amtrak gets $1 billion.
Transit infrastructure is targeted with $14 billion in grants, and
highways get $10 billion. Total cost of transportation spending:
$45 billion.

Rental assistance: $25 billion, with the current eviction
moratorium extended until January 31.

Nutrition and agricultural programs: $26 billion.

Child care: $10 billion.

Tax breaks: All told, the relief package includes tax
cuts worth roughly $30 billion (see more below).

Broadband: $7 billion in grants and investments.

For more on the details and how the bill might affect you,
see this
analysis at The New York Times.

What’s Not in the Relief Bill

Lawmakers dropped a Republican demand for a “liability shield”
to protect businesses and hospitals from virus-related lawsuits and
a Democratic demand for new money to help state and local
governments deal with budget shortfalls. They did, however, extend
the deadline for states and cities to use unspent money provided as
part of the relief package passed in March.

A Tax Break Tradeoff

The tax break for the three-martini lunch is back, with 100% tax
deductibility of the cost of business meals in 2021 and 2022 (up
from the current 50%), at a cost of $5 billion.

Tax experts have criticized the idea as ineffective and poorly
targeted for the current crisis. Democrats had also objected to the
expanded break but reportedly agreed to include it in exchange for
expansion of the Earned Income Tax Credits and Child Tax Credit for
low-income families. “It's sad to see the price extracted but this
EITC/Child Tax Credit provision is important to millions of people
who work for low wages & have been hammered by the economic
fallout,” Chuck Marr of the liberal Center on Budget and Policy
Priorities said.

Bloomberg’s Jonathan Bernstein
called the return of the business meal tax break a
rare legislative win for President Trump, who had pushed for the
provision for months. (“And surely it’s a coincidence that
restoring this deduction will once again subsidize high-priced
establishments such as those Trump owns,” Bernstein noted.)

Ending ‘Surprise’ Medical Bills

The year-end package will also include legislation to protect
patients from being hit with “surprise” medical bills, a bipartisan
priority that had gotten bogged down by disagreements among
lawmakers over who should cover the medical bills. Insurers and
hospital and doctors’ groups had lobbied intensely on the issue.
“The
compromise deal congressional committees struck
earlier this month was considered largely a win for hospitals and
doctors —and tweaks made in the final legislation are even
friendlier to providers,” Politico
reported.

What It All Means

Bloomberg’s Bernstein offered some useful perspective on the
politics: “Democrats got a whole lot less than they wanted and are
getting it more than six months after they wanted it. But on the
other hand, this is a package similar in size to the 2009 stimulus
bill, and that one (passed by large Democratic majorities in both
chambers, and with a new and popular Democratic president) had a
lot more tax cuts and a lot less spending. In other words, anyone
who claims this was a total win for either side is surely
wrong.”

The relief package is a case where, to paraphrase a line often

mistakenly attributed to Sir Winston Churchill,
Congress is doing the right thing after exhausting all the other
possibilities. It’s the right thing because, as many economists and
others have been warning for months, the surging Covid case counts
and renewed economic restrictions clearly necessitated some
additional fiscal policy response. Economists expect the package to
provide a sizable boost to the economy, though it’s not yet clear
whether the $908 billion package — meant to provide a few months of
support until vaccines can rein in the virus and allow some sense
of normalcy and recovery to take root — is sufficient for the
task.

“This is better than nothing, and there’s some good news that
we’re finally getting a deal,” Kathy Bostjancic, chief U.S.
financial market economist at Oxford Economics,
told The Washington Post. “The bad news is it’s
less stimulative than the prior packages, and the relief measures
are short-lived.”

‘More needs to be done’: Democratic leaders lauded their
deal Sunday, but they’ve already made clear they will be looking to
pass additional legislation next year. “We consider this a first
step. And that, again, more needs to be done,” House Speaker Nancy
Pelosi told
reporters Sunday evening. “And we're so excited that
that will be happening under the Biden-Harris Administration, about
700 hours from now.” Pelosi said she believes it will be “much
easier” to pass another package next year, arguing that a President
Joe Biden will be able to use the power of the bully pulpit to
rally support for more action.

It’s also not clear yet whether that’s true, given that Pelosi’s
Democrats are set to have a narrower majority in the next Congress
and would have to win both runoffs for Georgia Senate seats next
month to take control of that chamber. The spirit of bipartisan
cooperation and rush to pass a rescue package may not extend into
the new Congress. Even as they touted their agreement,
congressional leaders were also still trading shots over why it
took so long.

McConnell said Republicans had for months pushed for a package
under $1 trillion much like the one set to pass. “The progress of
this past week could have happened in July, or in August, or in
September, or in October. Senate Republicans were advocating for a
package just like this one, all along, in real time,” he
said. “I just wish our partners on the other side
had put political calculations aside and worked with us to make
this happen a long time ago.”

For their part, Pelosi and Senate Minority Leader Chuck Schumer
(D-NY) continued to decry Republican resistance to efforts to
“crush the virus” and provide aid to states. “Ideology gets in the
way, ideology gets in the way,” Schumer said.

So the fights that stalled this package for months are
likely to be revisited whenever another package is
considered.

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