Democrats Go All In on $1,400 Checks

 

Democrats Roll Out Plan for $1,400 Relief Payments

Democrats are moving ahead with their plans to send $1,400 coronavirus relief payments to millions of Americans. House Democrats on Monday rolled out their proposal, which calls for sending the full payments to individuals earning up to $75,000 and couples making up to $150,000, rejecting calls from Republicans and some moderates in their own party to scale back eligibility.

Democrats had debated limiting eligibility to individuals making up to $50,000 and couples earning up to $100,000, a structure supported by Sen. Joe Manchin (D-WV), who will be a key vote in the evenly divided Senate as Democrats seek to pass the relief package with a simple majority.

But as lawmakers in both parties have pushed to keep high-earning households from receiving the payments, the new Democratic proposal would phase out payments to individuals earning between $75,000 and $100,000 (and couples making twice those amounts). Individuals making $100,000 a year and couples making $200,000 would not get relief payments under the plan unveiled by House Ways and Means Chairman Richard Neal (D-MA). Unlike earlier relief payments, both children and adult dependents would qualify.

President Joe Biden said Tuesday that he agrees with the $75,000 threshold set by House Democrats.

Why it matters: “The broadening of stimulus payment eligibility among middle-class households is the latest sign that Democrats are moving ahead without Republican support,” The Washington Post’s Jeff Stein and Erica Werner report.

Some other details from the Democrats’ aid package: Democrats also unveiled details of an expanded child tax credit, which we told you about yesterday, as well as an extension of federal supplemental unemployment benefits of $400 a week, up from the current $300, through the end of August (one month less than Biden’s plan initially proposed). Democrats also included a minimum wage hike to $15 an hour and a two-year increase in Affordable Care Act premium subsidies.

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Poorest Americans Would Get Major Income Boost From Covid Relief Bill: Report

Three anti-poverty provisions in the legislation released this week by the House Ways and Means Committee would provide a 33% income boost on average for the poorest 20% of Americans, according to an analysis by the left-leaning Institute on Taxation and Economic Policy.

Part of the $1.9 trillion Covid relief bill currently being drafted by Congress, the provisions would provide another round of relief payments of $1,400 and expand both the child tax credit and the earned income tax credit programs. Under the expanded child tax credit, eligible families would receive $3,000 per child between the ages of 6 and 17 and $3,600 for children under 6, paid out in monthly installments. The expanded earned income tax credit would provide more robust aid, especially for childless adults, increasing payments by as much as 200%.

For households in the lowest 20% of the income distribution – with an upper limit of $21,300 and average earnings of $10,900 per year – the three provisions would provide more than $3,000 in aid on average, ITEP said. Breaking it down by program, the relief payments would provide a 20.3% boost to income on average, the expanded child tax credit would provide 9.7%, and the earned income tax credit would deliver another 3%.

Households higher in the income distribution would receive smaller payments on a relative basis, with those in the middle receiving a boost of about 6.6%.

Overall, all eligible families would receive an average payment of $3,290 for the year, based on 2020 household data.

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Charts of the Day: The US Goes Big

If signed into law, President Biden’s $1.9 trillion Covid relief package will be “the second-largest injection of federal cash in U.S. history,” second only to the $2.2 trillion Cares Act last March, Bloomberg reported Tuesday. The chart below shows increases in deficit-financed federal spending going back to the 1930s and up to last year’s bill, measured as a percentage of the economy.

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Mark Zandi, chief economists at Moody's Analytics, commented last week on the remarkable scale of federal Covid-related spending, saying that if Biden’s proposal passes, “the total amount of discretionary deficit-financed fiscal support provided to the economy during the pandemic will come to well over $5 trillion, equal to almost 25% of the nation’s pre-pandemic GDP.”

As the chart below indicates, the U.S. response to the pandemic would be the largest in the world, with only a handful of countries spending more than 10% of GDP to address their Covid health and economic crises. Zandi also notes that the total U.S. fiscal response to Covid would dwarf the response to the Great Recession, since the 2009 American Recovery and Reinvestment Act “amounted to substantially less than 10% of the nation’s pre-crisis GDP.”

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