Democrats Near the Finish Line on Covid Relief Bill

By Yuval Rosenberg

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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