Senate alters some House provisions, but moderates did not get much
Senate Democrats late Saturday passed, 50-49, President Joe Biden’s $1.9 trillion coronavirus relief/stimulus package, following an intraparty standoff over unemployment benefits, scaling back unemployment benefits approved by the House and narrowing the number of Americans who receive $1,400 payments in an effort to mollify centrist Democrats and get a bill to President Biden as early as next week. (Sen. Dan Sullivan (R-Alaska) had to leave early Friday for the funeral of his father-in-law, leaving Republicans with 49 votes and no need for Vice President Kamala Harris to cast a tie-breaker vote to gain the Democratic victory.) “The president supports the compromise agreement and is grateful to all the senators who worked so hard to reach this outcome,” Jen Psaki, the White House press secretary, said in a statement.
The American Rescue Plan now heads back to the House, which must approve the Senate-revised legislation before sending it to the White House for Biden’s expected signature. House Majority Leader Steny Hoyer (D-Md.) said in a statement that the House will vote on an identical measure on Tuesday.
What’s in and what’s not:
Unemployment benefits: Enhanced unemployment benefits totaling $300 a week are set to expire on March 14. Bowing to a few Democratic moderates who said the jobless aid was too generous, Democrats dropped their bid to raise a weekly federal unemployment benefit to $400 from $300, setting an end date of Sept. 6 (avoiding an “August cliff” set by the earlier deadline, when the Senate is typically not in session). Sen. Joe Manchin (D-W.Va.) insisted on scaling back his party’s plan, leading party leaders to drop their initial bid.
But as part of the agreement, they made a large portion of last year’s unemployment benefits tax-free — the provision would forgive up to $10,200 in taxes on unemployment benefits received through in 2020. The tax sweetener would be available only to those earning less than $150,000. Impact of the tax sweetener: Some with relatively low incomes overall wouldn’t get much of a benefit, but a middle-income person could save more than $1,000.
Direct payments: The Senate lowered the income cap that determines who can receive a stimulus payment to $80,000 for individuals, $120,000 for single parents and $160,000 for households. Biden had proposed caps $20,000 higher. The measure would send $1,400 checks to Americans earning $75,000 or less — or $112,500 for single parents and $150,000 for couples — with the stimulus payments falling gradually for those with incomes above those thresholds and disappearing altogether for those earning more than the income cap. 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.
Democrats defeated most of the amendments, including one by Sen. Ted Cruz (R-Texas) that would have blocked stimulus checks from going to illegal immigrants. Democrats defeated other amendments to block checks from going to those who are incarcerated or who were convicted of a felony in the past 15 years.
Aid for agriculture and nutrition: The package contains $22.7 billion in agriculture and nutrition assistance provisions, including $3.6 billion in aid for the food supply chain and $4 billion estimated cost of paying off USDA direct and guaranteed loans held by qualifying minority farmers.
Sen. Pat Toomey (R-Pa.) criticized the selected minority farmer debt relief pushed by Black Democratic senators Cory Booker (D-N.J.), and Raphael Warnock (D-Ga.), and House Ag Committee Chairman David Scott (D-Ga.). Toomey called the provision “unconstitutional” and “outrageous.” Under that provision, farmers who are Black, Hispanic, Native American or Asian American could receive payments worth up to 120% of their indebtedness on direct or guaranteed USDA loans. The additional 20% is intended to pay off the taxes the estimated 15,000 farmers would owe as a result of getting the payments. A change made in the Senate version could allow USDA to reduce the payments for the largest loans: The original House version said the payments must be "equal to" 120% of the indebtedness; the Senate changed that to "up to" 120%. Toomey noted there is “no income test, no asset test, it doesn’t matter whether you are rich or poor. You don’t have to have experienced any harm or any kind whatsoever, including from Covid. You just have to be the right race… This bill is supposed to be about Covid relief and helping the people who are adversely affected by the economics of the lockdown. Instead, we’re handing out money based exclusively on race.” Toomey's amendment failed on a party-line, 49-50 vote.
Besides the $4 billion in selected minority debt forgiveness, another $1 billion in assistance is targeted toward helping minority farmers with technical assistance, financial training and access to land. Some $5 million of that is earmarked for operation of an equity commission that USDA Secretary Tom Vilsack is forming to investigate to "root out any systemic racism" in USDA programs.
The plan includes $3.6 billion earmarked to fund commodity purchases and to provide grants and loans to processors, farmers markets, producers and organizations to pay for needs such as workers' personal protection equipment and to retool operations to "maintain and improve food and agricultural supply chain resiliency." Another $500 million is earmarked for grants to rural health care providers to compensate them for revenue lost due to the pandemic and to help with a range of needs, including the cost of testing and vaccine distribution.
The package would extend the temporary 15% increase in Supplemental Nutrition Assistance Program (SNAP/food stamp) benefits through September and expand child nutrition assistance.
Regarding connectivity issues in rural areas and schools during the pandemic, the bill would allocate more than $7 billion to help schools and libraries pay for devices, internet service and WiFi hotspots.
Tax credits for children: 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.
The proposal would also authorize periodic payments, so that the credit becomes a near-universal child allowance like those in some other countries instead of part of a lump-sum tax refund. While the package would make the child tax-credit changes only for one year, it is widely expected that Democrats will seek to make them permanent in the future.
Emergency paid leave: A provision would allow federal workers, including postal workers, to take as many as 600 hours of emergency paid leave related to Covid-19.
Aid 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 criticized the package for not directly tying funds to schools reopening and for spreading the aid over many years.
An amendment defeated by the Democrats would have banned coronavirus relief funds from schools that allow transgender women (biological males) to compete on women’s sports teams.
State and local aid: 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. The Senate changes set aside $10 billion of the state and local aid for infrastructure projects (including help for expanding broadband service and aid for water and sewer programs). For state and local aid, senators mandated that individual states receive at least as much as they did from a previous aid package and allowing governments to use the funds for economic recovery efforts. They also placed rules on how the funds can be used, barring states from using the aid for pensions or to finance tax cuts.
Aid to restaurants: The restaurant industry will receive $25 billion in relief targeted at small and midsize restaurants and chains. The money would be doled out in grants that don’t need to be repaid if the restaurants use them for operating expenses, including payroll, rent and providing personal protective equipment to employees.
Business loss tax deduction: The package extends by a year limits on how much high-income earners can deduct certain business losses. Those limits, created in the 2017 tax law, were suspended by last year’s coronavirus relief package, to the frustration of far-left Democrats. They are now in effect but are scheduled to expire in 2025 like other pieces of the 2017 law. The Democratic plan would generate revenue by extending the provision through 2026.
Executive compensation: The Senate package removed a House proposal that would have frozen the growth in annual limits on contributions to retirement accounts after 2030. They replaced it with tighter limits on companies’ deductions for executive compensation — but only starting in 2027.
Student loan forgiveness: Senate Democrats added a provision that would make much student-loan forgiveness free from income taxes, creating an exception from 2021 through 2025 to the normal rule that canceled debt is income.
Vaccines and testing: The package 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.
Other healthcare provisions: The bill contains the largest overhaul to the Affordable Care Act (ACA/ObamaCare) in years. The bill expands eligibility for subsidies to purchase insurance to people of all incomes and caps the maximum premium at 8.5% of a person’s income. It also takes steps to lower, or even zero out, premiums for people making less than 150% of the federal poverty line. The bill also encourages states to expand Medicaid by having the federal government pay for new recipients. Twelve states have refused to broaden their Medicaid programs through the ACA, even though the federal government pays 90% of the costs. Employees who lose their jobs or lose benefits as a result of working fewer hours qualify for 100% Cobra health-insurance subsidies under the Senate plan, a boost from the 85% subsidy in the House-passed bill.
No increase in minimum wage. The proposal to increase the minimum wage to $15 by 2025 attracted only 42 supporters — and 58 opponents, including seven Democrats and one independent who votes with them (Democratic Sens. Jon Tester (Mont.), Kyrsten Sinema (Ariz.), Chris Coons (Del.), Tom Carper (Del.), Angus King (I-Maine), Jeanne Shaheen (N.H.), Maggie Hassan (N.H.) and Manchin voted against the amendment). “If anybody thinks that we’re giving up on this issue, they are sorely mistaken,” Sen. Bernie Sanders (I-Vt.) told reporters. “If we have to vote on it time and time again, we will — and we’re going to succeed.”
Keystone XL oil pipeline: An amendment asking President Biden to review and approve the Keystone XL oil pipeline, which the president blocked in his first days in office, came up short in a 51-48 vote. The amendment needed 60 votes to pass under the rules tied to the budget.
Funding was eliminated for an extension of the Bay Area Rapid Transit subway in Silicon Valley and a bridge in upstate New York, due to a ruling by the Senate parliamentarian.
WHIP+/derecho aid amendment defeated: The Senate defeated, 45-54, an amendment by Sen. Chuck Grassley (R-Iowa) to make farmers hit by last year's derecho in Iowa and others states eligible for a share of the $3..6 billion in food system relief. A similar provision was narrowly approved in the House Agriculture Committee but stripped from the legislation before the House floor vote.