On Monday, the House Budget Committee advanced President Joe Biden’s $1.9 trillion pandemic-relief legislation, setting it up to pass the lower chamber by the end of this week.

The panel combined legislation written in various House committees in recent weeks — pulling enhanced jobless benefits, minimum wage increase, vaccine funding and other elements — into a single bill. The vote in favor of the measure was 19 to 16, largely along partisan lines.

Tax provisions in the package include:

  • A $1,400 direct stimulus payment to taxpayers, subject to income limitations;
  • Expanding the Earned Income Tax Credit for workers without children by nearly tripling the maximum credit and extending eligibility;
  • Raising the Child Tax Credit to $3,000 per child ($3,600 for children under 6) and making it fully refundable and advanceable; The Tax Foundation explained the credit would be advanced to families monthly, at $250/month for older children and $300/month for younger children;
  • Expanding the Child and Dependent Tax Credit (CDCTC) to allow families to claim up to half of their childcare expenses;
  • Increasing the Affordable Care Act’s (ACA) premium tax credits for 2021 and 2022; and
  • Extending business tax credits for paid sick and family leave through September 30, 2021 and the Employee Retention Tax Credit to December 31, 2021.

The package now heads to the House Rules Committee, the final stop before it’s put on the House floor for a potential vote on Friday or over the weekend. House work might still not be done, however, if the Senate tweaks the package when that chamber takes it up. Senate committees are not holding any hearings or votes on the bill, so any changes would be negotiated behind closed doors and made through a floor amendment.

The Budget Committee’s Monday action was a largely perfunctory step as part of the budget reconciliation process, the legislative tool Democrats are using, which requires only a simple majority in the Senate. That allows the bill to proceed without Republican support in a Senate with a 50 to 50 partisan split, with Vice President Kamala Harris holding the tie-breaking vote.

Revisions Likely

While the Budget panel wasn’t empowered to make changes to the package, the bill will likely undergo several revisions before it becomes law. The Congressional Budget Office said on Saturday that its cost slightly exceeds the $1.889 trillion limit the House and Senate had previously set. That means lawmakers must cut $31 billion in order to use the fast-track reconciliation process. The reduction could be included as an amendment on the House or Senate floor.

The bill is also subject to review to make sure it complies with the Senate’s reconciliation rules. Among the requirements is that all elements must have a measurable effect on the budget. The most prominent provision that might not be eligible is a minimum wage increase to $15 an hour, which Biden himself has acknowledged could be changed as the bill makes its way through Congress.

The Senate parliamentarian may decide in the middle of this week whether the wage provision complies with the rules.

Senate Budget Chairman Bernie Sanders argues that the measure qualifies as a fiscal initiative, since the non-partisan CBO estimated it would increase budget deficits by $54 billion over 10 years. Opponents say the budget impact is “merely incidental” relative to the overall labor-market impact. The wage provision may also violate Senate rules against adding to deficits after 10 years, and therefore, would require offsetting savings or revenue to qualify.

The House will have to vote again on the bill if it’s changed in the Senate. Congressional Democrats are intending to have the legislation ready for Biden’s signature prior to a March 14 deadline, when enhanced unemployment benefits enacted in December begin expiring.

We will continue to bring you updates as this legislation makes its way through Congress and to the President for his signature.

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