Update on Biden Administration’s COVID-19 Relief Plan

Congressional committees are crafting legislation this week on specific components of President Joe Biden’s $1.9 trillion COVID-19 relief plan, the American Rescue Plan. These developments come after votes in the House and Senate last Friday on a budget resolution for 2021, setting up an option to bypass a Senate filibuster and pass any legislation in the Senate by a simple majority. The Tax Cuts and Jobs Act was passed in 2017 under this same budget reconciliation process.

House leadership told reporters that Friday’s action sets Congress up to pass the stimulus bill before expanded unemployment benefits expire March 14, with House plans to vote on the final package the week of February 22. A positive vote sends the legislation to the Senate, where it could also begin voting on the bill later that same week. Any changes the Senate makes would require the House to vote again. The House and Senate could resolve differences through a formal conference committee or by bouncing the legislation back and forth until an identical bill passes both chambers.

This legislative process is ongoing and likely will be changing rapidly in the short-term. As of the writing of this update, some features of the emerging plan include:

Child Tax Credit Boost Gaining Steam – Democrats’ plans to expand the Child Tax Credit are coming into focus, as House lawmakers begin to shape another relief package.

President Joe Biden has called for a fully refundable CTC of $3,000 per child for a year. The credit would be $3,600 for those under six, and families with 17-year-olds would be eligible. Although the next aid package is likely Democrat-led, an expanded credit has received Republican support before—the 2017 tax law doubled the credit for those under 17 and added a $500 credit for older children and other dependents.

Direct Stimulus Payments – The Ways and Means proposal includes direct payments of $1,400 to individuals earning up to $75,000 or couples making $150,000, plus $1,400 payments to adult and child dependents in households that qualify. Those payments start to phase out at those income thresholds, so single filers earning more than $100,000 or married taxpayers making $200,000 and up get nothing.

The Ways and Means Committee plan also includes:

•  An extension and expansion of unemployment benefits that are scheduled to run out in mid-March. The bill would increase the weekly federal benefit to $400 from $300 and extend it through the end of August.
•  Benefits for self-employed individuals and gig workers, and those who have exhausted their regular jobless benefits, would also be extended.
•  Paid-leave benefits for workers and tax credits for employers with fewer than 500 employees to reimburse them for the cost of the leave.
•  An increase in the annual child credit to $3,600 a year for children five and younger and $3,000 for those six and up. The money would come in monthly installments from July through December.
•  A bump in the earned income tax credit for low-wage workers and the dependent care tax credit for children and adults.

The Education and Labor Committee panel’s language also includes:

•  $130 billion for kindergarten through 12th grade school reopening
•  $40 billion for higher-education institutions
•  $39 billion for childcare businesses
•  $5 billion for extended pandemic food benefits
•  $4 billion for expanded home-heating assistance
•  $1.4 billion for senior-care services
•  Provisions to tighten workplace safety standards for COVID-19
•  Funding to subsidize health insurance for the newly unemployed, and to address a rise in domestic violence and child abuse

The Financial Services Committee panel’s draft language includes:

•  $10 billion to use the Defense Production Act to produce masks and other COVID-19 equipment
•  $25 billion for rental assistance, largely run through the Treasury Department
•  $5 billion in assistance for the homeless
•  $10 billion for direct assistance to homeowners for mortgage payments, property taxes and utility costs
•  $14 billion in payroll assistance to airlines, with $1 billion for their contractors

The Transportation Committee’s draft text provides measures including the following:

•  $50 billion for the Federal Emergency Management Agency to deal with the Covid-19 disaster
•  $30 billion for transit
•  $8 billion for airports
•  $1.5 billion for Amtrak

We will continue to update you on this rapidly evolving process.