‘Help is on the way’ after Senate passes $1.9 trillion American Rescue plan in marathon session

 ‘Help is on the way’ after Senate passes $1.9 trillion American Rescue plan in marathon session

Those checks are $1,400 for all adults and children for households making up to $75,000 for single filers, $150,000 for joint filers. The payments will reduce on a sliding scale and are completely phased out for individuals who earn $80,000 or more and couples who make $160,000 or more, regardless of their number of dependents. The payments will be based on income for the last year of taxes filed, so anyone who has taken a major income hit in 2020 should file immediately to get the maximum benefit more quickly.

Lower-income workers without children will get a boost as well, with the earned income tax credit nearly tripling and expanded eligibility. The minimum age to qualify is being reduced to 19 from 25, and the upper age limit is eliminated—the most significant boost to the credit in more than a decade. It also provides student loan tax relief, thanks to Sen. Elizabeth Warren in the event that student debt is cancelled by Biden or the Congress, exempting all students loan forgiveness—for government-held federal loans, federally guaranteed loans, and private loans—from being taxed through 2025. Because, yes, cancelled student loan debt is taxable, but just in case, now it won’t be.

The $300/week boost to unemployment insurance passed by Congress in December will now continue through early September, not early October as Senate Democrats had hoped until Sen. Joe Manchin reared his obstructionist head. The West Virginia Democrat held voting on the whole package up for about 11 hours Friday while he threatened to vote with Republicans on an amendment that would have ended emergency UI benefits in July. Manchin went on to vote for both the Republican amendment and the rewritten Democratic one, with the latter prevailing. Significantly, and this really is a big one, the first $10,200 in UI received in 2020 won’t be subject to federal income taxes for households which earned less than $150,000. That’s a key win for millions of unemployed who could have been surprised with a tax bill. Because, yes, unemployment insurance is federally taxed. Now a huge chunk of it won’t be.

On top of all that is is the $350 billion for state, local, and tribal governments to help cover their budget shortfalls resulting from a year of the pandemic. It has $50 billion for vaccine distribution, and ongoing testing and tracing to try to control the virus. It also sets aside $8.5 billion for rural health. There’s a tremendous gift to all the people who’ve lost their jobs but kept their health coverage under COBRA—a massively expensive proposition for people having to pay their part as well as the employer part of their premiums. There’s $200 billion for schools to reopen safely, with $3 billion for technology in education, and $1.25 billion each for after school and summer school programs. There’s $58 billion to boost pension funds that have taken major hits in the past year; and $30 billion in housing assistance.

At the end of the amendment process, Majority Leader Chuck Schumer jumped in with what is the legislative equivalent of a magic wand, a 58-page “perfecting amendment” that added billions more for local government, restaurants, and child care grants. It basically reversed a $10 billion cut to aid to cities and counties that had been earmarked for state broadband projects by the Senate by adding that $10 billion back, so both things are funded. It also created a new $1 billion program for tribal lands and states with significant federal lands where there isn’t a large enough local tax base to pay for public services.

Schumer also erased a change that had been made from the House version of the bill that would have split the aid to states into two tranches, with half of the funding being held back until next year. The new language gives Treasury Secretary Janet Yellen the authority to determine whether to withhold half of the funding up front or not, depending on each state’s unemployment rate. The change also tightens restrictions on how the state and local aid can be used, stipulating that it can only replace revenue lost during the pandemic compared to the prior fiscal year. But, state and local government will now be able to use the funding to boost hourly pay for essential workers to up to $13/hour. Those workers are defined as those “needed to maintain continuity of operations of essential critical infrastructure sectors” or others as critical to “health and well-being” of their residents. Schumer’s amendment also increased Medicaid assistance to states, boosting a 7.35% federal match for home and community-based health services to 10%. And he chipped an additional $5 billion for state child care service grants, over the next ten years.

Schumer also sweetened the pot for restaurants and bars, adding $3.6 billion to the funding that had been earmarked for these particularly hard-hit businesses, bringing the total in aid available to $28.6 billion. That bonus came from tightening up the eligibility of nonprofits for Paycheck Protection Programs funds. (Disclosure: Kos Media received a Paycheck Protection Program loan.)

The bill now goes back to the House, where it is expected to pass Tuesday, even without the $400/weekly UI boost they wanted and the increase to $15/hour for the minimum wage. That provision was sacrificed relatively early in the process in the Senate when the parliamentarian advised that it wasn’t allowed under the special rules for bills passed by budget reconciliation, the process used on this bill. Given how Manchin almost blew the whole thing up over unemployment assistance, it’s probably just as well Senate leadership decided against trying to push the minimum wage by overruling the parliamentarian.

In a letter to Democratic colleagues, House Speaker Nancy Pelosi urged swift passage of the bill there. “As we continue to work for justice in so many areas, let us join together for a big, strong and hopefully bipartisan vote on the American Rescue Plan this week,” she wrote. “We can then send it to the President and move quickly to distribute its life-saving resources. At a time when people in our country are hungry and fear eviction, they will know that, as President Biden has promised: Help Is On The Way.”

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