A COVID relief bill is set to move through Congress over the next month or so, possibly with only the support of Democrats. The Senate on Feb. 5 approved the FY2021 budget resolution after an overnight session, unlocking the "budget reconciliation" process for President Biden's $1.9 trillion stimulus plan. The House passed the Senate version and plans to begin writing the reconciliation legislation in the coming weeks, subject to some constraints under reconciliation. Democrats hope to have the legislation enacted before the mid-March expiration of pandemic unemployment programs.
Key Provisions under the Biden plan are:
§ $400 billion to combat the pandemic (vaccine distribution, testing, etc.).
§ $350 billion in state and local funding.
§ $1,400 direct payments. The President has made the $1,400 amount non-negotiable, but income thresholds for qualification are negotiable.
§ Democrats are preparing to include an expansion of the child tax credit to provide $3,600 per child younger than 6 and $3,000 per child up to 17 over the course of a year, phasing out the payments for Americans who make more than $75,000 and couples who make more than $150,000. The credit would be split into monthly payments from the IRS beginning in July, based on a person or family's 2020 income. Although the proposed credit is only for a year, some Democrats say they would fight to make it permanent.
§ $400/week federal unemployment insurance supplement and extension of pandemic unemployment programs through September.
The plan will not be "paid for," but rather add to the federal deficit.
Indications are that neither a minimum wage increase nor COVID-liability protection for businesses will be included in the legislation.
Some Democrats are pushing to include provisions that would roll back CARES Act net operating loss (NOL) provisions. Specifically, they are pushing to limit owners of pass-through businesses from using active business losses to offset nonbusiness income in excess of $500,000 (such as capital gains income). They are also seeking to limit the ability to carryback losses to businesses experiencing losses during the pandemic by allowing only losses from 2020 and 2019 to be carried back.
Larry Summers, the former Treasury Secretary for Bill Clinton and top economic adviser to Barack Obama, penned an op-ed last week that was quite critical of Biden's plan and widely circulated among Democratic circles in D.C. Summers' argument essentially says that the plan is far larger than the economic difficulties necessitate (creating an inflation risk that could haunt Democrats heading into the 2022 midterms), and argued further that the plan is not sufficiently targeted toward resolving Democrats' environmental or social justice concerns.
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