(Bloomberg) — The House passed President Joe Biden’s $1.9 trillion stimulus bill, the last step before it goes to his desk to be signed into law.
The legislation includes a wave of new spending, an extension of jobless benefits, another round of direct household payments, money for state and local governments and an expansion of vaccinations and virus-testing programs, including a national vaccine distribution program for all residents regardless of immigration status. It also includes a massive, one-year expansion to the child tax credit program aimed at curbing child poverty, a change Democrats are already seeking to make permanent.
The legislation cleared the House for a second time after last-minute changes were made to unemployment insurance payments to mollify moderate Democrats in the Senate, which passed their version March 6. Despite slight process delays in moving the bill, Democrats are set to beat their March 14 deadline to enact the legislation, the date when jobless begin to expire.
The legislation rivals the $2 trillion March 2020 Cares Act in size and scope and follows a $900 billion December relief package. After this bill, lawmakers plan to begin work on a longer-term economic recovery plan in coming weeks, aimed at job creation, infrastructure investment and development goals such as climate change.
The legislation would send a third round of stimulus payments — this time at $1,400 per eligible individual. Singles earning up to $75,000 will get the full amount, with the payments phasing out completely by $80,000 in income. Couples making up to $150,000 will get $2,800 — $1,400 per person — with the payments declining at higher incomes and zeroing out altogether at $160,000. Children and adult dependents in those households are also eligible for $1,400 payments.
The plan would also allow residents who are married to undocumented residents to receive stimulus payments; they were barred in prior rounds. The IRS is likely to begin sending the first wave of payments out via direct deposit before the end of the month.
The legislation includes $160 billion for vaccine and testing programs to help stop the virus’s spread and ultimately end the pandemic. The plan includes money to create a national vaccine distribution program that would offer free shots to all U.S. residents regardless of immigration status.
The legislation includes funding to create community vaccination centers and deploy mobile units in hard-to-reach areas. Money is also directed toward testing efforts, including purchasing rapid-result tests, expanding lab capacity and helping local jurisdictions implement testing regimens.
Senate Democrats included more than $360 billion in aid for state, local and territorial governments. Democrats for months have pushed for more money to help state and local governments that have faced higher costs and lower tax revenue during the pandemic. States and cities warn they’ll be forced to make deep cuts to public health, safety and education programs without more funding, because they can’t borrow money in the way the federal government can. Many Republicans chafed at more money for local governments, saying it amounts to a bailout for mismanaged budgets. The package also includes specific pots of money for critical infrastructure, including broadband internet, and money for rural hospitals.
The legislation would extend supplemental unemployment benefits that are scheduled start running out March 14. The bill extends the weekly federal benefit of $300 a week through Sept. 6. That was a last-minute compromise to appease centrist Democrat Senator Joe Manchin of West Virginia. Manchin who was concerned that previous versions of the bill, that called for higher payments or a longer extension, were too costly.
The package also extends benefits for self-employed individuals and gig workers, along with those who have exhausted their regular jobless benefits. It includes tax relief on the first $10,200 in unemployment payments for workers in households earning up to $150,000 a year. The change will prevent many people from receiving surprise IRS bills this spring. Individuals who have already submitted their tax returns this year paying taxes on their jobless benefits can file an amended tax return to claim a refund for that money.
Health Coverage, Paid Leave
A late addition to the legislation by the Senate would cover 100% of the costs of continuing health insurance through September for laid-off workers eligible for so-called COBRA coverage in employer health plans.
The bill provides tax credits for employers with fewer than 500 workers to reimburse them for paid leave costs of up to $1,400 per week per worker. The bill does not mandate that employers offer paid leave.
The bill would expand tax credits for low- and middle- income families and make them refundable for 2021. It would also expand the child tax credit to $3,000 from $2,000 for each child aged 6 to 17. Children 5 and younger would be eligible for $3,600. The tax credits would be sent to households monthly starting in July, effectively creating a guaranteed monthly income for parents. Democrats are beginning to push to make the benefit permanent.
The bill also includes $25 billion for a stabilization fund to help open child-care centers and $15 billion in grants to support essential workers in meeting childcare costs.
The plan calls for $170 billion to help schools open — something Democrats have argued would allow many parents, especially women, to rejoin the labor force after they dropped out to care for children learning at home.
About $130 billion of that would go to K-12 schools to help them hire additional staff to reduce class size, modify spaces and purchase resources to help meet students’ academic and mental health needs. The plan would also direct $40 billion to colleges and universities. The plan includes a last-minute amendment that would require schools receiving funds to submit plans within 30 days about how they plan to safely re-open.
The legislation also would make student loan forgiveness tax-free. The bill doesn’t include provisions to forgive student loans, but it would put in place tax benefits if Congress or Biden were to forgive student loans in the future.
The legislation would provide $45 billion to help low-income households that have lost jobs pay rent, mortgages and utility bills. The plan would also provide $5 billion to states and localities to offer emergency housing for families facing homelessness.
The legislation includes a 15% increase in Supplemental Nutrition Assistance Program, or SNAP, benefits would be extended through September. The bill also gives money for grocery stores to upgrade system to accept SNAP benefits online and extends Pandemic EBT, a program that sends food money to families of children who typically rely on free school meals.
The legislation also provides $4 billion for Black farmers to assist with debt relief.
The bill allocates $14 billion for eligible airlines and $1 billion for contractors to the air carriers to extend a payroll support program set to run out on March 31. The legislation also includes $8 billion for airports to make changes to facilities or personnel to prevent the spread of Covid-19.
Companies that work with “third-party” gig workers will be required to report more transactions to the IRS, likely resulting in more taxes paid by ride-share drivers and food delivery contractors. Under current law, companies don’t have to report transactions to the IRS unless a contractor is paid more than $20,000 and is a result of 200 or more transactions. The bill would lower that amount to $600, no matter the number of transactions.
The legislation also repeals the worldwide interest allocation provision, which allows companies to choose where to attribute their interest costs. The bill also extends a tax provision from the Republican 2017 tax law that restricts how businesses losses can be carried forward to offset future-year profits through 2026. The provision was initially implemented through 2025.
The legislation includes $25 billion to help restaurants struggling from pandemic lockdowns and closures and $1.25 billion for venue operators. The bill also includes $15 billion for targeted Economic Injury Disaster Loans and an additional $7.25 billion for forgivable loans in the Paycheck Protection Program.
