Senate Passes $1.9 Trillion Stimulus Package

By Jennifer Hart

[Updated 03/10/2021] On Wednesday, the House passed a $1.9 trillion amended version of the American Rescue Plan, sending it to President Biden’s desk for his signature. Biden released a statement shortly after saying, “On Friday, I look forward to signing the American Rescue Plan into law at the White House – a people’s law at the people’s house.”

President Biden releases a statement on the stimulus bill clearing the final congressional hurdle. He’ll sign it into law at the White House on Friday. pic.twitter.com/3iF5c0S0pP

— Sarah Mucha (@sarahmucha) March 10, 2021

As vaccination rates continue to climb and the end of the pandemic is potentially in sight, Senate Democrats passed an amended version of the American Rescue Plan Act of 2021 that the House approved last week. The bill, which has an estimated price tag of $1.9 trillion, includes provisions related to COVID relief, but also includes significant amounts for Democratic priorities unrelated to COVID.

While some of the changes that the Senate made to the bill impact items from the Progressive Democrats’ wish lists, including a $15 minimum wage, it is expected that the House will approve the Senate version of the bill and send it to President Biden’s desk for signature next week.

Unemployment Benefits Extended

• After significant debate and multiple amendments, the bill extends the current federal $300 per week unemployment benefits through Sept. 6, 2021. While the House version of the bill included $400 in benefits through early October, Senator Joe Manchin (D-WV) joined with Republicans to lower the amount to $300 per week and shorten the time benefits are available. The September 6th deadline ensures that the benefits will not expire while Congress is on recess this August.
• For households making less than $150,000, the first $10,200 of 2020 unemployment benefits will be nontaxable. The reason given for this tax break was based on the failure of many states to withhold amounts for state or federal taxes, including Ohio.
• The relief bill includes no funds for retraining, despite predictions that up to 42% percent of jobs lost to the pandemic may never return due to advances in automation, a permanent move to remote work and expectations that travel, especially business travel, will not rebound to pre-pandemic levels. President Biden has stated that retraining would be addressed in a later bill.

$1,400 Direct Payments

• The plan includes $1,400 payments to Americans making less than $75,000 ($150,000 if married filing jointly), phasing out when income reaches $80,000 ($160,000 if married filing jointly).
• The phase out was part of a compromise between the White House and moderate Senate Democrats. The House phase out included households making up to $100,000 for single filers and $200,000 for those filing jointly. The estimated cost of these payments is $400 billion.

Sick Leave

• The refundable payroll tax credits for sick and family leave that were created by the Families First Coronavirus Response Act are extended to Sept. 30, 2021 and the clock on the limitation on the number of days available is reset after March 31, 2021.
• The bill increases the limit on the credit for paid family leave to $12,000 and the number of days a self-employed individual can take into account increases from 50 to 60 and 501(c)(1) governmental organizations are now allowed to take the credit.
• Leave that is due to a COVID-19 vaccination is also newly included.

Hospitality and Airline Industry Support; Additional SBA Loan Funding

• The bill creates the “Restaurant Revitalization Fund,” allocating $25 billion for a grant program for restaurants and bars to alleviate pandemic related revenue losses. Grant amounts will be based on a formula to determine the difference in gross receipts between 2019 and 2020 with some adjustment for PPP funds previously received.
• $5 billion of the fund is specifically reserved for entities with less than $500,000 in gross receipts in 2019. The remaining $20 billion will have a 21-day window where the funds are exclusively available to businesses owned by women, veterans and the socially-disadvantaged. These provisions are based on those in the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive Act (the RESTAURANTS Act), which KJK has covered previously.
• Live venues receive their own pool of $1.25 billion to use to offset COVID losses.
• The bill also includes $15 billion that airlines and their contractors must use to pay wages, salaries and benefits for employees.
• The bill includes an additional $7.2 billion in funding for the Paycheck Protection Program and $15 billion more for Economic Injury Disaster Loans.

Education

• The bill includes nearly $130 million for elementary and secondary schools, with at least 5% of those funds earmarked for addressing “learning losses.” The CBO noted that much of the previous amounts allocated to schools ($113 billion) haven’t been spent, and that 95% of the new allocation will likely be spent between 2022 and 2028.
• $39 billion is added to the Higher Education Emergency Relief fund, with a requirement that at least 50% of those funds be used for need based financial aid for students. A portion of funds must also be used to monitor and suppress coronavirus in accordance with public health guidelines and evidence-based practices.
• The bill does not include elimination of any student debt, but in the event that the Biden administration or Congress forgives student debt, the Senate did add a provision that would remove the tax burden related to the forgiveness of indebtedness. This tax-relief would also apply to any loans discharged through existing student debt forgiveness programs. President Biden’s team has stated that he does not believe he has the unilateral authority to cancel indebtedness by executive action, which Majority Leader Chuck Shumer and Senator Elizabeth Warren have pushed for.

Vaccination, Health Care and Health Insurance

• $15 billion to plan, prepare for, promote, distribute, administer, monitor and track COVID–19 vaccines, including $6 billion for the vaccine supply chain, and almost $50 billion for testing, contact tracing and monitoring, including research on ways to mitigate the spread of COVID and new variants.
• In a bid to get states that haven’t adopted the Obamacare expansion of Medicaid, the bill includes $15 billion for a temporary five percentage-point increase in the federal Medicaid match to states that expand eligibility to lower-income adults.
• $8.5 billion in funds for the Provider Relief Program to assist rural health care providers in addition to $500 million for rural hospitals and health care providers to be used in responding to COVID-19, including vaccination campaigns, increasing medical surge capacity, reimbursing for COVID-related costs and revenue losses, and increasing telehealth capabilities.

Changes to the Earned Income Tax Credit and Child Tax Credit

• The bill temporarily expands the Earned Income Tax Credit to certain additional childless adults and removes the age cap of 65 at an estimated cost of $25 billion.
• The bill also includes an expansion and increase of the Child Tax Credit from $2,000 per year to $3,000 a year for each child ages 6 to 17, and $3,600 for each child under age 6. The increased credit amount phases out for taxpayers with incomes over $150,000 for married taxpayers filing jointly, $112,500 for heads of household, and $75,000 for others. The IRS is also directed to make these payments monthly via direct deposit starting in July 2021.

State and Local Government Support

• The bill creates a pool of $350 billion for state, county and city governments, with distribution based on unemployment averages from October 2020 to December 2020.
• The Senate also added a $10 billion infrastructure program to the bill to help local governments continue crucial capital projects.

Agriculture & Nutrition Programs

• $4 billion to support food supply chain and agricultural response to COVID-19 including:
  • Making grants and loans for small or midsized food processors or distributors, seafood processing facilities and processing vessels, farmers markets, producers or other organizations to respond to COVID–19, including for measures to protect workers against COVID–19
  • Purchasing fresh produce, dairy, seafood, eggs and meat for use by food pantries and restaurants serving individuals in need
  • $300 million for monitoring and surveillance of animals for COVID-19
• $1 billion for providing loans and additional assistance to “socially disadvantaged farmers and ranchers.” Socially disadvantaged farmers and ranchers includes “a farmer or rancher who has been subjected to racial or ethnic prejudices because of their identity as a member of a group without regard to their individual qualities.” The definition specifically includes African Americans, American Indians or Alaskan natives, Hispanics, and Asians or Pacific Islanders.
• Extending pandemic-related Supplemental Nutrition Assistance Program (SNAP) benefits from June 30, 2021 until Sept. 30, 2021 as well as appropriating $25 million for technological improvements to the SNAP program.

Non-COVID Related Provisions

Many of the provisions above are not strictly related to COVID relief, but are at least nominally related to the pandemic in the form of economic stimulus. However, there are a number of provisions that seem to be completely unrelated to COVID, including, among others:

• $86 billion for nearly 2,000 multiemployer pension plans that are insured by the Pension Benefit Guaranty Corp
• A $35 billion increase in subsidies available to defray ObamaCare premiums, eliminating the income cap (previously 400% of the poverty level) and lowering the maximum amount participants are expected to contribute by 1.5%
• $1.5 million for the Seaway International Bridge, which connects New York to Canada
• $500 million for grants to fund activities related to the arts, humanities, libraries and museums, and Native American language preservation

What About the Minimum Wage?

• While an increase to the minimum wage was included in the House version of the bill, the Senate Parliamentarian determined that the increase could not be passed through the budget reconciliation process that allows lawmakers to bypass the filibuster in the Senate.
• Even if the Parliamentarian had approved of the inclusion of the phased increase, Senator Manchin made clear that the increase was too steep for rural states and that he would not support a federal minimum wage of $15.

This summary is not an exhaustive review of the 630-page bill and KJK continues to monitor and review legislation and regulatory activities that impact businesses and individuals. If you have any questions on the bill, please contact Jennifer Hart at jmh@kjk.com or 216.736.7208.