Biden’s $1.9 Trillion Stimulus Package

Dear Rich Lifer,

Democrats are moving forward to pass President Biden’s $1.9 trillion stimulus package, using a budgetary maneuver called reconciliation.

The Senate voted along party lines (50-49) to advance this budget resolution, which would allow the bill to pass without Republican support.

President Biden met with 10 Republicans on Monday to discuss their counterplan — a $618 billion proposal. But in a virtual meeting on Tuesday, he told Democrats the GOP plan was too small.

After the meeting Tuesday, Senate Majority Leader Chuck Schumer stated, “President Biden spoke about the need for the Congress to respond boldly and quickly.”

Senate Democrats could approve the budget resolution as soon as Friday, so today, we will explore key points of Biden’s proposal.

But first, let us start by explaining Reconciliation…

What Is Reconciliation?

Reconciliation is a rule that was included in 1974 when Congress rewrote budget rules. The goal of reconciliation was to allow Congress to pass a new budget resolution with new spending priorities quickly to reflect the nation’s needs at the time.

The Congressional Research Service, a nonpartisan research group in Congress, reports reconciliation was first used in 1980 and has been used to pass 25 reconciliation bills.

The process allows the party in control of Congress to pass most big-budget legislation with a 51-vote majority in the Senate without having to worry about a filibuster.

Zach Moller, deputy director of economic programs at the center-left think tank Third Way, noted that reconciliation has mostly been used for deficit reduction. However, in recent years it has become more popularly used to pass partisan bills when one party controls the government.

Democrats used reconciliation to pass some health care changes in 2010, and Republicans used it to pass tax cuts in 2017. Republicans were unsuccessful in using reconciliation to repeal the Affordable Care Act during Trump’s Presidency.

It’s worth noting that reconciliation is not as simple as adding policies to a budget bill and passing it with a Senate majority.

The process begins with a budget resolution and includes special rules and procedures. Typically, there’s only one shot at reconciliation per year because Congress only passes one budget per year.

However, this year is different because Congress did not pass a budget for 2020, so Democrats are able to attach reconciliation instructions to a 2020 and a 2021 budget — if they can agree on the contents of the budget.

Once a budget is agreed upon, the House and Senate have to pass the same language and then reconciliation can begin, which includes a time constructed debate in the Senate and no filibuster.

Remember, reconciliation can only apply to policies that change spending — the money the federal government pays out — or revenue — the money the federal government takes in. There is a rule called the “Byrd Rule,” named after former Sen. Robert Byrd, which requires reconciliation bills be confined to changing spending and revenue and bans “extraneous policies” from being included in reconciliation.

Some Republicans are criticising Democrats for considering reconciliation, especially because Biden’s plan includes raising the minimum wage to $15. Many Republicans, such as Texas Sen. John Cornyn, argue that a minimum wage increase isn’t allowed under budget rules.

Besides raising the minimum wage, what else is in Biden’s proposal? Let’s explore…

Biden’s Plan

Biden’s $1.9 trillion stimulus plan covers a wide range of immediate assistance for those struggling due to coronavirus. Here are some highlights of the plan…

Stimulus Payments — The President’s plan calls for sending another $1,400 check per eligible recipient. Individuals earning less than $75,000 a year and married couples filing jointly and earning less than $150,000 are eligible for the direct payment.

The new payments would also go to adult dependents that were left out of the earlier rounds and include households with mixed immigration status.

However, Biden just commented today that he is willing to be flexible on sending the $1,400 payments to a smaller, more targeted group of Americans.

Unemployment Benefits — Biden would increase the federal increase the jobless receive to $400 a week, from the $300 weekly enhancement contained in Congress’ relief package from December. These payments would be extended until September.

His plan also extends the Pandemic Emergency Unemployment Compensation program — for those who have exhausted their state’s payments — and the Pandemic Unemployment Assistance program — which helps the self-employed, independent contractors or gig workers to receive unemployment — until September.

Covid Vaccines, Testing and Tracing — Biden’s plan calls for investing $20 billion in a national vaccination program, including instituting community vaccination centers around the country and mobile units in hard-to-reach areas. There would also be increased federal support to vaccinate Medicaid enrollees.

The proposal would also invest $50 billion in testing, issuing funds to purchase rapid tests, increase lab capacity and assist schools in implementing regular testing to support reopening.

It would also support the hiring of 100,000 public health workers and address health disparities by expanding community health centers and health services on tribal lands. It would also give support to long-term care facilities experiencing outbreaks and to prisons for mitigation strategies.

Small Business — The President’s plan calls for dispensing $15 billion to establish a new grant program for small business owners, separate from the existing Paycheck Protection Program. The plan also proposes making a $35 billion investment in certain state, local, tribal and non-profit financing programs that make low-interest loans and provide venture capital to entrepreneurs.

Reopening Schools — The President would provide a total of $170 billion more to K-12 schools, colleges and universities to help them reopen and operate safely or to facilitate remote learning.

This includes $130 billion for schools to reopen and for districts to meet students’ academic, social, emotional and mental health needs. Another $35 billion would go to public colleges, community colleges, and public and private historically black and minority-serving institutions. The final $5 billion would allow governors to support the hardest hit educational programs, from early childhood to K-12 to higher education.

Family Care — The President would extend the 15% increase in food stamp benefits through September, invest another $3 billion to help women, infants and children secure food, give U.S. territories $1 billion in nutrition assistance, and create a $25 billion emergency fund to help child care providers who are at risk of closing or allow those who are closed to reopen.

Again, these are just the highlights of Biden’s proposal, and changes to the plan are constantly being unveiled. Even as we wrote this piece, Biden made comments that he is willing to change the overall price tag of the plan.

So the fate of the bill hangs in the balance…

To a Richer Life,

The Rich Life Roadmap Team

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