What’s in Biden’s 1.9 Trillion Stimulus Package? – by Syed Nishat
What’s in Biden’s 1.9 Trillion Stimulus Package? – by Syed Nishat
Congress’ stimulus plans in March and December of 2020 to help individuals and businesses alike were important measures to keep America going during the COVID-19 pandemic and the economic upheaval that it caused the country. A third incoming bill is aimed at continued recovery with concurrent measures addressing current economic needs, as well as getting a handle on the nationwide pandemic situation itself. The various components of the bill as it stands total $1.9 trillion; its details are fairly close to those of the plan the new Biden administration had proposed earlier. While the December plan was scaled back to gain Republican support, the new makeup of Congress means that Democrats can pass the bill on their own, and they believe it is vital not to delay. The House Budget Committee will work to bring all the current proposed pieces together into one cohesive bill to be voted on by the House. So what is included in this newest relief plan?
$1400 Stimulus Payments:
The December plan sent direct payments of $600 to eligible individuals. The current House bill will send up to $1400 to individuals, with different eligibility requirements. For those earning less than $75,000, they will receive the full $1400, with the amount reducing for those earning more, up to $100,000. For couples earning less than $150,000 a year, they will receive $2800, with dependent children eligible for an additional $1400 per child. The new bill also includes individuals who did not qualify in the last round such as mixed immigration status household members and adult dependents over 17 years of age.
Increase in Tax Credits: For one year, the plan would increase the fully-refundable Child Tax Credit to $3600 for children under 6 and $3000 for children between ages 6 and 17. In addition, the Earned Income Tax Credit would be increased to almost $1500 for childless adults while also raising the income limit to about $21,000 and expanding the qualified age range so older workers could also claim the credit. The phase out income limit is $150,000 joint and $75,000 single family return.
Rental Assistance: To help those of low- and moderate-income who lost jobs as a result of the pandemic, the plan allots $25 billion in rent assistance. To further aid renters who are struggling to pay bills, an additional $5 billion would be allotted to help pay utility bills.
Eviction Moratorium: The federal eviction moratorium that had been in place expired at the end of January. The new bill would extend a new end date to September 30, 2021, along with allowing homeowners with federally-guaranteed mortgages to apply for forbearance until the same date.
Continued Unemployment Enhancements: The December relief plan provided a $300 additional weekly amount to unemployment benefits through March of this year. This new plan would provide an increase of $400 to unemployment payments through August 29, 2020. Two current programs for those who are jobless have also been extended—the Pandemic Unemployment Assistance program (largely for use by freelance and gig workers) will be extended up to 74 weeks, and the Pandemic Emergency Unemployment Compensation (for use when traditional state benefits have been exhausted) has been extended for 48 weeks.
Increased Vaccination and Testing: To get a handle on the pandemic itself, the plan calls for a national vaccination program, which would establish community vaccination sites as well as mobile units to access more remote locations. The plan would also invest $50 billion in increased lab capacity, funding for testing to help schools utilize regular testing to enable, and rapid test purchasing.
Hiring Public Health Workers: The plan funds the hiring of more public health workers, tripling the workforce with an increase of 100,000 workers. This would include mental health resources and addressing lesser-served communities, as well as long-term care facilities and prisons.
Small Business Assistance: Separate from the existing Paycheck Protection Program, this plan proposes a new grant program for small business owners with a funding of $15 billion. A further $35 billion would be invested in financing some state, local, non-profit, and tribal programs that provide venture capital and low-interest loans to boost new business.
Raising the Hourly Minimum Wage: While it’s not a new discussion point, the new plan calls to raise the minimum wage to $15 an hour. It also proposes an end to the tipped minimum wage and the sub-minimum wage for people with disabilities.
State Aid: Part of this plan includes $350 billion to state, local, and territorial governments to support various services, such as increased testing and vaccination, reopening schools, and maintaining frontline worker employment. This also includes a $20 billion aid to public transit agencies that have been strongly affected by the pandemic to avoid eliminating routes and laying off workers.
School Aid: While part of the state allotment is intended to assist with reopening schools and providing student and teacher safety, there would be a specific $170 billion earmarked for schools. This includes K-12, colleges, and universities and is flexible in terms of usage, whether it’s used for safe reopening and in-person attendance or to improve and facilitate remote education options.
Hunger Relief: This is an extension of an existing program, with the 15% increase in food stamp benefits continuing through the end of September rather than ending in June. The new plan would also invest $3 billion to help women and children obtain food and another $1 billion for U.S. territories.
Health Insurance Subsidies: For those who lost jobs and therefore also their work-based health insurance, the plan would subsidize their premiums through September. At the same time, the plan calls for an expansion of the Affordable Cart Act’s premium subsidies to avoid enrollees paying higher than 8.5% of their income to obtain coverage.
Mental Healthcare and Veterans Care Coverage: Not only are basic insurance premiums included– the new plan provides $20 billion specifically for the healthcare needs of veterans. It also includes $4 billion to aid substance abuse clinics and mental healthcare programs.
Emergency Paid Leave Reinstated: The previous paid sick and family leave benefits expired at the end of 2020. This new plan would extend those benefits until September 30 for workers at businesses with fewer than 50 or more then 500 employees as well as federal employees, who did not qualify under the previous plan. For employers with fewer than 500 workers, the government will reimburse the full cost of the leave.
Childcare Assistance and Tax Credits: The plan would create a new $25 billion fund and add $15 billion to an existing grant program to help childcare providers to help pay operating costs such as rent, utilities, and payroll as well as new costs like personal protective equipment and more rigorous cleaning. For families making use of childcare, the proposal includes a one-year expansion of the childcare tax credit allowing families to get back up to 50% of their childcare spending.
While the full bill hasn’t been finalized yet, House will likely approve the complete bill later this month before it continues its journey on to the Senate. It’s anticipated that the Senate-approved bill will go to President Biden for his signature at some point in March before crucial dates when certain unemployment benefits will expire.
Syed Nishat, BFA, is a partner at Wall Street Alliance Group. He holds a bachelor’s degree in business administration from University of Nevada Reno. Syed holds the FINRA Series 7, FINRA Series 63 and FINRA Series 66 licenses, along with licenses for life, disability and long-term care insurance. He also has been awarded the Behavioral Financial Advisor (BFA) designation.
