Stimulus Package Update: Biden’s Plan Includes Third Checks, Vaccine Funding and Jobless Aid

Democrats in Congress are racing to meet a self-imposed mid-March deadline for President Biden’s coronavirus relief package before enhanced federal jobless benefits expire. Here’s an overview of the $1.9 trillion legislation, from stimulus checks to child tax credits, vaccine distribution, healthcare subsidies, restaurant aid and more.

The House and Senate passed a budget resolution earlier this month that allows them to craft a $1.9 trillion relief package. The size of the package has stayed roughly the same since it was unveiled by President-elect Biden during the transition period, and after he rebuffed a proposal by a group of 10 Republicans who argued for a $618 billion bill.

The Biden administration says the package is the right size and that the economy needs relief on that scale in order to bring down real unemployment rates that the Federal Reserve estimates to be around 10%—accounting for misclassifications in government data and people who have exited the labor force—and to alleviate the economic hardship faced by millions whose lives and jobs have been disrupted.

But Republicans have pointed to falling infection rates, signs of economic recovery and unspent funds from previous relief packages as a reason to hold off on another large round of stimulus, calling the bill a liberal wish list and arguing that funds should be more narrowly targeted.

How big are the stimulus checks?

The package includes a third round of economic impact payments to individuals. The current House legislation contains $1,400 checks for individuals making less than $75,000 annually, and phased-out amounts for people with higher incomes. Married couples who file taxes jointly can receive two $1,400 checks if their combined income is below $150,000. A compromise with moderate Senate Democrats resulted in the benefit being phased out faster above the income threshold. Payments would phase out at $80,000 for individuals and $160,000 for married couples.

Children and adult dependents would be eligible for the full $1,400. Those adult dependents, including disabled adults and college students, weren’t eligible for the first two rounds of checks.

What about unemployment payments?

Enhanced unemployment benefits totaling $300 a week are set to expire on March 14, creating a de facto deadline for Congress to act. The package would extend the benefits until Aug. 29 and bump up the weekly amount to $400. An effort by Sen. Joe Manchin (D., W.Va.) to keep the amount at $300 but extend the benefit through September appears likely to fail.

A nurse prepared a dose of the Moderna Covid-19 vaccine in Morgan Hill, Calif., Wednesday.



Photo:

Jeff Chiu/Associated Press

What is included for vaccines and testing?

The package contains tens of billions of dollars to facilitate the vaccine rollout. It allocates $8.75 billion to federal, state, local, territorial and tribal public-health agencies for distributing, administering and tracking vaccinations, with some funds specially dedicated to making sure the vaccination process reaches underserved communities.

Vaccine development would also get a boost, with around $20 billion going to federal biomedical research for vaccine and therapeutic manufacturing and procurement, along with around $3 billion for a strategic national stockpile of vaccines. Another $25 billion would be spent on testing, contact tracing and reimbursing hospitals for lost revenue related to the pandemic.

How does it expand tax credits for children?

The package makes a significant change to the social safety net through the tax code that could have an impact on child poverty rates and potentially form a pillar of Mr. Biden’s economic legacy. The plan would raise the $2,000 Child Tax Credit to $3,000, set the credit at $3,600 for parents of children under age 6 and make parents of 17-year-olds eligible. It would also make the credit fully refundable, so low-income households would get the full benefit, no matter how little they earn. For a household with a 4-year-old and 7-year-old that doesn’t earn enough to pay income taxes, the plan would boost their maximum child tax credit to $6,600 from $2,800.

While the package would make the child tax-credit changes only for one year, it is broadly expected that Democrats will seek to make them permanent in the future.

Are there other provisions targeted at certain industries or workers?

Yes. One provision would allow federal workers, including postal workers, to take as many as 600 hours of emergency paid leave related to Covid-19. Also, the restaurant industry will receive $25 billion in relief targeted at small and midsize restaurants and chains. The money would be doled out in grants that don’t need to be repaid if the restaurants use them for operating expenses, including payroll, rent and providing personal protective equipment to employees.

What happened to the minimum-wage increase?

A parliamentary ruling effectively barred Democrats from raising the federal minimum wage as part of the relief plan. The Senate parliamentarian said that raising the minimum wage wouldn’t comply with the body’s rules for legislation passed through a process called reconciliation, which allows a bill to be approved with just 51 votes but requires that it be closely tied to the budget.

An alternative effort by Democrats to find a way to spur companies to boost the wage they pay workers through tax penalties and incentives hit resistance among Democrats, though Mr. Biden and progressives like Sen. Bernie Sanders (I., Vt.) vowed to revisit the issue.

Concerns from Democrats over the minimum wage provision included in President Biden’s $1.9 trillion coronavirus relief package could force changes. WSJ’s Gerald F. Seib explains. Photo illustration: Laura Kammermann
What else did the Senate change from the House bill?

Senate reconciliation rules are much stricter than the House’s, which can pass legislation by simple majority. Along with the minimum-wage increase, the Senate also eliminated funding for an extension of the Bay Area Rapid Transit subway in Silicon Valley and a bridge in upstate New York, due to a ruling by the parliamentarian.

Part of the relief package would help schools reduce class sizes to accommodate social distancing. A class at the Mount Vernon Community School in Alexandria, Va., Tuesday.



Photo:

tom brenner/Reuters

How much funding is included for schools?

The plan contains around $130 billion in funds for K-12 schools. The money would go to school districts to pay for reducing class sizes to accommodate social distancing, improving ventilation, hiring more janitors and providing more personal protective equipment. Republicans have criticized the package for not directly tying funds to schools reopening and for spreading the aid over many years.

How much state and local aid is there?

The bill would provide $350 billion to state and local governments whose coffers have been hit by a loss of tax revenue during the pandemic, causing many to plan cuts to services and warn of tax increases to allow them to balance their budgets. Republicans have slammed the aid as “blue state bailouts,” rewarding Democratic states for poor financial decisions that predated the pandemic and note that many states’ tax revenues have exceeded expectations. The aid would go to governments in every state and territory, and some conservative economists, like Michael Strain of the American Enterprise Institute, have argued that some relief for state and local governments is necessary, if not the amount proposed by Mr. Biden.

What healthcare provisions are in the bill?

Along with virus-related provisions like vaccine and testing funds, the bill contains the largest overhaul to the Affordable Care Act in years. The bill expands eligibility for subsidies to purchase insurance to people of all incomes and caps the maximum premium at 8.5% of a person’s income. It also takes steps to lower, or even zero out, premiums for people making less than 150% of the federal poverty line.

The bill also encourages states to expand Medicaid by having the federal government pay for new recipients. Twelve states have refused to broaden their Medicaid programs through the ACA, even though the federal government pays 90% of the costs. It is unclear whether these changes would lead states to accept the expansion after years of opposition.

Employees who lose their jobs or lose benefits as a result of working fewer hours qualify for 100% Cobra health-insurance subsidies under the Senate plan, a boost from the 85% subsidy in the House-passed bill.

Only one Republican senator, Lisa Murkowski of Alaska, has indicated she is open to supporting the package.



Photo:

Stefani Reynolds/Bloomberg News

Will Republicans support the proposal?

Not likely. Republicans see the bill as too large, saying it sprawls beyond pandemic aid and instead is a wish list of liberal priorities. In the House, no GOP lawmaker backed the bill. Only one Republican senator, Lisa Murkowski of Alaska, has indicated she is open to supporting the package. While a small cadre of Republicans has engaged with the White House on the substance of the relief package, few if any are expected to vote for the final package—and Democrats can pass it without their support.

Some, like GOP Sen. Shelley Moore Capito of West Virginia, have pointed to the effect that the package will have on federal budget deficits, and she and others have favored a more narrowly tailored bill that would facilitate the vaccine rollout and provide less-generous stimulus checks and unemployment benefits.

Republicans have used the budget-resolution amendment process to inflict political damage on Democrats and expose their differences on issues like providing aid to undocumented immigrants and raising the minimum wage. But they have been unable to strike many blows against support for the overall package, which enjoys strong approval in polls and has so far kept congressional Democrats united on its top-line priorities.

Write to Gabriel T. Rubin at gabriel.rubin@wsj.com

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