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  • Writer's pictureMichael Trout

$1.9 Trillion Covid Stimulus Passes Senate

Joe Biden’s signature $1.9 trillion Covid-19 relief bill passed the Senate 50-49 on Saturday following a more than 25-hour marathon of amendment votes completed after Democrats settled an intra-party dispute over unemployment aid.

The measure, the "American Rescue Plan Act", now heads back to the House, where Majority Leader Steny Hoyer said a vote will be held Tuesday. Although some House progressives have complained about changes made by the Senate, none so far have threatened to withhold votes. Democrats aim to have it signed into law next week.

Enactment of the second-largest stimulus bill in U.S. history would hand Biden his first legislative victory and set the stage for work this spring on a massive infrastructure and manufacturing recovery bill that he wants.

“As tough as this moment is, there are brighter days ahead -- there really are,” Biden said at the White House after the Senate acted. “It’s never been a good bet to bet against America.”

The bill would provide the biggest health-care expansion since the Affordable Care Act, a temporary plan to slash the child poverty rate and send $1,400 payments soon to millions of Americans. In addition, state and local governments are set to get more than $350 billion in aid and schools would get an infusion of funding, all of which Democrats hope will propel a faster economic recovery long before they face voters in 2022.

It would deliver $300 a week in extra unemployment assistance through Sept. 6 and make the first $10,200 of unemployment insurance benefits non-taxable for households with incomes of less than $150,000. The legislation includes $160 billion for vaccine and testing programs to help stop the spread of the coronavirus. The Senate also adopted a bipartisan amendment from Republican Lisa Murkowski of Alaska and Democrat Joe Manchin of West Virginia to direct $800 million toward alleviating youth homelessness.

Overall, the legislation is double the size of the Obama-era stimulus and exceeded many earlier Wall Street estimates for how big a package could Democrats pass with the thinnest margin of control. It is eclipsed in size only by the $2.2 trillion pandemic aid plan passed a year ago.

The Democratic drive in the Senate stalled out for nearly 12 hours on Friday after Manchin -- a pivotal vote in the 50-50 Senate -- balked at an amendment to extend supplemental unemployment benefits into October.

As Republicans tried to lure Manchin to vote for a proposal by Senator Rob Portman of Ohio that would extend the benefits only through July 18, Democrats from Biden on down furiously lobbied Manchin and reworked their earlier plan to get his support.

Negotiations on that amendment caused a separate vote on minimum wage that set a record for the longest vote in Senate history, dragging on for nearly 12 hours as Democrats tried to keep their caucus united. In the end, the provision was left out of the legislation because of arcane Senate budget rules.

Despite that stumble, passage was a major victory for Senate Majority Leader Chuck Schumer, who aimed to show that Democrats could wield power despite the 50-50 Senate split.

The deals he brokered on stimulus payments and unemployment aid, as well as the addition of a dozen smaller changes, ensured that moderate Democrats like Manchin and Arizona’s Kyrsten Sinema were on board along with progressives like Senate Finance Chairman Ron Wyden. That may also help in the House, where progressives were already angered over the loss of the minimum wage provision.

Democrats held together to reject Republican amendments on limiting state and local aid; restricting abortion funding; banning aid to schools that have transgender athletes or fail to open 5 days a week; and ending aid to minority farmers, among others

Schumer said the vote showed Democrats that if they don’t negotiate, Democrats are prepared to act on their own.

“Now they know we mean it,” he said at a news conference after the vote. “On every single important vote, every Democrat stuck together.”

The passage of the stimulus was enabled by the upset victories in January runoff elections of two Democratic senators from Georgia, which handed Democrats their razor-thin majority.

“The people of Georgia deserve great credit for what happened here today. If they had not stood up in such a powerful way on that historic election day and sent Jon Ossoff and myself to the Senate, we simply would not be here today,” Senator Raphael Warnock told reporters.

Republicans also were united in opposition. They argued that much of the measure is unnecessary given improving economic indicators, like Friday’s stronger-than-expected jobs report, and that it’s a danger to the long-term health of the economy because of the growing U.S. budget deficit. The Congressional Budget Office estimated the deficit would reach $2.3 trillion this year before the passage of the new bill adds $1.2 trillion more to that total in fiscal 2021.

“The Senate has never spent $2 trillion in a more haphazard way,” Senate Minority Leader Mitch McConnell said.

The bill will send $1,400 payments to individuals earning up to $75,000 and couples earning up to $150,000 based on either 2019 or 2020 tax returns. The payments phase out fully for those individuals making $80,000 and couples making $160,000. Those are lower phase-outs than in the original House-passed bill.

The provision on unemployment insurance also extends benefits for self-employed individuals and gig workers, along with those who have exhausted their regular jobless benefits. It also 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.

Economists have boosted forecasts for growth thanks to expected passage of the stimulus bill, along with recent evidence that the economy is already picking up pace. Gross domestic product will clock a 5.5% gain this year -- the best since “morning in America” 1984 -- according to the latest Bloomberg monthly survey of economists.

Retail sales rose in January by the most in seven months, and the labor market, which has been slower to recover, added more jobs in February than economists had forecast, though employment remained well below pre-pandemic levels.



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