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Senate Passes $1.9T Relief Package After Marathon Votes

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What You Need to Know

  • The measure, the American Rescue Plan Act, now heads back to the House, with Democrats aiming to have it signed into law next week.
  • The bill will send $1,400 payments to individuals earning less than $75,000 and couples earning less than $150,000 based on either 2019 or 2020 tax returns.
  • It would enact the biggest health care expansion since the Affordable Care Act and a temporary plan to slash the child poverty rate.

President 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 that was completed only after a lengthy interruption while Democrats settled an intra-party dispute over unemployment aid.

The measure, the American Rescue Plan Act, now heads back to the House, with Democrats aiming to have it signed into law next week. Enactment 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.

But because of changes made in the Senate to satisfy moderate Democrats, it’s not clear if more negotiations with progressives might be necessary to win final passage in the House.

Details of the Vote

The Democratic drive in the Senate stalled out for nearly 12 hours on Friday after West Virginia Democrat Joe Manchin — a pivotal vote in the 50-50 Senate — balked at a deal 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.

Manchin finally signed on to a deal that would provide $300 a week in extra benefits 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 Portman amendment passed with Manchin’s support but was then overridden by the Democratic deal.

That cleared the way for votes on three dozen amendments — most of which failed — and final passage. In the end, all Senate Democrats and independents lined up in favor of the bill, a feat of unity for Senate Majority Leader Chuck Schumer, despite the stumble on unemployment insurance.

He brokered key compromises restricting the eligibility of higher-income Americans to receive the bill’s $1,400 direct payments as well as extending unemployment benefits at a lower level than in the House version.

Legislative Scope

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.

The bill would enact the biggest health care expansion since the Affordable Care Act, a temporary plan to slash the child poverty rate and send checks soon to most Americans.

In addition, state and local governments and schools would get an infusion of aid that Democrats hope will propel a speedy economic recovery long before they face voters in 2022.

The deals 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 a provision to raise the minimum wage because of arcane Senate budget rules.

“A new day has come and we tell the American people that help is on the way,” Schumer said on the Senate floor before the final vote. “This bill will deliver more help to more people than anything the federal government has done in decades.”

Bill’s Opposition

Republicans united in opposition to the bill. 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.

Vice President Kamala Harris wasn’t needed to cast a tie-breaking vote because Senator Dan Sullivan, an Alaska Republican, returned to his home state to attend a funeral for his late father-in-law. That left Republicans with 49 votes.

Payments, Other Programs

The bill will send $1,400 payments to individuals earning less than $75,000 and couples earning less than $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 amendment on unemployment insurance also would extend tax rules regarding excess business-loss limitations for one additional year, through 2026.

The legislation includes $160 billion for vaccine and testing programs to help stop the spread of the coronavirus, and $350 billion for state and local governments, some of which have lost revenue during Covid-19 lockdowns.

It would also expand the child tax credit to $3,000 from $2,000 for each child 17 and younger. The Senate also adopted an amendment from Republican Lisa Murkowski and Manchin to direct $800 million toward alleviating youth homelessness.

Vote-a-Rama

The Senate passed the bill after an arduous floor debate that began with a nearly 11-hour reading aloud of the 628-page bill, demanded by Wisconsin Republican Ron Johnson.

On Friday afternoon, the Senate began voting on amendments to the bill with an attempt by Vermont Independent Bernie Sanders to add an increase in the minimum wage from $7.25 per hour to $15 by 2025.

Democrats had originally sought to include that provision, but the Senate’s parliamentarian ruled the package could no longer be immune from a Republican filibuster if the minimum wage was included.

The Sanders amendment was defeated as the chamber set a record for the longest vote.

The Senate agreed by voice vote to a provision by Republican Senator Jerry Moran of Kansas aimed at closing a loophole whereby for-profit colleges are able to avoid a requirement that 10% of revenue come from non-federal sources.

Senators also agreed to an amendment by Democrat Maggie Hassan requiring educational agencies receiving relief funds to publish a plan to return to in-person instruction within 30 days.

So far the bill appears to be a political boon for Democrats, who largely fended off GOP attacks intended to scale it back.

Public Support, Economic Matters

Sanders, the Budget Committee chair and a lead architect of the bill, cited polls showing more than 70% of the public favors the stimulus, contrasting with the lower support for Republican tax cuts during the Trump administration and the GOP’s failed attempt to repeal Obamacare.

“Not only is this $1.9 trillion emergency Covid-relief package the right thing to do from a moral perspective and a public policy perspective, it is exactly what the overwhelming majority of the American people want us to do,” he said. “The American people didn’t want us to give tax breaks to billionaires, the American people didn’t want us to throw 30 million people off the Affordable Care Act.”

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.

Despite the better outlook, Biden on Friday again said that the government had to keep its foot on the gas pedal. At a White House meeting, he pointed out that the economy still has more than 9 million fewer jobs now than in February last year. “At that rate it would take two years to get back on track,” he said.

–With assistance from Laura Davison.

Copyright 2021 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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