The government is sending up to $300 monthly checks to families with kids starting today. Democrats want to make it permanent as a new form of Social Security.

Joe Biden Chuck Schumer
President Joe Biden and Senate Majority Leader Chuck Schumer.

  • The US government is poised to send the first batch of child tax credit payments on Thursday.
  • Policymakers estimate 35.2 million families could see cash deposited into their bank accounts.
  • The success of the program will determine whether Democrats can extend it as another form of Social Security.
  • See more stories on Insider’s business page.

America’s neglected social safety net could be getting its largest patch in a generation on Thursday, when the US begins a year-long experiment providing a guaranteed income for families with children. Its success will determine whether it becomes a permanent fixture.

The Internal Revenue Service is poised to send the first batch of monthly child tax credit payments stemming from President Joe Biden’s stimulus law, which was approved in March over united Republican opposition. For six months, families can get a $300 monthly benefit per child age 5 and under, amounting to $3,600 this year. The measure provides $250 each month per kid age 6 and 17, totaling $3,000. Half of the benefit will come as a tax refund.

If all goes to plan, the federal government will deposit cash directly into the bank accounts of 36.2 million families, according to projections from administration officials shared with reporters on Wednesday evening. That represents the bulk of the 39 million families the IRS has identified as being eligible for the child allowance.

Experts say the one-year child tax credit payments could shift public attitudes on cash benefits given its wide reach and mark a big step forward in slashing child poverty – some estimate it could be cut by up to half.

“It’s hard to understate the significance of this expansion for child poverty in America,” Samuel Hammond, a welfare policy expert at the center-right Niskanen Center, told Insider. “Most countries have some form of child or family allowance – and the US has been an outlier in excluding the lowest income households from our version of a child benefit,” he said, adding “once you start on this path, it’s hard to turn back.”

Some Democrats are already drawing comparisons between the program and the birth of Social Security in 1935, a milestone that set up a critical source of income for retired and disabled Americans.

“It’s the most transformative policy coming out of Washington since the days of FDR,” Sen. Cory Booker of New Jersey recently told The New York Times.

‘Some bumps in the road’

Michael Bennet Capitol Hill
Sen. Michael Bennet (D-CO), arrives for a vote in the Capitol.

Democratic lawmakers and Congressional aides have labored behind the scenes to ensure a smooth rollout of the payments. The child tax credit was revamped to include low-income families not required to file taxes, a group previously shut out from tapping into the benefit.

There were some signs of problems early on. Some experts and community groups raised concern that an IRS portal to sign up the poorest families was too complex and inaccessible for people who lacked desktop computers.

Sen. Michael Bennet of Colorado, an architect of the measure, said on Monday the IRS has given the child tax credit “100% of their attention” and said he’s regularly communicated with the agency.

Still, he cautioned there could still be some snags. The pandemic has added to the IRS’s responsibilities over the past year and strained its depleted staff. It has gone from being a tax-collecting agency to a benefit distributor on par with the Social Security Administration.

“I’m sure there will be some bumps in the road as there always are when rolling out something new like this,” he told reporters. “But it’s important as bumps arise to iron them out.”

Some of those potential problems, Bennet told Insider, include “people not getting the benefit they were supposed to receive and accounting issues that might arise. I hope they won’t be systemic issues, I don’t think they will be.”

The IRS has struggled sorting through a massive backlog of tax returns in recent months, delaying tax refunds in at least some cases. Hammond said it was unclear whether distributing monthly child benefits via the IRS is “sustainable in the long run.”

“We’ve increasingly asked the IRS to do an awful lot of social policy beyond taxing and collecting revenues, and the IRS is just not equipped to be a benefits administrator,” he said.

The future of Biden’s child allowance

joe biden
President Joe Biden makes brief remarks at the White House.

The bulked-up child tax credit is a rare measure that enjoys deep support among both House and Senate Democrats. Bennet, Sen. Sherrod Brown of Ohio, and Reps. Rosa DeLauro of Connecticut and Suzan DelBene of Washington, are among the lawmakers spearheading efforts to make it permanent.

Biden proposed in his spending plans to extend the bulked-up benefit until 2025, the same year that Trump-era tax cuts for individuals end. It’s possible Republicans could trade support to renew the pair of benefits, given the GOP is generally opposed to cash aid as a standalone measure.

“I think we should embrace allowing people to keep more of their own money, if we’re applying it towards their payroll tax,” Sen. Marco Rubio of Florida told Insider last month. Rubio and Sen. Mike Lee of Utah led efforts to double the size of the child tax credit in the 2017 Republican tax law. The pair favor boosting the benefit amount for workers.

On Wednesday, Rubio released a statement tearing into the child allowance. “The way President Biden tells it, the handout is part of his administration’s ‘pro-family’ plan,” he said. In reality, he has transformed the pro-worker, pro-family Child Tax Credit into an anti-work welfare check.”

Senate Democrats are kicking off a flurry of negotiations to finalize what measures will ultimately be included in a $3.5 trillion budget deal that would mostly be paid for with tax increases. They’ll advance it in a pathway known as reconciliation, which allows them to approve certain bills with a simple majority instead of a filibuster-proof 60 votes. Every Democrat must stick together for the budget package to clear the Senate.

Brown, the Banking Committee chairman, said talks were in their early stages so no child allowance expiration date was set. “Not clear what year yet, but it’s going to be a popular program like Social Security,” he told Insider on Wednesday. “Republicans will not only be afraid to take it away, they’ll start taking credit for it.”

He also suggested its hefty price tag could keep a permanent extension out: “I think its so costly it may not [be included], but I’m still fighting for permanence,” he said.

Brown also rejected the notion of changing the income thresholds. “I think that’s pretty locked in. We’ve all been talking about how important that is, 90% of the public getting this is really consequential and key to its popularity,” he told Insider.

Some Democratic moderates may balk at renewing the child tax credit in its current state. Sen. Joe Manchin of West Virginia, a swing vote, told Insider he was open to a permanent extension last month. Others are undecided on the program’s fate.

“I consider it not an easy issue,” Sen. Angus King of Maine, an independent who caucuses with Democrats, said in an interview. “It is a major expansion of what amounts to an entitlement program. I certainly supported it as part of the pandemic relief package. But supporting it on a permanent basis is something that I have to have more data on and understand how it’ll be paid for.”

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Joe Manchin doubles down on refusing to add to the deficit to fund a Democrat-only infrastructure plan

Joe Manchin
WASHINGTON, DC – JUNE 09: Senator Joe Manchin (D-WV) speaks with Xavier Becerra, Secretary of Health and Human Services (HHS) (L), before a Senate Appropriations Subcommittee hearing on June 9, 2021 at the U.S. Capitol in Washington, D.C. The committee is hearing testimony about the Fiscal Year 2022 budget request for the Department of Health and Human Services.

  • Manchin doubled down on his insistence to fully finance a Democrat-only infrastructure package.
  • “I think we’ve put enough free money out,” he said, citing the federal response to the pandemic.
  • Manchin’s support is critical for Democrats in an evenly-divided Senate.
  • ISee more stories on Insider’s business page.

Sen. Joe Manchin is ruling out borrowing money to finance a party-line infrastructure package as Senate Democrats deliberate the range of tax increases that would be needed to pay for President Joe Biden’s agenda.

‘I think everything should be paid for now,” he told reporters. “I think we’ve put enough free money out.”

Manchin later told reporters on Tuesday he would only back an infrastructure package that was fully financed by tax revenue, adding, “How much debt can y’all handle?” He wants to do this with tax increases, though he favors less aggressive measures than Biden put forward such as a smaller corporate tax bump.

“I think we’ve incurred over 28 and a half trillion dollars of debt and I’d like to start paying for it,” he told reporters, referring to the national debt that the US government has accumulated over several decades.

Senate Democrats are still negotiating the final price tag of an infrastructure plan that only requires a simple majority vote, allowing Democrats to skirt Republicans under a legislative pathway known as reconciliation. But they need every Democratic senator to back a party-line package given the 50-50 Senate and their tie-breaking vote from Vice President Kamala Harris.

On reconciliation, Democrats are undertaking a delicate balancing act to find an amount that satisfies progressives who want to spend big and moderates like Manchin who want to fully finance it with tax increases.

“We’re trying to move as quickly as we can,” Sen. Ron Wyden, chair of the Senate Finance Committee and a key player in the talks, told Insider. Talks that began last month could stretch into late July, with passage of a bill sometime in the fall.

The national debt has grown at least $6 trillion over the past year in the wake of the federal government’s response to the pandemic, since multiple federal rescue packages were approved. Still, many economists and the Federal Reserve say that now is the time for Congress to take advantage of low interest rates – which make it cheaper to borrow – and repair the economy.

Sen. Bernie Sanders said Monday that he was seeking a package that was over $3.5 trillion. He argues the package presents Democrats with an opportunity to overhaul the economy in a scale unseen since the 1930s.

“Childcare, clean energy, family care, we know what we need,” Sen. Elizabeth Warren of Massachusetts told reporters. “We’ve got to get to a topline number that will support that.”

Senate Majority Leader Chuck Schumer alluded to the potential potholes that lie ahead on Tuesday.”It is not going to be easy, but it is certainly going to be worth it,” he said.

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Laid-off workers are scoring early wins in lawsuits against GOP governors attempting to cut off federal jobless aid

unemployment insurance weekly benefits stimulus checks recession job losses coronavirus pandemic
Carlos Ponce joins a protest in in Miami Springs, Florida, asking senators to continue unemployment benefits past July 31, 2020.

  • Jobless workers in Indiana and Maryland racked up early court wins about restoring federal unemployment.
  • “I think it certainly has the potential to start more cases,” one expert said of the litigation.
  • A lawyer who brought a similar case in Ohio said he may even go after the state for damages.
  • See more stories on Insider’s business page.

Jobless workers in Ohio are the latest group to push back against Republican governors cutting off their federal benefits early – in court.

Federal benefits in the state wound down on June 26, months ahead of their scheduled expiration in September. Now, a new lawsuit representing three Ohio workers claims that the state is obligated to continue paying up.

The suit follows similar ones filed in Indiana and Maryland, both of which won temporary victories. In Indiana, firms argued that a similar law mandates the state procure all unemployment compensation conferred upon it, including compensation from amendments like those in the CARES Act. In other words, Republican governors might be trying to cancel extra unemployment from Biden’s stimulus, but it’s illegal.

The Ohio suit hinges on a specific part of state law that deals with the state’s responsibility to cooperate with the federal government on unemployment insurance – and whether it should “secure to this state and its citizens all advantages available.”

Former Ohio Attorney General Marc Dann is now with DannLaw, one of the two firms representing plaintiffs in the case. He told Insider he believes the amendments to federal unemployment written into pandemic-era laws “are exactly the type of thing that it was the intention of the legislature that the governor is required – has a clear, legal duty – to accept and pass on to the folks that were represented.”

“I think it certainly has the potential to start more cases,” Andrew Stettner, a senior fellow and jobless policy expert at the left-leaning Century Foundation, said. “The legal argument made in Indiana was based on a set of components that were not unique to Indiana law.”

At least 400,000 jobless workers in Ohio are impacted by the additional $300 ending, according to an estimate from Stettner.

The three plaintiffs in the case say they won’t be able to pay their basic living expenses if all federal benefits are cut off early, including rent, food, and medications for pets and service animals.

But in Indiana, where a preliminary injunction was granted to temporarily halt the end of benefits, jobless workers may still face difficulty getting their money. The state’s Department of Workforce Development claims it can’t restore the benefits, HuffPost’s Arthur Delaney reported. It’s a situation that Labor Secretary Marty Walsh told Insider he’s keeping a close eye on.

But in Ohio, “it would be real easy to get it restarted and, frankly, if they don’t, then we’ll look at bringing some sort of a damage action against the state to recover what they should have gotten,” Dann said.

Maryland Gov. Larry Hogan has said he’s planning to appeal the court’s 10-day injunction ordering the state to continue dispensing federal jobless benefits.

“Why wouldn’t a state that cares about the people that live in it, and who has a statutory obligation to pass on benefits that are available under federal law, why wouldn’t they do it?” Dann said.

Are you an unemployed worker with a story to share? Email these reporters at jkaplan@insider.com and jzeballos@insider.com.

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Why a fourth stimulus check isn’t likely anytime soon

Biden
President Joe Biden.

  • A fourth stimulus check is unlikely given the accelerating pace of the recovery.
  • For now, Democrats have moved onto addressing evictions, among other things.
  • The White House has punted the issue and said it’s up to Congress to decide.
  • See more stories on Insider’s business page.

Stimulus checks remain popular with average Americans. Congress under both the Trump and Biden administrations issued three direct payments amounting to $3,200 for millions of Americans.

However, a fourth round is unlikely to be sent anytime soon as the economy continues regaining jobs. No lawmaker in Congress has pitched a plan so far, and congressional Democrats are squarely focused on approving President Joe Biden’s infrastructure plans this summer.

“I don’t see people advocating for another check at this moment,” Mike Konczal, director of macroeconomic analysis at the left-leaning Roosevelt Institute, said in an interview. “I think the big fights are about dealing with the legacy of the pandemic, both getting vaccination rates up, dealing with evictions and foreclosures, and making sure that bottlenecks in the economy are swiftly taken care of.”

It could also crash into resistance among most Republicans and some Democrats in Congress. During negotiations for the $1.9 trillion stimulus law in March, a bloc of moderate Democrats flexed its political muscle to cut who could get a $1,400 direct payment. Centrists balked at the prospect of government cash going to households that didn’t experience job losses during the pandemic or pulled six-figure incomes.

The Biden administration has punted on whether it would back more stimulus payments, throwing the issue to lawmakers. “We’ll see what members of Congress propose, but those are not free,” White House Press Secretary Jen Psaki said at a May press conference.

A White House official told Insider that the Biden administration is “committed to providing relief to the American people to recover from the impacts of the pandemic.” The official noted the stimulus law included various measures to shore up small businesses and provide rental aid, along with an expansion of the child tax credit.

“We look forward to continuing our work with Congress to implement ARP and pass the president’s full Build Back Better agenda,” the official said, referring to the American Rescue Plan.

The bulked-up child tax credit makes up a core part of Biden’s stimulus. The law transformed it into a monthly payment of either $250 or $300 for families, depending on the child’s age. Those are poised to go out on July 15 for nearly 90% of American families.

Konczal said the child allowance is capable of stabilizing incomes and cutting hunger rates once it starts reaching families. “It’s going to expand the notion of what social insurance is meant to do in a way that is profound,” Konczal said.

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Democrats and Republicans want to fund infrastructure using federal unemployment benefits yanked from workers

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Demonstrators rally near the Capitol Hill residence of Senate Majority Leader Mitch McConnell, R-Ky., to call for the extension of unemployment benefits on July 22.

  • President Joe Biden threw his support behind a bipartisan infrastructure package on Thursday.
  • But that package doesn’t contain funding from tax hikes, as he initially proposed.
  • It would be partially paid for by targeting unemployment fraud and unused federal unemployment funds.
  • See more stories on Insider’s business page.

President Joe Biden has thrown his support behind a $1 trillion bipartisan infrastructure deal focused on roads and bridges – and part of the spending would be potentially offset by unused relief funds and targeting unemployment insurance fraud.

Repurposed federal UI will account for $25 billion of the deal’s pay-fors, a person familiar with details of the plan told Insider. The bulk of the funding from UI will come in the form of “unemployment insurance program integrity,” which will provide $80 billion in revenue.

“It’s the fraud. It’s the fraud from UI,” Sen. Jeanne Shaheen (D-N.H.) told Insider when asked about the inclusion of unemployment insurance in the funding. She added: “Apparently, there are several reports that talk about significant fraud in the UI.”

Sen. Joe Manchin, a key moderate, said the deal wouldn’t detract from enhanced UI. “There’s an awful lot of fraud in UI that can be repurposed,” Manchin told Insider.

Previously, Sen. Shelley Moore Capito – a major GOP player and negotiator – had floated repurposing unemployment funds from the states ending federal early benefits early to pay for an infrastructure package. That seems to have garnered traction among lawmakers.

Andrew Stettner, a senior fellow and unemployment expert at the left-leaning Century Foundation, cautioned that legislative details still needed to be ironed out. He also said there’s a risk people could lose jobless aid they’re entitled to if anti-fraud prevention policies are poorly implemented.

“There’s been certainly a surge in organized crime activity in the UI system that has led to a lot of fraud,” Stettner told Insider. “The thing that we have to be concerned about: Are the mechanisms that are being put in place to try and prevent that fraud? Does it lead to unfairness in the system? Are people being wrongly implicated in fraud? We’ve had a lot of cases with that.”

At least 26 states are prematurely cutting off federal unemployment benefits this summer.

Many of the states opting out are ending all federal benefits, including programs with expanded eligibility. That means thousands of workers will lose – or already have lost – all benefits completely. So far, a dozen states have ended their benefits, cutting off somewhere between 400,000 and 500,000 people.

Now, lawmakers are proposing that those severed benefits be used to fund new infrastructure spending, rather than tax hikes on America’s wealthiest and its large corporations.

Overall, about 4 million Americans will see their benefits end ahead of schedule. Federal programs are set to end nationwide in September, but several governors have opted to cut off their benefits in an effort to get workers back into the workforce – although the current labor shortage may also be driven by lack of childcare, or a mismatch between open roles and unemployed workers’ qualifications. As Insider’s Ayelet Sheffey reported, job searches were actually down in states ending those benefits early.

“This is not because the government – because the world – is suffering from people not returning to their jobs,” Keshya Dempsey told Insider of the decision to end benefits prematurely, which will cut her off as well. The 35-year-old Dempsey lives in Florida, where the $300 in extra weekly benefits will end on Saturday.”This is political. It has always been political.”

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Mitch McConnell gives ‘maybe 50-50’ odds of bipartisan infrastructure deal as Democrats say they won’t drop climate initiatives

GettyImages mitch mcconnell
Senate Minority Leader Mitch McConnell.

  • McConnell took a dour view on the likelihood of a bipartisan Senate group succeeding with an infrastructure bill.
  • He told a conservative radio host that its odds were “maybe 50-50.”
  • Pelosi signaled she’s unwilling to strike a deal with Republicans if it meant substantially cutting the package.
  • See more stories on Insider’s business page.

Senate Minority Leader Mitch McConnell provided a downbeat view on the latest roughly $1 trillion infrastructure framework negotiated by a faction of centrist senators from both parties.

The plan would provide just over $1 trillion in new infrastructure spending focused on roads, bridges, ports, and highways.

“Maybe 50-50,” the Kentucky Republican said in a Monday interview with conservative radio host Hugh Hewitt. “Look, both sides would like to get an infrastructure bill.”

McConnell reiterated the by now familiar “red lines” for Senate Republicans: no modifications to the 2017 Republican tax law that would result in tax increases, and that any package should be paid for.

He suggested repurposing stimulus aid to states provided under President Joe Biden’s $1.9 trillion coronavirus relief law to cover the cost. That’s already been shot down by the White House in previous negotiations with Senate Republicans.

“States and localities are literally awash in extra money. A lot of that is still in the pipeline,” McConnell said. “Why don’t we repurpose that, earmark it for infrastructure, which both localities would prefer to spend it on anyway?”

The bipartisan group encompasses 10 lawmakers from both parties and includes Republican Sens. Mitt Romney of Utah, Rob Portman of Ohio, Bill Cassidy of Louisiana, Lisa Murkowski of Alaska, and Susan Collins of Maine.

On the Democratic side, it includes Sens. Joe Manchin of West Virginia, Kyrsten Sinema of Arizona, Jeanne Shaheen of New Hampshire, Mark Warner of Virginia, and Jon Tester of Montana.

The framework is unlikely to contain the aggressive climate measures that many Democrats favor, which is a nonstarter among a growing group of Democratic senators. House Speaker Nancy Pelosi also appears to be against dropping climate initiatives if it means passing a watered-down bill with the GOP.

“I have no intention of abandoning the rest of my vision,” Pelosi told CNN’s “State of the Union” on Sunday, adding the proposed measures “could have been talked about 50 years ago.”

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Four states cut off federal unemployment benefits Saturday – and the White House is very unlikely to step in to prevent the loss of stimulus aid

unemployment insurance weekly benefits stimulus checks recession job losses coronavirus pandemic
  • Four states are cutting off stimulus jobless aid on Saturday.
  • The cuts in Mississippi, Missouri, Alaska, and Iowa yanks aid from 340,000 workers.
  • The Biden administration is very unlikely to step in and prevent the unemployment aid losses.
  • See more stories on Insider’s business page.

For nearly 340,000 workers on Saturday, a steady flow of federal assistance will abruptly end.

Mississippi, Missouri, Alaska, and Iowa are the first four Republican-led states to scrap their federal unemployment insurance programs. They include the $300 federal supplement to unemployment checks, along with a pair of federal programs that expanded government assistance to gig-workers, freelancers, and the long-term unemployed during the COVID-19 pandemic.

No extra federal assistance will be going out the door in those states after this weekend. That means the level of wage replacement with regular unemployment aid will not amount to half of workers’ past income, per data from Andrew Stettner, a senior fellow and jobless policy expert at the left-leaning Century Foundation.

Some 22 million US jobs were lost last year because of the pandemic, many of them low-wage positions.

Twenty-five GOP-led states are pulling the plug on unemployment insurance programs over the summer, imperiling aid for nearly four million people, according to Stettner. Republican governors argue that the federal aid is keeping people from re-entering the workforce, slowing the economic recovery.

“It has become clear to me that we cannot have a full economic recovery until we get the thousands of available jobs in our state filled,” Mississippi Gov. Tate Reeves said last month.

The unemployment aid was extended until early September under President Joe Biden’s coronavirus relief law enacted three months ago. But many employers and Republicans stepped up their complaints about worker shortages, particularly in the leisure and hospitality sector, though those sectors added jobs in the past two months.

Biden appears to have demonstrated some sensitivity to the criticisms. The president said last week that it “makes sense” for federal unemployment aid to expire on Labor Day. Then White House press secretary Jen Psaki said Republican governors have “every right” to cancel the administration’s jobless aid programs.

Sen. Bernie Sanders, along with some economic experts, argue that the government has a legal obligation to step in and distribute aid to at least gig workers through the Pandemic Unemployment Assistance program. But the Labor Department – which administers the program – has concluded it is unable to do much about it.

Some Democrats in Congress have been fiercely critical of the GOP moves.

“No one should face financial ruin for living in states run by Republicans,” Sen. Ron Wyden of Oregon said in a statement last month. He told Politico recently he was eyeing a new bill to address the situation, though such a plan faces an uphill climb in the evenly-divided Senate.

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Biden has reportedly offered to ditch his rollback of Trump-era tax cuts in a major infrastructure concession to GOP

Joe Biden Shelley Moore Capito in Oval Office White House
President Joe Biden meets with Sen. Shelley Moore Capito at the White House.

  • Biden has reportedly made a major concession to drop a corporate tax hike in infrastructure talks with Republicans.
  • Instead, he’d put in place a 15% minimum corporate tax.
  • Republicans have barely budged in the negotiations so far. They’re schedule to speak again Friday.
  • See more stories on Insider’s business page.

President Joe Biden has reportedly floated creating a minimum tax for corporations rather than pursuing his proposed corporate tax rate increase, according to The Washington Post.

The move comes as the president continues a fourth week of negotiations with the GOP, who have ruled out any alterations to the 2017 Republican tax cuts. Biden had proposed raising the corporate rate from to 28% from its current level of 21% enacted under President Donald Trump’s tax law.

Instead, Biden put forward a 15% minimum corporate tax as a possible solution, a source familiar with the discussions told the Post. That tax would take aim at corporations paying little to no taxes. Biden has previously cited a report from the left-leaning Institute on Taxation and Economic Policy indicating 55 major American companies paid nothing in federal income taxes in the past year.

The White House did not immediately respond to a request for comment.

The move represents a sharp break from Biden’s previous fiery rhetoric on the need for increased corporate taxes; Still, some centrist Democrats like Sen. Joe Manchin of West Virginia are pushing for a rate closer to 25%, rather than 28%. Biden wants to offset his proposed infrastructure spending with tax hikes on corporations and the country’s highest-earners.

Republicans last week led by Sen. Shelley Moore Capito of West Virginia pitched an infrastructure plan with only a modest amount of new spending above what Congress has already approved. Both parties are at loggerheads over the size and scale of the package, along with how to pay for it. Republicans are seeking to finance their spending with coronavirus relief money, which Democrats are rejecting.

It also comes amidst a push by the US to enact a global minimum corporate tax rate, which would seek to standardize taxes for multinational companies and prevent them from fleeing to countries with lower levies. The latest figure reported for that rate is also 15%, not the expected 21%.

The White House also reportedly wants to increase tax enforcement on corporations and high-earners.

“It’s just not fair. It’s not fair to the rest of the American taxpayers,” Biden previously said in a speech defending the corporate tax rate increase. “We’re going to try to put an end to this. Not fleece them – 28%. If you’re a mom, a dad, a cop, firefighter, police officer, etc., you’re paying close to that in your income tax.”

Capito and Biden are scheduled to speak again on Friday.

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A new Senate ruling provides Democrats an opening to evade GOP filibusters and approve some bills themselves – but only in cases like an economic downturn

Chuck Schumer
Senate Majority Leader Chuck Schumer (D-New York).

  • A new ruling from a top Senate official said there are limits to the number of times Democrats can embark on reconciliation in a given fiscal year.
  • The parliamentarian ruling emphasizes that Democrats must argue there’s a reason to start the process more than once in a year, such as in an economic recession.
  • Biden is still negotiating with the GOP on his $4 trillion economic plans.
  • See more stories on Insider’s business page.

A new ruling from the Senate parliamentarian could pose a roadblock for President Joe Biden’s $4 trillion economic agenda and Democrats attempting to evade a Republican filibuster as they push ahead with major spending plans on health, education, and childcare.

A ruling issued last Friday from Senate parliamentarian Elizabeth MacDonough said there are limits to the number of times Democrats can embark on reconciliation in a given fiscal year. It’s a legislative tactic designed to approve some bills with a simple majority of 51 votes in the Senate, as also skirt the 60-vote threshold known as the filibuster. A person familiar confirmed the official’s ruling.

Any amendment to an existing budget, such as the $1.9 trillion coronavirus relief law approved in March under reconciliation, would have to go through the full committee and amendment process. It indicates that revisiting a budget resolution would contain no procedural shortcuts compared to opening a new one.

Rulings from MacDonough are not made public. It was first reported by Punchbowl News.

Zach Moller, deputy director of economic policy at the center-left think tank Third Way, said he believed it was a “narrow ruling” that won’t set back the capacity of Democrats to draft a new budget resolution for the 2022 fiscal year unlocking reconciliation.

But the top Senate official’s ruling emphasizes there’s a bar to clear for lawmakers to start the process more than once beyond political convenience, such as a recession.

“We always knew that Democrats were going to be able to use reconciliation three times before the November 2022 elections,” he told Insider. “I’m interpreting it as, ‘If you want to do it again, make the case you’re meeting this test,’ as opposed to a broad ruling – unlimited budget resolutions, unlimited budget reconciliation.”

He added: “It’s important to know this is a fluid situation and it may change, but this does not seem to have any impact on the ability to use the FY2022 budget resolution for the American Jobs Plan or the American Families plan.”

Biden is negotiating with Republicans on his two-part, $4 trillion infrastructure plans. He is scheduled to meet with the lead Republican negotiator Sen. Shelley Moore Capito of West Virginia on Wednesday as talks reach a make-or-break phase.

Republicans pitched a new infrastructure plan last week with only $257 billion in new spending above what Congress has already set. Still, the Biden administration appeared receptive to parts of it, though they do not want to fund it with stimulus money as Republicans are seeking.

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A man was arrested after allegedly spending $5 million in stolen COVID-19 relief on Ferrari, Bentley, and Lamborghini sports cars

A black lamborghini sports car with the door open
A black Lamborghini, one of the cars federal agents seized from the suspect.

  • A man was arrested Friday on charges related to fraudulently obtaining and spending $5 million in PPP loans.
  • Officials said the man gave banks falsified documents to apply for loans for four “sham businesses.”
  • They said he spent some of the money on Ferrari, Bentley, and Lamborghini sports cars, which were seized by federal agents.
  • See more stories on Insider’s business page.

A man from Irvine, California, was arrested on Friday over charges that include illegally obtaining $5 million in COVID-19 relief and spending it on sports cars, according to the Department of Justice.

Mustafa Qadiri, 38, is accused of fraudulently receiving money through the Payment Protection Program by applying for the loan under the guise of “sham businesses.” His charges include bank fraud, wire fraud, aggravated identity theft, and money laundering.

According to the indictment, Qadiri applied for the PPP loans in May and June of 2020. He submitted falsified documents to three different banks, claiming to operate four businesses in Orange County, none of which are currently in operation. He provided the banks with false employee records, tampered bank account balances, and fake tax returns.

Read more: Fraudulent unemployment claims have cost the US tens of billions of dollars since the pandemic began. Congress and the Biden administration need to crack down on this abuse.

For one of the loans, the Justice Department said he used another person’s name and social security number.

His loan applications were approved and the banks transferred about $5 million into his accounts, the indictment said.

The Justice Department said he allegedly used the “fraudulently obtained” loans “for his own personal benefit, including for expenses prohibited under the requirements of the PPP program, such as the purchase of luxury vehicles, lavish vacations, and the payment of his personal expenses.”

Ferrari, Bentley, and Lamborghini sports cars that Qadiri allegedly bought with the loans were seized by federal agents.

PPP loans were implemented as a coronavirus relief measure and were intended to encourage small businesses to keep their employees on payroll during the economic fallout of the pandemic. The loans did not have to be paid back as long as they met certain spending criteria.

“Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent, and utilities,” the Justice Department said.

Charges have been brought against multiple people related to fraudulently obtaining PPP loans.

In a similar case, the Justice Department said Friday a man from Connecticut was arrested over charges that allege he fraudulently obtained $2.9 million in PPP loans and spent them on expensive cars, including to pay off a Porsche Panamera Turbo and to purchase both a Mercedes and BMW.

“Congress authorized the Paycheck Protection Program to help small businesses and their employees withstand a devastating pandemic, not so individual recipients can illegally reap a financial windfall,” Acting U.S. Attorney Leonard C Boyle said.

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