Around 2 million people could face delays getting $300 federal unemployment benefits

Unemployment filing coronavirus
A person files for jobless benefits.

  • Around 2 million people could see delays receiving unemployment benefits, including a $300 bonus.
  • It could amount to a two-week delay that hits mostly gig workers and long-term unemployed people.
  • Some states like New York say they can pay out enhanced unemployment aid this week.
  • See more stories on Insider’s business page.

Around two million people could face delays receiving enhanced unemployment insurance, including a $300 federal benefit, despite Democrats approving a $1.9 trillion stimulus plan ahead of government aid expiring for many people this month.

The estimate comes from a new analysis from Andrew Stettner, a senior fellow and unemployment expert at the liberal-leaning Century Foundation.

The delays, per Stettner, could largely hit those enrolled in programs set up in 2020 to provide unemployment relief to freelancers and laid-off workers who depleted regular state jobless payouts: Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation, respectively.

“We do expect some states to have delays, getting those who ran out of benefits back on and even starting up PUA and PEUC again,” Stettner said in an interview. “You can’t get the $300 without those underlying benefits.”

Still, jobless workers may not have to wait for long to receive critical benefits. Stettner said he believed it would be a two-week setback for most, largely because the new stimulus law didn’t make major changes to the flow of unemployment benefits. That makes it easier to administer for overburdened state labor offices.

“It is a simpler program,” he told Insider. “I do think it will go better than it has and some states are indicating as such – that this will go a little more smoothly, but not without hiccups.”

Stettner cited California, which issued a release saying people would be able to certify weeks – one of the steps to obtain jobless benefits – in April.

Around 18 million Americans are still claiming unemployment insurance a year into a pandemic which decimated vast swaths of the economy. Additional research from Stettner and Elizabeth Pancotti, policy director of Employ America, indicated that one in every four workers relied on unemployment at some point during the crisis.

Delays to obtain jobless insurance have been common during the pandemic, particularly early last year as the calamity exposed the antiquated state of unemployment offices across the US. The crush of people filing for emergency aid caused a massive backlog.

The stimulus law approved by Biden and Democrats renewed a $300 federal unemployment until Labor Day on September 6. That’s also the expiration date for PUA and PEUC.

Some states are indicating they are prepared to pay out benefits as soon as this week. The New York Department of Labor said on March 17 there would be no lapse in aid, though the agency posted a tweet Monday notifying people there could be a 1-2 day delay at most.

As the benefit-year ends, unemployed people should expect to continue receiving benefits without applying for them again, Stettner said.

“States should not direct people to reapply, and individuals should not reapply unless they worked since they first got laid-off,” he said.

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4 measures in the Biden stimulus law that provide extra cash for Americans

Joe Biden
President Joe Biden.

  • The $1.9 trillion Biden stimulus law was enacted last week.
  • Some elements could strengthen the nation’s social safety net in the wake of the pandemic.
  • Provisions include larger tax credits and enhanced unemployment insurance.
  • See more stories on Insider’s business page.

President Joe Biden signed a $1.9 trillion stimulus law last week, among the largest government rescue measures in American history.

Many of its provisions are directed at keeping individuals and families afloat as vaccinations become more widely available. Still, some aspects of the law may end up dramatically remaking the social safety net.

“This package sets a new and powerful precedent, especially for helping children and their families when they have limited or no income,” Indivar Dutta-Gupta, co-executive director of the Georgetown Center on Poverty and Inequality, said in a recent interview with Insider.

(1) $1,400 stimulus checks

The relief law includes a $1,400 direct payment for most taxpayers. Those will be distributed over the next few weeks, and some are already going out the door.

Individuals earning up to $75,000 and couples making up to $150,000 qualify for full checks. A married couple, then, can get $2,800. People can also collect an extra $1,400 per adult dependent, a change from the first two federal payouts.

People earning above those thresholds still qualify for a smaller direct payment. But eligibility is capped at individuals earning more than $80,000 and joint filers bringing in more than $160,000, meaning people and households making above those amounts are paid nothing.

(2) $300 federal unemployment benefits through Labor Day

The law provides $300 in weekly federal unemployment benefits until September 6. The measure renewed the government supplement to state unemployment checks for an extra six months.

It extends the length of various programs, such as the Pandemic Unemployment Assistance program for gig workers and the Pandemic Emergency Unemployment Compensation for long-term unemployed people. Both will expire in September without additional action in Congress.

(3) Expanded tax credits

The law also beefs up the child tax credit for millions of families. For the next year, it provides $3,600 per child aged 5 and under, and $3,000 for each kid aged 6 to 17.

Payments were designated as “periodic” to clear Senate procedural hurdles, but Democrats want to implement advance monthly checks to families of up to $300, although it’s unclear if the IRS can accommodate that request. Advance checks could start going out on July 1, the legislation indicates.

Other tax credits are augmented as well, such as the Earned Income Tax Credit. The law nearly triples the maximum amount a childless worker can receive, from $540 to $1500. The income cap for adults is also lifted from $16,000 to $21,000, a step widening its reach.

(4) Bigger SNAP benefits

The measure also aims to address hunger and food insecurity through the Supplemental Nutritional Assistance Program. It renews a 15% boost to SNAP benefits through September.

Put another way, the increase is equal to $27 more in SNAP benefits per person each month, or just over $100 monthly for a family of four, according to the Center on Budget and Policy Priorities.

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Democrats are giving average Americans a load of cash, setting up a clash with Republicans over the social safety net

Biden Schumer Pelosi Harris Democrats
Vice President Kamala Harris, President Joe Biden, Senate Majority Leader Sen. Chuck Schumer (D-NY) and Speaker of the House Rep. Nancy Pelosi (D-CA) host a press conference on the stimulus law at the White House.

  • Democrats are pouring stimulus cash onto Americans, selling it as part of an anti-poverty crusade.
  • But those provisions will expire later this year if Congress takes no further action.
  • Experts say the child poverty rate could double next year.
  • See more stories on Insider’s business page.

President Joe Biden secured his first major legislative victory on the 51st day of his new administration. He signed a $1.9 trillion economic aid bill into law Thursday, paving the way for a large infusion of federal cash onto middle-class and lower-income Americans.

The package includes various measures to help struggling households a year into the pandemic: A wave of $1,400 stimulus payments, beefed-up tax credits for children and adults, larger food-stamp assistance, and enhanced unemployment insurance. Democrats cast it as among the most historic pieces of legislation that Congress has taken up in many years.

Speaker Nancy Pelosi compared the relief bill to the Affordable Care Act (ACA) passed a decade ago under President Barack Obama, which provided health coverage to millions of Americans. “I think I can safely say, and I’ve said this to my colleagues in the House on the Democratic side, this is the most consequential legislation that many of us will ever be a party to,” Pelosi said on Thursday.

Unlike the ACA, though, the stimulus package does not permanently strengthen America’s social safety net. Passed via reconciliation on a party-line vote to bypass a Republican filibuster, all the government aid expires in 2021. It’s one reason Wall Street analysts are projecting a strong economic recovery in 2021 – but it may prompt clashes on Capitol Hill.

The law’s provisions are designed to provide a temporary boost now or expire later this year. The stimulus checks are one-time payments; $300 federal unemployment benefits are set to lapse on Labor Day; advance child tax credit payments for parents will last only a year.

“I think the fundamental choice policymakers will face then is whether or not they want to swing from maybe the largest one-year child poverty reduction in US history to the largest one-year increase in child poverty,” Indivar Dutta-Gupta, co-executive director of the Georgetown Center on Poverty and Inequality, told Insider.

Numerous studies indicate the legislation will make a major dent in the nation’s poverty rate, cutting the overall level by one-third and slashing it by half for children. Experts also project millions of Black and Latino kids will be lifted out of poverty due to the child tax credit expansion. The bottom 20% of Americans are estimated to receive a 20% boost in their incomes, per a Tax Policy Center analysis.

Republicans have uniformly opposed this bill as too large and stuffed with progressive priorities. No Republican lawmaker in either chamber of Congress voted for it, viewing it as a slippery slope towards bigger government.

In control of Congress and the White House for the first time since Obama took office, Democrats consider the moment as an opportunity to wage a fresh assault on poverty and leave their mark while in power. Without further action in Congress, child poverty will double next year.

“This package sets a new and powerful precedent, especially for helping children and their families when they have limited or no income,” Dutta-Gupta said, adding it was an “earnest attack” on the racial inequalities that the pandemic worsened.

FILE PHOTO: U.S. Sen. Marco Rubio (R-FL) speaks during a Senate Intelligence Committee nomination hearing for Rep. John Ratcliffe (R-TX), on Capitol Hill in Washington, U.S., May 5, 2020. Andrew Harnik/Pool via REUTERS
Sen. Marco Rubio (R-FL).

The Democratic push to make permanent changes

Democrats are starting to become vocal about pressing to make at least some of the provisional parts of the law enduring – the child tax credit in particular. It would annually provide up to $3,600 per child age 5 and under, and $3,000 for each kid between ages 6 and 17. It also expands it to millions of families who previously did not qualify because of low or zero tax obligations.

Many Republicans oppose it. “If pulling families out of poverty were as simple as handing moms and dads a check, we would have solved poverty a long time ago,” Sen. Marco Rubio of Florida wrote in a National Review op-ed. However, they may begrudingly support the measure given its wide scope once it’s up and running.

“Republicans will probably end up voting to extend the child credit because they understand it would be political suicide not to,” Brian Riedl, an economist at the right-leaning Manhattan Institute, said in an interview. “Once a middle-class benefit is created, it is nearly impossible to let expire. This is so broad, and it is going to be received by so many families.”

Democrats appear to be betting enough Republicans will come onboard with an expansion. It may be a risky one given GOP opposition to green-light more government spending after Congress approved $5 trillion in emergency aid over the last year. Sen. Mitt Romney of Utah rolled out a child benefit plan, one paid for by cutting some social programs.

Rep. Richard Neal, chair of the House Ways and Means Committee and an architect of the measure, told Insider this week that he believed the child benefit expansion would establish a pillar of support. “Once it becomes policy, I think there’s an acceptance level for it,” Neal said.

The shift in Democratic messaging, however, appears to lend credence to GOP arguments that the stimulus law veered from providing immediate pandemic relief to enacting lasting safety net changes.

“Republicans feel vindicated in their opposition,” Riedl said. “The ones I’ve talked to – they’ve been saying all along that this bill was never about the pandemic or stimulus, this was about permanently expanding the federal government.”

Some, like House Minority Leader Kevin McCarthy, are wagering voters will grow disillusioned once they learn more about the law’s sweeping reach. He labeled it “a payoff for Pelosi’s political allies,” though the GOP has struggled to arrange a consistent response.

In 2009, Congressional Republicans’ attempts to paint Obama’s $800 billion stimulus law as a huge waste contributed to Democrats losing the House in the midterms the following year. That dealt a crippling blow to Obama’s ability to push his legislative agenda in a divided Congress.

“I’m a lot less worried about the negative response as people learn what’s in the package,” Dutta Gupta said. “The depths of the crisis is far worse, the popularity of the bill going through is far greater. I think the benefits seem more salient this time around.”

So far, the Biden stimulus law has drawn broad support in multiple polls and surveys. It remains to be seen if other provisions, such as stronger unemployment benefits, could form part of a follow-up economic recovery package.

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House Democrats are inching closer to final passage of $1.9 trillion stimulus legislation

Nancy Pelosi
Speaker of the House Nancy Pelosi speaks during a press conference with other House Democratic leaders about COVID-19 financial relief.

  • The House is on course to vote on Biden’s stimulus plan on early Wednesday.
  • The legislation would provide stimulus checks and $300 federal unemployment benefits.
  • There were no imminent signs of progressive revolt after the Senate changed some parts of the bill.
  • Visit the Business section of Insider for more stories.

The House is set to vote on the final version of the $1.9 trillion relief plan early Wednesday and send the bill to President Joe Biden for his signature

The House Rules Committee is taking it up on Tuesday to set the parameters for debate on the floor.

The Democratic relief bill would provide $1,400 stimulus checks for most taxpayers; $300 federal unemployment benefits through August; $350 billion in state and local aid; and funds for vaccine distribution and virus testing among other provisions. It also contains a large boost to the child tax credit.

Rep. Hakeem Jeffries says Democrats were determined to quickly approve the plan and assailed the GOP for not supporting it.

“The question is not whether we’re going to pass the American Rescue plan – we will,” he said at a press conference. “The question is whether Republicans are going to step up on behalf of their constituents and support this effort to decisively crush the virus.”

Republicans are strongly critical of the legislation, assailing it as a wasteful endeavor that could have been improved with their involvement. The GOP has blasted the large price tag. No House Republican voted for its passage last month, and they are likely to be united in opposition again. No Senate Republican voted for it more recently in that chamber.

“We could have had a bill that was a fraction of the cost of this one, it could have gotten bipartisan approval and support,” Rep. Liz Cheney, chair of the House Republican Conference, told reporters on Tuesday.

Like with many large bills, the legislation being considered by the House looks different from the version that was submitted to the Senate weeks ago. Senate Democrats were advised by the parliamentarian to scrap a $15 minimum wage, a top progressive priority, and some moderate senators successfully pushed Biden to tighten the eligibility for a third wave of stimulus checks.

But there were no immediate signs of a revolt among House progressives. Rep. Bonnie Watson Coleman, vice chair of the Congressional Progressive Caucus, criticized the bill over the weekend and reiterated on Tuesday that the Senate had “failed” to put struggling Americans first, but said she would still vote for the final bill.

“While I will continue to pressure my party to live up to its banner as the party of the people I cannot ignore the immediate need for relief,” she said in a statement.

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The White House says a ‘large number’ of Americans will receive $1,400 stimulus checks by the end of March

white house press secretary jen psaki
Jen Psaki, the White House press secretary.

  • The White House says many Americans can expect to get a $1,400 stimulus check this month.
  • Individuals earning below $75,000 annually can receive the full amount.
  • Under the last stimulus bill, the IRS distributed 147 million checks in two months.
  • Visit the Business section of Insider for more stories.

The White House said on Monday that many Americans could expect to get a $1,400 stimulus check within a few weeks.

The White House press secretary, Jen Psaki, said the Biden administration was aiming to distribute a significant number of checks this month.

“We expect a large number of Americans to receive relief by the end of the month,” she said, later adding that Treasury Secretary Janet Yellen was “focused like a laser” on getting checks out the door this month.

House Democrats are on course to approve a $1.9 trillion relief bill as soon as Tuesday. It contains direct payments in addition to other provisions such as $350 billion in aid to states, $300 weekly federal unemployment benefits, and a large expansion of the child tax credit.

Individuals earning up to $75,000 can receive the $1,400 check. Couples making up to $150,000 also qualify for the full amount.

Households above both those income thresholds could get a smaller amount, but eligibility is capped at individuals earning above $80,000 and couples making more than $160,000. Biden authorized lowering the eligibility thresholds last week after a push from moderate Senate Democrats.

Still, the vast majority of Americans would be eligible to get a direct payment. The left-leaning Institute on Taxation and Economic Policy estimated that the legislation would benefit 86% of adults and 85% of children.

It would be the third wave of one-time checks that the federal government has authorized during the pandemic. Congress early last year approved $1,200 stimulus checks, most of which the IRS sent within a month.

Lawmakers approved sending $600 relief checks as part of a pandemic aid package in December. The IRS sent 147 million payments to eligible taxpayers it had on file in less than two months.

People who did not receive a check in either round can file to get one in their 2020 tax return.

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Biden poised to sign final stimulus package with $1,400 checks within days

Joe Biden
President Joe Biden at the White House.

  • Biden appears to be on course to sign a massive $1.9 trillion stimulus bill within days.
  • House Democrats are set to vote on a final version of the bill late on Tuesday.
  • Biden said $1,400 stimulus checks would start going out once the bill is signed.
  • Visit the Business section of Insider for more stories.

President Joe Biden is on course to sign a $1.9 trillion stimulus plan within days, marking his first major legislative achievement nearly two months into his administration.

The Senate approved the massive rescue package on Saturday after a marathon day of voting. Now the House is expected to vote on the bill in its final form late on Tuesday, after it makes a stop at the Rules Committee. Democrats are rushing to enact the bill ahead of a March 14 deadline for the end of enhanced unemployment benefits.

House Democrats hold a five-seat majority, the slimmest in decades for the lower chamber. Speaker of the House Nancy Pelosi has vowed to approve the rescue bill quickly.

It would provide $1,400 stimulus payments for most taxpayers; $300 weekly federal jobless aid through early September; fund vaccine distribution and testing; an expanded child tax credit; and money for state and local governments.

However, the bill contains some notable differences from the one House Democrats cleared a week ago, which requires some finagling in the Rules Committee. The new legislation does not include a $15 minimum wage, after a Senate official ejected it last month, and it cuts federal unemployment benefits to $300 weekly instead of $400. The duration of unemployment benefits is actually longer than the House version of the bill, running through September 6, but shorter than an earlier Senate proposal to run through October 3.

Despite early concerns that these changes could prompt a revolt among progressives, they still appear to support the rescue package. Rep. Pramila Jayapal of Washington, chair of the Congressional Progressive Caucus, said the final bill has “retained its core bold, progressive elements.”

“Importantly, despite the fact that we believe any weakening of the House provisions were bad policy and bad politics, the reality is that the final amendments were relatively minor concessions,” Jayapal said in a Saturday statement.

Jayapal also said in a tweet that she believed the stimulus serves as a “down-payment on the $3-to-$4.5 trillion in stimulus,” suggesting progressives will continue pressing for ambitious spending.

Biden said on Saturday that the federal government would start sending stimulus payments “this month” as he touted parts of the bill that are broadly popular with voters. He also said the legislation strongly resembles the initial one he proposed in early January.

“I don’t think any of the compromises have in any way fundamentally altered the essence of what I put in the bill in the first place,” Biden said on Saturday.

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Senate Democrats advance the $1.9 trillion stimulus plan, clearing hurdle as they finalize changes to legislation

Senate Majority Leader Chuck Schumer
Senate Majority Leader Charles Schumer, a New York Democrat, speaks during a news conference following a virtual Senate Democratic policy luncheon.

  • The Senate voted to advance the $1.9 trillion Biden relief bill along party lines on Thursday.
  • The move kicks off a marathon debate which will likely push final Senate passage into the weekend.
  • Republicans are moving to drag out the proceedings and offer hundreds of amendments to the bill.
  • Visit the Business section of Insider for more stories.

The Senate voted to advance the $1.9 trillion rescue package on Thursday along party lines, kicking off a lengthy debate that Republicans are moving to drag out. Passage of the bill may slip into the weekend.

Vice President Kamala Harris served as the tie-breaker in the 51-50 vote.  The clock has started on 20 hours of debate, followed by a marathon amendment process called a vote-a-rama.

“No matter how long it takes, the Senate is going to stay in session to finish the bill this week,” Senate Majority Leader Chuck Schumer said Thursday.

But Sen. Ron Johnson of Wisconsin set up a full read-out of the 628-page relief legislation shortly after, which could stretch on for up to ten hours. The task fell upon the chamber’s clerks, and senators wouldn’t be reading the bill.

“We need to keep this process going so we can highlight the abuse – obviously not Covid relief, obviously a boondoggle for Democrats,” Johnson said.

Democrats brushed this aside as a political stunt, and pointed to polls showing strong public support for the package.

“We Democrats want America to hear what’s in the plan,” Schumer said. “And if the senator from Wisconsin wants to read it, let everybody listen because it has overwhelming support.”

ron johnson stimulus checks
Sen. Ron Johnson (R-WI).

Legislation changed in Senate en route to party-line vote

Democrats spent much of the past day finalizing changes to the sprawling legislation. The president signed off on Wednesday to tightened eligibility for a round of $1,400 stimulus checks, placing lower income caps to prevent higher-earning Americans from receiving a third direct payment.

The moderate Democrats who led this effort also adjusted the aid formulas for $350 billion in state and local funding.

“I wanted to be sure localities had an ironclad share of the state and local funding,” Sen. Angus King of Maine told reporters on Thursday. “I wanted to be sure that the individual payments were targeted to those most in need.”

The relief package would provide $1,400 stimulus checks for the majority of taxpayers; $400 in federal unemployment benefits through August; $200 billion in funding for schools; $50 billion in virus testing and tracing; and a major revamp of the child tax credit.

Republicans are staunchly opposed to the bill, arguing it is an untargeted piece of legislation full of progressive priorities. Some were supportive of Johnson.

“I would expect a very long night into the next day and keep going on. There’s a lot to still cover,” Sen. James Lankford of Oklahoma told Insider. “Obviously we need to read the bill first.”

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Some Senate Democrats eye changes to unemployment benefits and direct payments in the $1.9 trillion stimulus plan

Manchin vote a rama
Sen. Joe Manchin (D-WV) talks with reporters before a series of Senate votes known as vote-a-rama in the Capitol on February 4, 2021.

  • Some Democrats are pushing to change unemployment benefits and stimulus checks in the $1.9 trillion stimulus.
  • Manchin suggested a $300 federal jobless benefit ending in the summer; others want money for broadband.
  • Another Democratic senator said she favored lowering the income threshold for the new stimulus checks.
  • Visit the Business section of Insider for more stories.

Senate Democrats are up against a narrow timeline to approve a $1.9 trillion stimulus package and get it to President Joe Biden’s desk. But some Democratic senators are eyeing changes to key components of the legislation, particularly unemployment insurance and stimulus checks.

The jockeying among Democrats to amend provisions for direct aid comes as they attempt to enact the legislation by March 14, the deadline for when numerous unemployment measures expire, including a $300 federal benefit. They have only days to settle policy differences, and it may shape the course of the economic recovery.

Senate Majority Leader Chuck Schumer told reporters the measure could be advanced as early as Wednesday. Asked if he would support targeting some aspects of the bill, he responded: “We want to get the biggest, strongest, boldest bill that can pass. And that’s what we’re working to do.”

He said discussions were ongoing between the Biden administration and a group of nine Democratic senators that includes Sen. Joe Manchin of West Virginia; Sen. Jeanne Shaheen of New Hampshire; Sen. Mark Warner of Virginia; and Sen. Dick Durbin of Illinois, the second-ranking Senate Democrat.

The relief package would provide $1,400 stimulus checks for taxpayers; $400 in federal unemployment benefits through the end of August; $350 billion in aid to state and local governments; $200 billion in school funding; $50 billion for virus testing and tracing; and a major revamp of the child tax credit.

Biden called into a Senate Democratic lunch on Tuesday and urged lawmakers to approve the bill quickly. Sen. Tim Kaine of Virginia told reporters that “he got on and kind of gave us a rally call.”

Inside the group of nine

Manchin said Tuesday he supported a $300 benefit that would expire sometime in the summer.  He appeared to suggest the end of June as a possible end-date.

“I’m thinking by end of June, first of July we’re gonna have most people inoculated,” the West Virginia Democrat told reporters on Capitol Hill. “So by that time there should be doors opening up, ready to go.”

Shaheen indicated she supported designing a new pot of money for broadband and healthcare providers. “Those are two areas we’re really hoping to see additional funding,” she told reporters. 

She suggested those initiatives could be financed with a lower check income threshold for married couples and an extension of the federal jobless benefit at $300 instead of $400. 

The push to cut unemployment benefits encountered early Democratic resistance. “I oppose that. I don’t know if it will prevail, but I’m for $400,” Durbin told reporters. Still, he said he was open to restructuring a third wave of direct payments.

That part of the legislation is far from settled. Sen. Ron Wyden of Oregon, chair of the Senate Finance Committee, said he believed there was “growing support” for unemployment benefits to end in September. “I think we’re making a lot of headway,” he told reporters, without specifying further.

Other Democrats pushed back against the idea of restricting stimulus check eligibility. “I think the president has made it clear what his views are and I believe those will prevail,” Sen. Bernie Sanders, chair of the Senate Budget Committee, told Insider.

The House approved the package on Saturday, giving Democrats only two weeks to approve the legislation in the Senate, where it will likely be amended. A second vote-a-rama will occur on Thursday afternoon, kicking off a long amendment process which is expected to end with approval of the bill by the end of the week.

Then the amended bill must go back to the House for final passage before Biden can sign it into law.

Democrats are employing a process known as reconciliation to push the rescue package through without Republican votes. The legislation must adhere to strict budgetary guidelines so it can pass with a simple majority of 51 votes in the Senate, but the Democrats’ slim majority means they cannot afford to lose a single vote.

Republicans are slamming the legislation as a Democratic wishlist of unrelated priorities. “This is a wildly expensive proposal largely unrelated to the problem,” Senate Minority Leader Mitch McConnell told reporters on Tuesday. “We’ll be fighting this in every way that we can.”

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Senior Democrats ditch their backdoor proposal for a $15 minimum wage, throwing pay hike in doubt in $1.9 trillion stimulus package

Bernie Sanders Chuck Schumer Ron Wyden
Sen Bernie Sanders speaks at a news conference alongside other top Democrats.

  • Senior Democrats tossed out a backdoor plan to raise the minimum wage to $15 an hour, per a person familiar with the decision.
  • The proposal was ditched as Democrats appeared reluctant to finalize a complex plan that could delay stimulus passage.
  • Experts said the backup plan risked being inefficient at raising hourly wages.
  • Visit the Business section of Insider for more stories.

Senior Democrats are abandoning their backdoor $15 minimum wage proposal, leaving a wage hike in doubt as they scramble to enact a $1.9 trillion stimulus plan within two weeks.

Sens. Bernie Sanders (I-Vermont) and Ron Wyden (D-Oregon) were in the midst of drafting a plan to levy a 5% tax on the payrolls of large corporations that don’t compensate workers below an unspecified wage. It would be paired with tax credits to incentivize small businesses to raise their employees’ wages.

The senators ditched their proposal. According to a person familiar with the decision, finalizing the plan and getting every Democrat onboard imperiled the passage of the legislation before the expiration of enhanced unemployment insurance on March 14 for millions of Americans.

The Washington Post first reported the development.

Sanders and Wyden came up with the alternative after the Senate parliamentarian ruled on Thursday evening that a $15 minimum wage provision in the rescue package did not clear the strict guidelines of the reconciliation process. The move blocks the measure from moving ahead under the process Democrats are using, which needs 51 votes in the Senate to bypass Republicans.

Experts said the backup plan risked being inefficient at raising hourly wages. Arindrajit Dube, a professor of economics at the University of Massachusetts, Amherst, wrote in an email to Insider that “the devil is in the details.”

Dube noted that most minimum wage workers don’t work for large corporations, so the plan may encourage those businesses to accelerate outsourcing to third-party contractors to avoid the tax.

“For these reasons, any tax-based minimum wage scheme should be broad-based in my opinion, in contrast to proposals from Senators Sanders and Wyden as I understand them,” Dube said. “Senator Wyden’s tax incentive to small businesses are also unlikely to be very effective and will largely go to employers who are already paying higher wages.”

The move slashes the odds of a wage increase becoming part of the stimulus plan, with little time left to draft legislation that would comply with the budget reconciliation process.

Still, Democrats such as Sen. Sherrod Brown of Ohio, chair of the Senate Banking Committee, say they will find a way to bump the federal minimum wage, which hasn’t increased from $7.25 an hour since 2009.

“Democrats are united in giving a raise. We’re going to raise wages,” he told NBC’s “Meet the Press” on Sunday. “We’re going to find a way to. It’s just too important not to.”

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Democrats want to enact a new stimulus package within weeks. Here’s the possible calendar for passage of $1,400 direct payments.

neal pelosi
House Democrats, led by Speaker of the House Nancy Pelosi.

  • Democrats want to pass Joe Biden’s rescue package within weeks.
  • Final passage could come in early March, before the expiration of enhanced unemployment insurance.
  • Here is a stimulus timeline with possible floor votes.
  • Visit the Business section of Insider for more stories.

Democrats aim to pass President Joe Biden’s $1.9 trillion economic rescue plan in only a matter of weeks.

The House Budget Committee kicked off a markup session on Monday afternoon which is set to last at least five hours, according to Rep. John Yarmuth (Ky.), chair of the Budget Committee. The panel is expected to approve the legislation and send it to a floor vote.

Here’s the Democratic calendar for coronavirus relief, based on statements from Democratic officials:

  • February 25-27: The House is expected to vote on passage of the government rescue plan.
  • March 2-5: The Senate takes up the legislation, and possibly amends it before a vote.
  • March 8-12: The House votes on the rescue package again if the Senate makes legislative changes.

Democrats have a narrow margin of error. They are pledging to enact the package before March 14, the date that enhanced unemployment benefits for millions of Americans starts ending.

Rep. Don Beyer of Virginia, vice chair of the Joint Economic Committee, told Insider that Democrats will “do our damnedest to meet it.”

The House proposal would also provide $1,400 stimulus checks and $400 federal unemployment benefits through August It also includes funding for vaccine distribution and virus testing, aid for state and local governments, and a $15 minimum wage increase.

Still, some key hurdles remain in the Senate. Democrats are using a process called reconciliation that allows them to pass a budgetary bill with only 51 votes instead of 60.

The Senate parliamentarian governing the procedure may rule the wage increase is unrelated to the federal budget and strike down the provision, setting back the timeline. On the other hand, the wage increase’s sponsor, Budget Committee Chairman Sen. Bernie Sanders (I-Vt.), obtained a letter from the Congressional Budget Office saying it would have a sizable impact on the budget.

In recent weeks, Biden has downplayed the odds it would survive the process, though he still supports the measure.

Republicans are uniformly opposed to the Biden plan. They argue it is too costly and that a previous round of aid enacted in December still hasn’t been fully tapped.

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