The poorest 20% of Americans will likely see a 20% income boost thanks to Biden’s stimulus plan, per new analysis

Joe Biden
President Joe Biden.

  • New analysis found the COVID-19 relief bill will primarily focus on low- and mid-income households.
  • Direct stimulus checks and an expanded child tax credit will put extra money in Americans’ pockets.
  • The House is set to vote on a final version of the bill this week and Biden will sign it soon after.
  • Visit the Business section of Insider for more stories.

Under President Joe Biden’s $1.9 trillion pandemic relief bill, the poorest of the poor should expect to receive a significant boost to their incomes, while the richest of the rich should expect, well, not much.

According to a new analysis by the Tax Policy Center, the Senate-passed version of President Joe Biden’s coronavirus spending bill would give the poorest 20% of Americans a 20.1% income boost after taxes, while giving the richest 20% of Americans a 0.7% raise.

Most of that extra money will come from direct stimulus payments and monthly benefits stemming from the child tax credit included in the legislation. The earned income tax credit and the child and dependent care tax credit also play a role in the extra funds.

The White House is hailing The American Rescue Plan Act of 2021 as the most progressive piece of legislation in history and many progressives agree.

Democratic Rep. Pramila Jayapal of Washington, who chairs the Congressional Progressive Caucus, called the stimulus a “truly progressive and bold package that delivers on its promise to put money directly in people’s pockets.”

The Tax Policy Center’s data released Monday appears to confirm that sentiment.

The current version of the stimulus bill would reduce federal taxes by an average of $3,000 and raise after-tax incomes by 3.8 percent, with the majority of relief – nearly 70% – going to low and middle-income households that make $91,000 or less, according to the nonpartisan think-tank.

Families with children would get a tax cut of more than $6,000 on average, with low and middle-income families receiving nearly 75% of the benefit, according to the Tax Policy Center.

The most significant tax cut will likely come from the next installment of economic impact payments. In the current version of the bill, individuals earning below $75,000 annually can receive the entire $1,400 and couples making up to $150,000 also qualify for the full amount.

The checks represent more than two-thirds of the overall tax cut, according to the analysis, cutting household taxes by $2,300 on average.

One of the biggest wins for progressives is the bill’s inclusion of the beefed-up child tax credit, an expansion that Biden has said he supports making permanent. Currently, the credit is a one-year measure in the relief bill, and caretakers of 93% of children will receive the monthly benefits.

Howard Gleckman, a senior fellow at the Tax Policy Center, drew sharp comparisons between the coronavirus spending bill and the Republican-passed Tax Cuts and Jobs Act of 2017 in a Monday blog post for the think-tank.

While the coronavirus spending bill provides the majority of relief to low and middle-income households, “nearly half of the [Tax Cuts and Jobs Act’s] 2018 tax cuts went to households in the top 5 percent of the income distribution (who made about $308,000 that year).” Gleckman wrote.

While the 2017 Tax Cuts and Jobs Act heavily favored upper-middle and upper-class households, the American Rescue Plan Act of 2021 is focused on providing immediate aid to the Americans struggling most.

The richest 1% will receive a 0% income boost from the bill, according to the analysis.

The House is likely to take its final vote on the Senate version of the stimulus bill Wednesday, according to CNN. The chamber is expected to pass the bill and will send the legislation to Biden, who will sign it into law shortly thereafter, mere days before the December stimulus measures are set to expire.

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As another stimulus package hangs in the balance, some programs like unemployment benefits are set to expire by the end of March

nancy pelosi
  • Dems are trying to pass the $1.9 trillion stimulus bill before certain benefits expire before the end of the month.
  • The current package includes $1,400 stimulus checks and $400 payments in federal unemployment benefits.
  • Programs at stake include unemployment benefits and food stamp benefits.
  • Visit the Business section of Insider for more stories.

The House passed the $1.9 trillion stimulus bill over the weekend. The proposal now heads to the Senate in a race to approve the massive coronavirus relief bill before certain programs are set to expire before the end of the month.

The package includes $1,400 stimulus checks, $400 payments in federal unemployment benefits, and funds for coronavirus testing and vaccines. The bill passed largely along party lines in the House in a 219-212 vote – with two Democrats joining all House Republicans in opposition of the bill.

The proposal only requires a simple majority in the Senate in order to land on President Joe Biden’s desk, but lawmakers can offer amendments to the bill and could likely craft a different version of the proposal. Doing so would send it back to the House for approval or both chambers would have to negotiate line items in a joint conference committee.

“Now, the bill moves to the United States Senate, where I hope it will receive quick action,” Biden said during a press briefing over the weekend. “We have no time to waste.”

“If we act now – decisively, quickly, and boldly – we can finally get ahead of this virus,” the president added. “We can finally get our economy moving again.”

Here’s what at stake if the bill hasn’t passed before the end of March:

Unemployment benefits are set to expire on March 14

Temporary federal unemployment programs are set to lapse this month, leaving more than 11 million out-of-work Americans without federal financial assistance. Weekly unemployment payments were included in the first coronavirus stimulus package passed by Congress last March, and the payments were later extended another 11 weeks in the relief package passed in December.

According to data from The Century Foundation, about four million workers will face a “hard cliff” and see their unemployment benefits end abruptly on March 14 – the 11-week benchmark of the December extension – and about 7 million unemployed Americans will face a “soft cliff,” in which their benefits will end sometime between mid-March to mid-April.

Even if Biden signs the package currently being negotiated by Congress by the mid-March deadline, some unemployed Americans will experience a hiccup in payments, just a month after the disruption in payments from the delay in finalizing the December relief bill. The latter was eventually sent out retroactively to those who qualified for the program.

The Paycheck Protection Program and federal eviction moratorium are not included in the current draft of the bill

PPP loans, a crucial federal financial assistance program aimed at helping small businesses, are set to expire by the end of March. The current bill won’t extend the program past March 31. 

But if the proposal is passed before March 31, an additional $7 billion will be allocated to the program to help more small businesses, as well as “provide $15 billion to the Emergency Injury Disaster Loan Program, which provides long-term, low-interest loans from the Small Business Administration,” CNN reported.

The proposal also includes $25 billion for “a new grant program specifically for bars and restaurants,” according to the CNN report.

Like the small business loan program, the federal eviction moratorium is scheduled to end by the end of the month as well. In order to extend the program past March, it would need to be issued by executive order.

The proposal currently allocates $19.1 billion to state and local governments in rent and utility assistance to low-income households, as well as $5 billion to states and cities to help communities and localities at risk of homelessness. Another $10 billion would go towards homeowners struggling to pay mortgages, utilities, and property taxes.

A tax incentive for employers that offers expanded paid sick and family leave will end on March 31

A federal tax incentive program for employers to offer expanded paid sick and family leave will end on March 31 if the bill is still in negotiations by the end of the month. In the CARES Act passed last March, the federal government guaranteed an additional 10 weeks of paid family leave to families with kids who were at home with schools closed.

The benefit expired last December, but “employers can still receive a tax credit if they voluntarily provided the expanded paid leave through March,” CNN reported.

Food stamp benefits could be extended as part of the relief package

Americans who receive food stamps got an additional 15% in benefits as part of the relief package passed last December. The benefits are set to last through June, but the massive proposal currently at the Senate could extend the benefits through September.

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Tired of waiting for help, some states have begun passing their own COVID-19 aid

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Not waiting for more federal help, states have been approving their own coronavirus aid packages, spending hundreds of millions of dollars to help residents and business owners devastated by the the pandemic’s economic fallout.

  • As Americans await the passage of Biden’s stimulus plan, some states are passing their own relief.
  • At least five states have passed or proposed their own economic and virus aid legislation.
  • But critics argue their success undermines calls for state and local aid from the federal government.
  • Visit the Business section of Insider for more stories.

As President Joe Biden’s $1.9 trillion stimulus plan slowly inches toward passage, more and more states are starting to take matters into their own hands.

At least five states across the country have passed or are considering their own economic stimulus measures to address COVID-19 hardships, the Associated Press reported. 

Several states have spent hundreds of millions of their own dollars to help address the economic fallout of the ongoing pandemic for jobless residents and strapped business owners alike. 

But some critics argue the success of these states’ individual relief bills undermines continued calls for significant state and local government aid in the federal stimulus package. Biden’s relief plan currently calls for $350 billion of federal money to be sent to state and local governments.

The issue proved a point of contention for Congress during negotiations for December’s stimulus package, with many Republicans arguing that the billions of dollars directed toward states was an effort to “bail out” Democratic-led states they accused of overspending. The issue was eventually nixed from the final package. 

Sen. Rick Scott of Florida, a frequent and vocal critic of federally-funded state relief, told the AP that states passing their own virus relief are good signs.

“It’s great news that states are doing well, many seeing revenues higher than projected, and are able to help their citizens during this pandemic,” he said in a statement to the AP. “House and Senate Democrats should follow the facts and ditch their radical efforts to award wasteful bailouts for failed politicians in states like New York and California.”

The growing number of states employing their own efforts also suggests that many states are faring better during the pandemic than originally anticipated, the AP reported. Many state governments have maintained healthy budgets, despite ongoing economic hardships wrought by the virus and subsequent lockdowns.

Still, many governors are insistent on more help from the federal government, arguing their individual relief efforts directly target residents who remain in dire situations nearly one year after the pandemic began, according to the AP. 

Maryland’s Republican Governor Larry Hogan signed more than $1 billion in tax cuts and economic relief aimed at struggling businesses and jobless residents last week. The package includes direct one-time stimulus checks of $300 for certain people and $500 for families, according to the AP. The package also includes up to $9,000 in sales tax relief for small businesses, the outlet reported.

“If we can do that in Maryland, there is no reason why President Biden and Republicans in Congress cannot work together to pass bipartisan federal COVID-19 relief,” he tweeted.

Meanwhile, California Governor Gavin Newsom signed a hefty $7.6 billion COVID-19 relief package this week that will send $600 one-time payments to 5.7 million people, and will direct more than $2 billion in grants for struggling small businesses according to Axios. 

Community colleges, hair salons, restaurants, food and diaper banks, and the child care sector will also receive financial help, the outlet reported. 

Lawmakers in New Mexico have proposed a relief package that would provide $200 million in direct grants to businesses, a $600 tax rebate for low-wage workers, and a four-month tax holiday for restaurants recovering from dining restrictions, the AP reported.

The bill is awaiting Governor Michelle Lujan Grisham’s signature.

North Carolina Governor Roy Cooper unveiled a $695 million emergency budget proposal earlier this month that, if passed, would provide state money for teacher and school staff bonuses, hazard pay for law enforcement officers, and funding for rural broadband and small businesses, according to the AP.

The outlet said Republicans in control of the legislature are unlikely to pass the legislation, though they haven’t dismissed it outright and have signaled support for additional COVID-19 relief.

And Pennsylvania Governor Tom Wolf signed legislation earlier this month funding grants of up to $50,000 to owners of struggling bars, restaurants, and hotels, expected to be available by next month, the AP said. 

But even though more states are taking an active role in recovery, Congressional Democrats aim to pass Biden’s economic rescue plan in a matter of weeks. The House of Representatives plans to vote on the bill by the end of this week. The Senate will take up the bill the following week, and Democrats hope to have a final version enacted by March 14, the day that enhanced unemployment benefits for millions of Americans start to end.

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White House economist rejects GOP senators’ push for $1,000 stimulus checks instead of $1,400

Jared Bernstein
Council of Economic Advisors nominee Jared Bernstein speaks after US President-elect Joe Biden announced his economic team at The Queen Theatre in Wilmington, Delaware, on December 1, 2020.

  • White House economic advisor Joe Bernstein told MSNBC that he thinks President Biden will reject GOP plans for smaller direct payment checks. 
  • While Biden is pushing for $1,400 checks as part of his $1.9 trillion stimulus deal, Republicans think the sum is too big and want $1,000 checks. 
  • Democrats are preparing to pass Biden’s $1.9 trillion bill including the larger checks without GOP support if necessary. 
  • Visit Business Insider’s homepage for more stories.

A White House economist knocked back a GOP proposal for stimulus checks of $1,000 on Monday night, characterizing it as too little to satisfy President Joe Biden.

Jared Bernstein, a member of the White House Economic Advisors Council, said that Biden would want more than the offer from ten Republican senators. Biden is pushing for $1,400 checks.

Speaking to anchor Rachel Maddow, Bernstein discussed the meeting Monday evening between a group of moderate GOP senators and Biden as they seek to broker a bipartisan stimulus deal. 

Bernstein highlighted differences between the parties, with the size of direct payment checks one of the issues. 

While Biden wants checks of $1,400 as part of his $1.9 trillion stimulus deal, the ten GOP senators back a much smaller $600 billion relief bill. That plan includes smaller checks, worth $1,000 each, and would sent them to fewer people.

Bernstein said there was common ground between the White House and the GOP senators on aid for businesses and “some agreement on addressing the COVID crisis.”

But he said that key differences remained: “They also have checks to direct impact payments to people. But those checks are scaled back. And I and I believe from some comments coming out of the White House tonight, they’re scaled back at a level that the president would judge to be too far.”

There are indications that some details of the direct payments checks plans are up for negotiation, according to comments by Biden aides to The New York Times.

The aides said that the president remains opposed to scaling back the relief bill, but is open to negotiating details, including the overall cost, by implementing tighter thresholds for who gets them. 

Bloomberg also reported Monday that the size of the checks, and the eligibility criteria to receive them, was causing division inside the White House. 

Bernstein made it clear in his comments to MSNBC that the proposed GOP scale back of the checks is too much. 

Read more: President Biden already has an antagonist-in-chief. It’s Ron DeSantis, the Florida GOP governor Democrats have tagged as ‘Trump’s errand boy.’

Some Democrats, including Sen. Joe Manchin of West Virginia, have expressed skepticism about the size of the bill and advocate more targeted relief.

Though Biden is seeking to negotiate a bipartisan deal, Democrats have prepared the ground to pass the $1,9 trillion deal without GOP support if necessary, using a mechanism called budget reconciliation.

The move means that Democrats could pass the bill with only Democrats, bypassing potential Republican blocking measures. 

Bernstein said Monday that Biden is happy to discuss the bill with Republicans, but “will not settle for any package that fails to meet this moment with the magnitude to finally knock COVID back on its feet, get it behind us, and launch a robust and inclusive and a racially equitable recovery.”

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Trump just cost jobless workers one week of federal unemployment assistance after he failed to sign the relief bill by midnight on Saturday

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President Donald Trump has said he wants the relief bill to include $2,000 stimulus checks for Americans.

  • President Donald Trump did not sign the latest coronavirus relief legislation before midnight on Saturday, costing jobless workers one week of $300 federal unemployment benefits.
  • State agencies can only distribute benefits for weeks the bill is enacted, meaning the delay could cause the unemployment benefits to be distributed for 10 weeks instead of the intended 11.
  • About 14 million Americans have also lost unemployment benefits, as two federal programs expired on Saturday.
  • Visit Business Insider’s homepage for more stories.

President Donald Trump did not sign the latest coronavirus relief legislation by midnight on Saturday, a move expected to cost jobless workers at least one week of $300 federal unemployment benefits.

Trump had suggested he might reject the $900 billion stimulus package, which passed in both chambers of Congress earlier this week, unless it includes $2,000 stimulus checks for Americans.

The bill currently includes $600 checks, along with the $300 weekly federal unemployment insurance.

“I simply want to get our great people $2,000, rather than the measly $600 that is now in the bill. Also, stop the billions of dollars in ‘pork,'” Trump tweeted Saturday morning.

The president has not made clear whether he will sign the legislation, but the delay puts other federal assistance programs in danger and could prove costly for Americans whose unemployment benefits were supposed to restart December 26.

By not signing the bill before the end of day Saturday, Trump has effectively cut a week of $300 federal unemployment benefits for jobless people, according to Michele Evermore, a policy expert at the National Employment Law Project.

But she cautioned it’s hard to project without federal guidance how the holdup would affect other unemployment programs.

“I’m not entirely sure how this will be interpreted – at the very least, we lose a week of the $300,” Evermore told Insider. “No matter what, if he doesn’t sign, next week it goes down to 10 weeks of an extra $300.”

The $300 federal unemployment supplement included in the bill is scheduled to end on March 14, a date that will not change based on when the bill actually becomes law.

Depending on when the bill is signed, labor agencies could restart the payments during the first week of January. Because states cannot provide benefits for weeks that precede the approval of the bill, the $300 supplement may only be in place for 10 weeks, rather than the intended 11.

About 14 million people are at risk of losing unemployment benefits, as Saturday was the last day that two federal unemployment programs distribute their payments. They are the Pandemic Unemployment Assistance for gig workers and freelancers and Pandemic Emergency Unemployment Compensation for people who exhausted state benefits.

In tweets on Saturday, including one sent hours before midnight, Trump again called for the relief bill to include higher stimulus checks.

Trump could still sign the package in the following days, though he has not indicated whether he will do so.

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Biden ally Larry Summers, a former treasury secretary, said $2,000 stimulus checks would be a ‘serious mistake’ that could overheat the economy

Larry Summers, former Treasury secretary
Former Treasury secretary Larry Summers

  • Former US treasury secretary Larry Summers told Bloomberg on Friday that $2,000 stimulus checks for Americans would be a “pretty serious mistake.”
  • Summers, who was reportedly an adviser to President-elect Joe Biden’s campaign, said boosting consumer spending was the wrong route to economic recovery.
  • The checks could overheat the US economy, he told Bloomberg.
  • US President Donald Trump has so far refused to sign a pandemic relief bill containing $600 checks for Americans, saying the checks should be $2,000 instead. The Democrats support larger checks.
  • Visit Business Insider’s homepage for more stories.

Larry Summers, the former US treasury secretary who has reportedly advised President-elect Joe Biden, thinks $2,000 stimulus checks would be a “pretty serious mistake” that could overheat the US economy.

Congress approved a $2.3 trillion pandemic relief package containing $600 checks for struggling Americans on Monday. On Thursday, US President Donald Trump called for $2,000 checks instead, and he has refused to sign the bill. Democrats support these larger checks, and House Speaker Nancy Pelosi plans to hold a vote on them Monday.

Summers, who was treasury secretary at the end of Bill Clinton’s presidency and director of the National Economic Council at the start of Barack Obama’s administration, told Bloomberg it’d be better to have stimulus than not – but that promoting consumer spending through individual checks was the wrong way to keep the economy moving.

He said he was “not even sure I’m so enthusiastic about the $600 checks,” let alone $2,000 ones. 

The bill “probably would pay out $200 billion to $250 billion a month for the next three months,” Summers said.

“The level of compensation is running about $30 billion a month below what we would have expected it would. GDP is running about 70 billion a month below what we would have expected it would … We have stimulus already, much more than filling out the hole,” he said.

“And given that lots of the hole is not from the fact that people don’t want to spend, but because they can’t spend – they can’t take a flight or go to a restaurant – I don’t necessarily think that the priority should be on promoting consumer spending beyond where we are now,” he said.

Handing $2,000 checks to Americans would be a “pretty serious mistake that would risk a temporary overheat,” he added.

Read more: Joe Biden is hiring about 4,000 political staffers to work in his administration. Here’s how 3 experts say you can boost your chances of getting one of those jobs.

Summers was advising the Biden campaign this year, Bloomberg reported, but will not take a role in the Biden administration.

Progressive groups in May urged Biden to drop Summers, criticizing the former treasury secretary’s economic policy record.

Democrats appear united behind the idea of larger stimulus checks, and a Democratic attempt to advance them was blocked by House Republicans Thursday. Progressive Democrats, in particular, reacted positively to Trump saying the $600 checks were not enough.

“When you see the two extremes agreeing, you can almost be certain that something crazy is in the air,” Summers said, adding that when Sen. Bernie Sanders and Trump are aligned, it’s “time to run for cover.”

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Jobless benefits for about 14 million Americans expire, as Trump still refuses to sign the pandemic aid package containing $600 stimulus checks

donald trump hands
US President Donald Trump.

  • Jobless benefits for millions of Americans expired Saturday.
  • A $2.3 trillion pandemic aid and spending package approved by Republicans and Democrats would extend special unemployment benefits, but President Donald Trump has so far refused to sign it.
  • Trump is unhappy with the massive bill, in part because he says that one-off $600 stimulus checks for struggling Americans are not large enough. He wants $2,000 checks.
  • Trump has not vetoed the bill and could still sign it in the coming days. The package contains $1.4 trillion for normal government spending — without it, a government shutdown looms.
  • Visit Business Insider’s homepage for more stories.

Jobless benefits for millions of Americans expired on Saturday, after President Donald Trump refused to sign into law a $2.3 trillion pandemic aid and spending package.

Trump is unhappy with the massive bill, in part because he says that one-off $600 stimulus checks for struggling Americans are not large enough. He has demanded the amount be raised to $2,000 – but House Republicans on Thursday blocked a Democratic attempt to increase the size of the checks

Trump stunned Republicans and Democrats when he said Wednesday that he was unhappy with the massive bill, which provides $892 billion in badly needed coronavirus relief, including extending special unemployment benefits expiring on Saturday, and $1.4 trillion for normal government spending.

Without Trump’s signature, about 14 million people could lose those extra benefits, according to Labor Department data. A partial government shutdown will begin on Tuesday unless Congress can agree a stop-gap government funding bill before then.

The bill was flown to Trump’s Mar-a-Lago resort on Thursday. While the outgoing president’s strategy for the bill remains unclear, he has not vetoed it and could still sign it in the coming days.

House Speaker Nancy Pelosi plans to hold a vote to approve $2,000 stimulus checks on Monday.

After months of wrangling, Republicans and Democrats agreed to the $2.3 trillion package on December 20, with the support of the White House. Trump, who hands over power to Democratic President-elect Joe Biden on January 20, did not object to terms of the deal before Congress voted it through on Monday night.

But since then, he has complained that the bill gives too much money to special interests, cultural projects, and foreign aid. He has also said its one-time $600 stimulus checks to millions of struggling Americans were too small – a view supported by Democrats, who have long-argued for a larger stimulus package.

“Why would politicians not want to give people $2,000, rather than only $600?…Give our people the money!” the billionaire president tweeted on Christmas Day, much of which he spent golfing.

Read more: Joe Biden is hiring about 4,000 political staffers to work in his administration. Here’s how 3 experts say you can boost your chances of getting one of those jobs.

Many economists agree the bill’s aid is too low but say the immediate support is still welcome and necessary.

A source familiar with the situation told Reuters that Trump’s objection to the bill caught many White House officials by surprise. 

On Saturday, he was scheduled to remain in Mar-a-Lago. Biden, whose November 3 electoral victory Trump refuses to acknowledge, is spending the holiday in his home state of Delaware and had no public events scheduled for Saturday.

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