A single GOP senator blocked a bill that would stop private debt collectors seizing stimulus checks

pat toomey gamestop
Sen. Pat Toomey, R-Pa.

  • GOP Sen. Pat Toomey blocked a bill meant to stop debt collectors seizing stimulus checks.
  • Democrats had hoped to pass the measure to maximize the help people would get.
  • But Toomey intervened, saying debt collectors had the right to claim cash owed.
  • See more stories on Insider’s business page.

Republican Sen. Pat Toomey on Thursday blocked a bill meant to bar private debt collectors from seizing checks issued as part of the recent stimulus bill.

The law that Toomey opposes had been proposed by Democratic senators Ron Wyden and Sherrod Brown.

Such a measure was included in the December stimulus package passed under President Donald Trump, which provided $600 checks.

However, it was not included in the latest stimulus bill passed under President Joe Biden, which provided $1,400 checks to most Americans.

Democrats still supported the proposal, but had to leave it out because of the rules of the Senate mechanism known as “budget reconciliation” which was used to pass the latest stimulus.

That mechanism let Democrats pass the bill without any GOP votes, but comes with limits on what is allowed. The same rules led to proposals for a $15 federal minimum wage being dropped.

Democrats tried to introduce the rule in separate legislation, arguing that the cash is meant to help struggling Americans rather than debt collection agencies.

Wyden and Brown proposed the measure under a unanimous consent rule, which allows bills to pass quickly and bypass some lengthy Senate procedures.

However, any single senator can block such a proposal, which Toomey chose to do.

Toomey argued that Democrats were to blame for the rule not being in the recent relief bill, because they chose not to involve Republicans in putting it together.

He said that debt collectors had “valid legal claims” against people who “owe money to someone else and that someone else has gone to court, and it’s been adjudicated.”

The senator also said that, with 90 million relief checks already issued, it was too late to seek the amendment.

The process of the relief check money being seized by creditors is known as “garnishment.”

“These payments have already gone out the door,” Toomey said. “The garnishment happens automatically. It’s already happened!”

Toomey’s objection means it is likely that many other relief checks will be seized by debt collectors.

In comments to the Huffington Post, Brown said “we will keep trying” to get the measure passed. Senators can still try to pass it without unanimous consent, which would take longer and would also require some Republican support to evade filibuster rules.

“Families are hanging on by a thread, but Senate Republicans blocked protections against their relief payments from being seized to pay credit card and medical debt. It’s shameful,” said Wyden in a statement Thursday.

It is unclear if there is wide backing in the Senate GOP for Toomey’s objection to the measure. Republicans have supported the measure before but may not in future.

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A former Obama economic advisor says inflation warnings about the new stimulus bill are ‘absurd’ – here’s why

People Shopping covid NYC
People shopping at an outdoor market in New York City in December 2020.

  • Paul Constant is a writer at Civic Ventures and a frequent cohost of the “Pitchfork Economics” podcast with Nick Hanauer and David Goldstein.
  • In the latest episode, Hanauer and Goldstein spoke with economist Austan Goolsbee on whether or not government stimulus spending could cause hyperinflation.
  • Goolsbee says that hyperinflation is highly unlikely and that the stimulus package should be seen instead as disaster relief money.
  • See more stories on Insider’s business page.

Every time an elected leader proposes a progressive policy that will cost money – expanding health care, for instance, or the wildly popular American Rescue Plan that the Biden White House is championing to combat the economic damage caused by the coronavirus pandemic – the inflation hawks loudly warn that another Great Inflation is on the way.

To anyone below the age of 50, “inflation” sounds like a kind of boogeyman, a campfire ghost story used to warn against government spending.

I’ve never personally encountered hyperinflation in my life – I was born in 1976 – but the word triggers nightmares for those in my parents’ generation. During The Great Inflation, which spanned the years between 1975 and 1982, prices skyrocketed out of control in grocery stores and gas stations around the country, surpassing wage growth by a huge margin and putting everyday necessities out of reach for many.

The fear-mongering of hyperinflation

After nearly four decades without an inflation crisis, is hyperinflation still a danger? Could a $1.9 billion COVID relief bill set off a spate of higher prices around the United States? This week on “Pitchfork Economics,” hosts Nick Hanauer and David Goldstein ask Austan Goolsbee, who served as chair of President Obama’s Council of Economic Advisers and is now a professor of economics at the University of Chicago, whether too much government spending could result in a $10 gallon of milk.

“I consider much of the inflation-mongering to be absurd,” Goolsbee said, adding that rank partisanship is fueling most of the loudest claims. “90% of the inflation-mongering comes from the same people who deficit-hawk when Democrats are in office, but were absolutely for increasing the deficit when Donald Trump was president.”

That said, the return of hyperinflation is always within the realm of the possible. Serious economists do warn that too much government spending might increase the output gap, which Goolsbee explained as “the difference between what we think is the potential is for the economy, and what the actual economy is.”

In other words, if the government starts pumping more money into the economy than the economy is actually worth, the actual value of the American dollar begins to lose coherence, throwing the prices of imports and exports out of whack and potentially driving the cost of goods up.

“In a normal stimulus environment, you’re trying to fill the output gap to get us back to where we were in unemployment and output and wages,” Goolsbee explained.

Because the stock market has largely done very well, and because the wealthiest Americans have amassed over a trillion dollars in additional wealth since the beginning of the pandemic, some economists don’t believe the current economic crisis is big enough to warrant spending.

Stimulus versus disaster relief

Goolsbee believes it’s a mistake to consider the American Rescue Plan to be a stimulus package in the first place. Unlike Obama’s stimulus package, he explained, the plan that the Biden administration is pushing “isn’t about trying to generate a big multiplier on government spending to raise the GDP, the way normal stimulus is. This is absolutely disaster relief money, in which you’re trying to prevent permanent damage.”

This spending isn’t trying to offset generalized harm to the American economy as a whole. Instead it’s counteracting the specific financial harm absorbed by the American people as they followed public health protocols to stop the spread of coronavirus. The money in the American Rescue Plan will go directly toward keeping small businesses open, keeping Americans housed without ruining their credit ratings, and feeding American families who have lost one or both sources of income.

Say the government gives someone $1,000 to make a rent payment that she otherwise wouldn’t have been able to make, preventing her eviction. That’s a very different kind of government spending than, say, propping up the GDP through high-level stimulus spending on financial institutions. It avoids the negative impact on the economy that a wave of mass evictions would represent, and that rent money is immediately recirculated through the economy in the form of consumer spending.

A calculated risk

Goolsbee points to recent economic analysis of the American Rescue Plan, which projects that the output gap would probably grow by about 1% by the end of 2022 – an amount lower than the output gap after both President Trump’s $2 trillion corporate tax cuts and the dot com bust of the George W. Bush Administration.

“We’ve had three times in the last 30 years where we were, for an extended period, running hotter than what [the economy under the American Rescue Plan] would run, without inflation,” Goolsbee said.

But what if, for one time in four decades, the inflation hawks are right and prices do start to rise?

“We as societies, as economies, have a lot of tools for fighting inflation,” Goolsbee said, “and we have virtually no tools for fighting deflation.”

It’s better for our leaders to risk a little bit of inflation that they can then alleviate through higher interest rates and other economic mechanisms, because that price would be nothing compared to what we would all pay if the economy tanks because too many businesses close, too many Americans lose their homes, and consumer spending plummets.

“But that said,” Goolsbee said, “I think the case for inflation is a lot smaller than they say.”

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Millennials need a lot more than a $1.9 stimulus package to heal their economic wounds

millennial
The stimulus will help millennials, but they also need longer-term solutions.

Are financially burdened millennials finally seeing the light at the end of the tunnel?

The House of Representatives passed the $1.9 trillion stimulus package on Wednesday, and President Joe Biden just signed it into law.

Designed to boost the economy during the worst crisis seen in generations, the law provides everything from additional funding for small businesses and vaccine distribution to housing and rental benefits, and a pot of money for state and local governments. An early analysis of the rescue plan indicates the vast majority of its benefits are squarely directed at middle and low-income households.

But it also has the potential to be a stepping stone that millennials need to help climb their way out of the affordability crisis they’ve been facing for most of their adulthoods, marked by two recessions before the age of 40.

Beefing up unemployment benefits to $300 a week will help many Americans, but especially the younger workers who have been hardest hit in terms of income loss during the pandemic. The older cohort of millennials in prime child-rearing years stand to benefit from a beefed-up child tax credit that will put up to $3,600 in the pockets of parents. And $1,400 checks will help cover the things millennials struggle with most: living costs like rent and debt.

While critics say the final American Rescue Plan is missing some key initiatives like a federal minimum wage hike and student-loan debt relief, it has overall received widespread support. A new Morning Consult poll found that 75% of voters support the package, including 59% of Republicans.

While it’s a good start, millennials need more to heal their economic wounds; they need solutions to restructure the broken economy they inherited.

Millennials have been facing an affordability crisis

Millennials are a generation of optimistic, hard-working people who have been dealt a bad hand, according to Jill Filipovic, author of “OK Boomer, Let’s Talk,” which explores how boomers created an economic crisis that will leave millennials the first generation worse off than their parents.

“None of this was an accident,” she told Insider back in August. “If we understand where millennials are and how we got here, we can have a better idea of how to fix things going forward.”

The oldest millennials came limping out of the Great Recession with crippled finances, and they were still dealing with its lingering effects a dozen years later, when the coronavirus recession hit.

The financial crisis left the oldest millennials with wealth levels 34% below where they would be if it didn’t occur, and it could have led to stagnant wages for the generation up to 15 years after graduation. Coupled with student-loan debt, soaring costs for things like houses and health care, and now, income loss due to the pandemic, it’s been a grim wealth-building journey.

millennial job loss
Many millennials have struggled with everything from rent to student-loan debt.

But these aren’t the only economic forces behind millennials’ economic plight.

A November Deutsche Bank Research report stated that younger generations have been hit hard while older generations have reaped benefits from the economy. Boomers, it said, saw an increased value in assets thanks to low interest rates and inflated housing prices. They didn’t have to pay as much for education as millennials have, nor will they face the cost for environmental damage caused by the carbon emission-releasing companies in which they’ve invested.

Boomers have been questioned by authors like Filipovic and news outlets ranging from Vox to the Guardian for their role in bankrupting the rich economy they inherited, leaving millennials to pick up the pieces. And they’re not actively setting up a framework to fix this.

Neil Howe, the economist, historian, and demographer who coined the term “millennial,” told Insider that boomers refuse to pay for institutional upkeep, preferring to spend money on things that change people’s lives now. He said this is a result of their coming-of-age experience, in which their parents, the GI generation, cared about building strong institutions and looking into the future. Boomers took that for granted and developed a “live-for-today attitude,” he said.

Consider when boomers entered the same life stage millennials are in now, in the 1980s. They supported the increasing financialization of the economy and a massive reduction of taxes, causing financial asset speculation to become both disconnected from and controlling of the real economy, Kurt Andersen, author of “Evil Geniuses: The Unmaking of America,” told Insider in February.

Millennials need a game plan and room at the table

Biden promised to “go big” on a stimulus package, and he delivered with a progressive historic bill that some have likened to FDR’s “New Deal” agenda of the 1930s. As Insider’s Juliana Kaplan wrote, it has the potential to inject the government into American life in unprecedented ways, while Insider’s Ben Winck reported that’s part of $5 trillion in stimulus going back to the early days of the pandemic during the Trump administration.

Putting cash in pockets and fattening unemployment benefits will inevitably be a leg up for many millennials suffering from economic hardships. But it needs to be followed up with longer-term action.

“Millennials would like to see a real game plan,” Howe said, adding that they ideally want to see society move in a more constructive way that ensures their future. The older generation, he said, is more focused on getting through the next six months than investing in a structural solution for the future.

Joe Biden
Biden needs to follow up the stimulus package with long-term action.

Take the question of student-loan debt, for example. Biden has advocated for canceling up to $10,000 of it while resisting the more progressive agenda to cancel up to $50,000. Biden claims he lacks the legal authority to do it.

Sen. Elizabeth Warren disagrees, and she was a cosponsor of a tax exemption in the stimulus on student-loan forgiveness through 2025. She argues it sets the stage for student loan forgiveness. While this would wipe out debt for 15.3 million Americans, it doesn’t solve the problem of the rising cost of tuition that leads to such massive student-debt burdens.

But millennials are by and large waiting for a political class from another generation to make these decisions.

Boomers have held tremendous political, cultural, and economic power for the past several decades, Filipovic said. “What millennials need is not just boomers imparting their wisdom and experience, but really making room at the table for us,” she added.

While the number of millennials in Congress rose slightly this year by 1%, they still only make up 7% of Congress with 31 out of 532 voting members, per the Pew Research Center.

“Unless millennials are at the table, we’re really not going to see the issues that are most important to us addressed,” Filipovic said. “You need people who are actually going to live in the future, who have a stake in the future, at the decision making table.”

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Biden’s $1.9 trillion stimulus could drastically cut poverty, studies say

Joe Biden
President Joe Biden.

  • Biden’s $1.9 trillion stimulus passed the House again today, and is set to be signed into law this week.
  • The legislation could play an enormous role in reducing poverty rates, especially for children.
  • Two separate studies found it could reduce poverty rates by a third, but only over the next year.
  • See more stories on Insider’s business page.

President Joe Biden’s historic $1.9 trillion stimulus relief package just passed the House, and is set to be signed into law this week.

The bill will allocate billions towards Americans, providing relief for unemployed workers, parents, and millions more. Many taxpayers are set to receive $1,400 stimulus checks, and parents could receive up to $3,600 per child under the child tax credit.

One area where the stimulus will be acutely felt: poverty rates. Two different studies anticipate that the legislation will have a dramatic effect, projecting that millions of Americans will no longer be living in poverty in 2021. The bill, passed via reconciliation along party lines in both the House and Senate, includes measures that will expire in 2022, meaning that it’s an open question what happens to poverty rates at that point.

A study out of the Center on Poverty & Social Policy at Columbia University found that the package could nearly halve child poverty, and would more than halve the rate for Black and Hispanic children. Broadly, that study projects that the annual poverty rate would fall from 12.3% to 8.2% – meaning it would drop by a third.

Meanwhile, a study from the Urban Institute finds the plan would cut poverty by over a third. That study projects that the annual poverty rate would shrink from 13.7% to 8.7%, with 16 million fewer Americans living in poverty in 2021.

This will also impact some of those who have been hardest hit by the pandemic. Poverty rates will drop by half for those in households who experienced job losses during the pandemic, compared to a nearly one-third drop for households who did not lose jobs during the pandemic. As Insider’s Ben Winck previously reported, low-wage, minority workers were the hardest hit by pandemic unemployment.

The share of Americans in deep poverty – defined as those with resources that are less than half of the poverty threshold – would also drop by a third.

The legislation will help address some racial disparities. Historically, poverty rates have been higher for Black and Hispanic Americans. With the American Rescue Plan, it would fall 42% for Black Americans, 39% for Hispanic Americans and 34% for white Americans.

Those drops aren’t unexpected. Throughout America’s pandemic year, poverty has fallen with each new stimulus package and increased unemployment benefits, according to research from economists at University of Chicago, University of Notre Dame, and Zhejiang University.

In a statement on the bill’s passage, Biden highlighted how it will reduce child poverty, and added: “This legislation is about giving the backbone of this nation – the essential workers, the working people who built this country, the people who keep this country going – a fighting chance.”

There is that one catch, though: What happens to poverty rates after the stimulus money runs out?

Read the original article on Business Insider

The $5 trillion in pandemic-era stimulus is more than triple Great Recession-era aid – and suggests a permanent shift in the way Congress spends

Biden stimulus
  • Passage of President Biden’s stimulus plan brings the total pandemic-relief bill to $5 trillion.
  • The relief packages handily surpass past measures and mark a turning point for how Congress spends.
  • Americans largely back the new approach, with 66% supporting Biden’s measure in a recent poll.
  • Visit the Business section of Insider for more stories.

The amount of fiscal stimulus used to keep the US economy afloat over the past year blows past packages out of the water. But Americans don’t seem all that worried. In fact, one could say they’re getting used to it.

House Democrats passed President Joe Biden’s $1.9 trillion relief package on Wednesday, sending the bill to the Resolute desk for a final signature. The plan’s approval brings the sum of federal aid passed during the pandemic to roughly $5 trillion, a level practically unimaginable just 10 years ago.

All three stimulus packages passed during the pandemic have each handily surpassed the largest relief measure approved during the financial crisis. When compared to even older aid measures, the pandemic-era bills are gargantuan.

The scope of the virus’s economic fallout is just one reason for the packages’ hefty price tags. Others have critiqued past plans as inadequate and urged Congress to err on the side of overspending.

Yet even adjusting for inflation, the deals passed by President Biden and President Donald Trump exist in a league of their own. And despite the swelling price tags, several recent polls suggest Americans are largely on board.

Bridging the last crisis

For comparison, stimulus passed by President George W. Bush at the start of the financial crisis totaled just $152 billion. The Troubled Asset Relief Program created soon after allocated $700 billion for buying up banks’ toxic assets. Yet only $426 billion was invested through the program.

President Barack Obama’s first major legislative accomplishment came in February 2009 when he signed the American Recovery and Reinvestment Act into law. The stimulus plan included some $831 billion in aid spread across tax cuts, expanded unemployment benefits, education funding, and aid for state and local governments.

The Obama administration at one point aimed to pass a $1 trillion bill but gave up on such plans after considering how difficult it would be to market the legislation to more moderate lawmakers, according to the former president’s memoir. Still, the approved bill was then the largest-ever stimulus package by a large margin.

But stimulus measures aren’t the only laws to boast increasingly massive price tags. The Tax Cut and Jobs Act signed by Trump in 2017 is estimated to raise the federal deficit by $1.9 trillion from 2018 to 2028, according to the nonpartisan Congressional Budget Office.

The bill included the largest ever cut to the corporate tax rate. Still, analysis by the Committee for a Responsible Budget pegs it as the eighth-largest in US history when measured as a proportion of the country’s gross domestic product.

Looking further back, it’s clear that Washington has grown more comfortable with spending swaths of cash in response to crises. Just weeks after the 9/11 terrorist attacks froze the travel industry, Congress passed a measure to extend $15 billion in relief to struggling airlines. That sum amounts to roughly $22.2 billion when adjusted for inflation.

Even New Deal policies enacted throughout the 1930s pale in comparison to the COVID-19 rescue packages. The collection of programs and laws is estimated to have cost $41.7 billion at the time, according to a 2015 study by economists Price Fishback and Valentina Kachanovskaya. That equates to about $789 billion in today’s dollars, less than Obama’s stimulus package and roughly 40% the size of Biden’s plan.

Pay now, worry later

Passage of the third major pandemic-relief bill marks a turning point in how Congress spends, but Americans are generally for the change. Two-thirds of Americans back Biden’s plan while just 25% oppose it, according to a late February poll conducted by The Economist and YouGov. That’s makes it more popular than Obama’s stimulus bill, the 2008 TARP plan, and Trump’s 2017 tax cut.

Studies of the $2.2 trillion CARES Act passed in March 2020 suggest the main tenets of the package – $1,400 direct payments and expanded unemployment benefits – will quickly lift consumer spending and accelerate growth. Americans receiving checks from the first stimulus measure immediately raised spending by $604 on average, according to research from the Federal Reserve Bank of Chicago.

Americans living paycheck-to-paycheck spent 62% of their stimulus payment in just two weeks. That compares to 35% for Americans who save most of their monthly income, the Fed researchers said. The data signals that targeting lower- and middle-income Americans with additional aid is the most efficient way to spur growth.

Wall Street is also optimistic Biden’s bill can supercharge the climb to pre-pandemic strength. Morgan Stanley and UBS lifted their growth forecasts this week, citing the plan and its size for their rosier outlooks. The plan’s passage and fast-acting effects on spending can bring US GDP to levels seen before the pandemic by the end of the month, economists at Morgan Stanley said.

To be sure, the unprecedented amount of federal spending has racked up a similarly historic bill. Federal debt was expected to reach 102% of GDP this year even before Biden’s plan was approved, the CBO said last month. The office also pegged the pre-stimulus budget deficit at $2.3 trillion, meaning the bill’s passage stands to lift the shortfall to its largest level ever.

Yet officials at the Fed aren’t immediately concerned with paying for the trillions of dollars in aid. The central bank has signaled it plans to hold interest rates near zero through 2023, ensuring that the cost the US pays to service its debt won’t rise to dangerous levels.

Chair Jerome Powell reiterated to lawmakers in February that, although the debt can’t remain at such elevated levels, Congress’s focus should remain on reviving the economy.

“I think that we will need to get back on a sustainable fiscal path,” Powell said while testifying to the Senate Banking Committee. “That’s going to need to happen, but it doesn’t have to happen now.”

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Not a single Republican in either chamber of Congress voted for Biden’s $1.9 trillion stimulus package

GettyImages mitch mcconnell
  • No Congressional Republican voted in favor of the Biden rescue plan.
  • The vote reflects the widening gulf between Republicans and Democrats on Capitol Hill.
  • It may signal early difficulties for Biden if he moves to attract GOP support for legislative proposals in 2021.
  • See more stories on Insider’s business page.

Not a single Republican lawmaker in either chamber voted in favor of President Joe Biden’s $1.9 trillion economic aid package, reflecting their fierce opposition to an early Democratic legislative priority.

The House voted 220-211 to approve the relief package in mostly party-line vote. The legislation encountered a brick wall of GOP opposition as every House Republican opposed it. Only one Democrat voted against it.

The bill’s path through the House and Senate starkly illustrates the widening gulf between Republicans and Democrats in Congress. Nearly a decade ago, President Barack Obama pushed through an $800 billion stimulus package aimed at preventing the freefall of the American economy after the financial crisis.

That measure drew some GOP support. Every House Republican voted against the bill in February 2009. However, it garnered the support of three Republican senators in the upper chamber as Democrats at the time pressed to keep the bill’s price tag in check.

Still, right-leaning experts argue now that Republicans were cut out of the negotiating process by Biden along with Congressional Democrats. Biden rejected a $618 billion stimulus counteroffer put forward by a group of 10 Senate Republicans in February.

“They were completely ignored,” Brian Riedl, a budget expert at the libertarian-leaning Manhattan Institute, said in an interview. “Democrats put out a $1.9 trillion bill barely moved an inch and there was no attempt at compromise.”

He added: “Republicans are more concerned about drawing a line in the sand, and spending money more smartly in the recession.”

Others say that Republicans are less willing to negotiate a middle ground with Democrats.

“It’s the latest indication of how polarized the Republican Party has become, despite the fact it’s overwhelmingly popular with the American people,” Jim Manley, a former senior Democratic aide, told Insider. “They were prepared to vote no.”

Democrats pushed through the legislation using a maneuver known as budget reconciliation. It allows bills to be approved in the Senate with a simple majority of 51 votes instead of crossing a 60-vote threshold.

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The $1.9 trillion stimulus bill would literally pay parents for having kids, and it could dramatically change America’s social safety net forever

family child tax credit mothers
The child tax credit, part of the stimulus bill, would give parents up to $3,600 per child.

Later this week, President Joe Biden is set to sign a $1.9 trillion stimulus bill into law that would inject a massive amount of federal cash into nearly every part of the economy. Much of that direct aid would temporarily benefit people as the nation’s economy slowly begins recovering from the pandemic.

But the legislation also plants the seeds for what could be a major transformation of the nation’s social safety net for the lowest-income Americans. The bill contains a one-year provision to dramatically expand the child tax credit, which would allow for parents to receive up to $3,600 per child.

Democrats aim to distribute this credit through monthly checks. Parents with children ages 5 and under could get a $300 payment per child, while those with kids between 6 and 16 could get $250 each month.

Some Democrats in the House and the Senate have said they will press to make it a permanent benefit program later this year. Biden told House Democrats last week he supported making the temporary beefed-up child tax credit permanent, though it’s unclear if that applies to monthly checks.

Democrats seem to be wagering that giving this credit to families for one year will be so popular that the case for making it permanent will be obvious.

There is some support on the right for this idea, too: Sen. Mitt Romney of Utah proposed a larger cash benefit for families last month.

Researchers at Columbia University projected the measure would form a key component in cutting the child poverty rate nearly in half, a statistic that Biden and other White House officials have cited repeatedly in recent days. The bill would also halve the poverty rate for Black and Hispanic children, according to the Columbia study.

If it does so, the policy may revolutionize the government’s relationship with families by offering a universal benefit to many with the potential to lift them out of poverty. That has been a key priority of Democrats for decades.

The relief package is “one of the most consequential and most progressive pieces of legislation in American history,” White House press secretary Jen Psaki said Monday.

‘Social Security for Children’

Democrats and progressives already see similarities between this child tax credit expansion and historic additions to the social safety net from the 1930s and ’60s during the presidencies of Franklin Roosevelt and Lyndon Johnson, respectively.

Rep. Rosa DeLauro of New York, the chair of the House Appropriations Committee, compared the initiative to “Social Security for children” in an interview with The New York Times – essentially another program directed at providing a basic income to a specific segment of Americans.

Chuck Marr, the director of federal tax policy at the liberal-leaning Center on Budget and Progressive Priorities, drew a comparison between the proposed program and Johnson’s push to curb poverty through his “Great Society” program. Johnson’s goal was, as he put it in his first State of the Union address, “not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it.”

Marr told Insider if the child tax credit became permanent, “it becomes a landmark achievement.”

Current law prevents many of the poorest families from tapping into the child tax credit that the federal government offers. The maximum amount for families with small tax bills is $1,400, and nearly one-third of children live in families with earnings too low to qualify. The stimulus would make this tax credit fully refundable instead, meaning households could receive cash even if they had no tax obligations – but only for the duration of 2021.

If the child tax credit became a permanent fixture in the US economy, America would move closer to many Western European countries, including Germany and Sweden, which have a universal child benefit. Canada and Australia also have generous tax-free child benefit programs that phase out for top earners.

A permanent child tax credit along the lines of the stimulus would be on par with Luxembourg’s family allowance, which offers a standardized monthly amount of $313 per child (this increases slightly at ages 6 and 12). It would be higher than Denmark’s $732 quarterly allowance for children ages 0 to 2 and $151 monthly allowance for those ages 15 to 17.

The other countries that offer such programs typically have lower child poverty. Denmark, which spends 20.9% of its GDP on social programs, has a child poverty rate of 2.9%, according to the Economic Policy Institute.

As of 2019, the US child poverty rate was 14.4%.

Read the original article on Business Insider

Democrats may be about to change the relationship of families to the government forever

family child tax credit mothers
The child tax credit, part of the stimulus bill, would give parents up to $3,600 per child.

Later this week, President Joe Biden is set to sign a $1.9 trillion stimulus bill into law that will inject a massive amount of federal cash into nearly every part of the economy. Much of that direct aid will temporarily benefit individuals as the nation’s economy slowly begins recovering from the pandemic.

But the legislation also plants the seeds for what could be a major transformation of the nation’s social safety net for the lowest-income Americans. The bill contains a one-year provision to dramatically expand the child tax credit, allowing for parents to receive up to $3,600 per child.

Democrats aim to distribute this credit through monthly checks. Parents with children aged 5 and under could get a $300 payment per child, while those with kids between 6 and 16 could get $250 each month.

Some Democrats in the House and the Senate have said they will press to make it a permanent benefit program later this year. Biden told House Democrats last week he supports making the temporary beefed-up child tax credit permanent, although it’s unclear if that applies to monthly checks.

Democrats seem to be wagering that giving this credit to families for one year will be so popular that the case for making it permanent will be obvious.

There is some support on the right for this idea, too: Sen. Mitt Romney of Utah proposed a larger cash benefit for families last month.

Researchers at Columbia University project the Biden measure would form a key component in cutting the child poverty rate nearly in half, a statistic that Biden and other White House officials have cited repeatedly in recent days. The bill would also halve the poverty rate for Black and Hispanic children, per the Columbia study.

If it does so, the policy may revolutionize the government’s relationship with families by offering a universal benefit to many with the potential to lift them out of poverty. That has been a key priority of Democrats for decades.

The relief package is “one of the most consequential and most progressive pieces of legislation in American history,” White House Press Secretary Jen Psaki said Monday.

‘Social Security for Children’

Democrats and progressives already see similarities between this child tax credit expansion and historic additions to the social safety net from the 1930s and 1960s, in the presidencies of Franklin Roosevelt and Lyndon Johnson, respectively.

Rep. Rosa DeLauro of New York, the chair of the House Appropriations Committee, compared the initiative to “Social Security for children” in an interview with The New York Times – essentially another program aimed at providing a basic income to a specific segment of Americans.

Chuck Marr, director of federal tax policy at the liberal-leaning Center on Budget and Progressive Priorities, drew a comparison between the proposed program and Johnson’s push to curb poverty through his “Great Society” program. Johnson’s aim was, as he put it in his first state of the union address, “not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it.”

Marr told Insider that if the child tax credit becomes permanent, “it becomes a landmark achievement.”

Current law prevents many of the poorest families from tapping into the child tax credit that the federal government offers. The maximum amount for families with small tax bills is $1,400, and nearly a third of children live in families with earnings too low to qualify. The stimulus makes this tax credit fully refundable instead, meaning households could receive cash even if they have no tax obligations – but only does so for the duration of 2021.

If the child tax credit becomes a permanent fixture in the US economy, America would move closer to many Western European countries, including Germany and Sweden, which have a universal child benefit. Canada and Australia also have generous tax-free child benefit programs that phase out for top earners.

A permanent child tax credit along the lines of the stimulus would be on par with Luxembourg’s family allowance, which offers a standardized monthly amount of $313 per child (this increases slightly at ages 6 and 12). It would be higher than Denmark’s $732 quarterly allowance for children ages 0 to 2 and $151 monthly allowance for those ages 15 to 17.

The other countries that offer such programs typically have lower child poverty. Denmark, which spends 20.9% of its GDP on social programs, has a child poverty rate of 2.9%, per the The Economic Policy Institute.

As of 2019, the US child poverty rate was 14.4%.

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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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The COVID-19 relief bill includes $5 billion in aid for farmers of color who have long faced discrimination by federal officials

Black farmer depiction
A steel cutout depicting a 19th-century Black farmer rises from a field across the highway from the small community of Nicodemus, Kansas.

  • The COVID-19 relief bill hasĀ a $5 billion provision that will forgive debts for farmers of color.
  • Democratic Sen. Raphael Warnock of Georgia led the push for the inclusion of the funding.
  • Farmers of color, and especially Black farmers, faced years of discrimination by federal officials.
  • Visit the Business section of Insider for more stories.

For over a century, Black farmers faced discrimination from the US Department of Agriculture and were largely excluded from federal loans and farm improvement initiatives.

In an effort led by Democratic Sen. Raphael Warnock of Georgia, the $1.9 trillion COVID-19 relief bill that passed on Saturday includes a $5 billion provision that will forgive debts for Black, Hispanic, Indigenous, and other farmers of color, to enable reforms that will assist farmers with building generational wealth.

Last week, Warnock, Georgia’s first Black senator, praised the incorporation of the Emergency Relief for Farmers of Color Act into the COVID-19 bill.

He said that Democrats sought to “ensure equity in our recovery efforts and address longstanding injustices that have left some communities behind for far too long” and pledged that the aid “will not only help farmers of color, but will also lift up the economies of our rural communities working to recover from the economic turndown,” according to Rolling Stone.

Due to systemic racism from both private lenders and government officials, many Black farmers did not have set deed structures that allowed for properties to be passed down in whole, which created fractional ownership setups.

Sen. Debbie Stabenow of Michigan, chairwoman of the Agriculture Committee, strongly backed the effort, lauding Warnock for “coming in and and working to embrace this and get it over the line right away,” according to Rolling Stone.

In 1910, 14% of farmers in the US were Black, compared to 2% today, something that Stabenow highlighted.

“When you look at one of the very first ways that there was racial discrimination after slavery was legally abolished, it was lack of support for black farmers,” she said, adding that they “were discriminated against in terms of land ownership.”

Last year, Democratic Sen. Cory Booker of New Jersey introduced “The Justice for Black Farmers Act,” which would allow Black farmers to individually reclaim 160 acres through a system of land grants to address racial discrimination in federal agricultural policy.

“Overtly discriminatory and unjust federal policy has robbed Black families in the United States of the ability to build and pass on intergenerational wealth,” he said in a statement. “When it comes to farming and agriculture, we know that there is a direct connection between discriminatory policies within the USDA [US Department of Agriculture] and the enormous land loss we have seen among Black farmers over the past century.”

Booker reintroduced his bill last month with cosponsors Warnock, Sens. Elizabeth Warren of Massachusetts, Kirsten Gillibrand of New York, Tina Smith of Minnesota, and Patrick Leahy of Vermont.

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