We’ve previously discussed the President’s $1.9 trillion proposal for the next round of relief, and Congress is prepared to forge ahead with that proposal using a process called budget reconciliation that would allow them to avoid a filibuster. A group of ten Senate Republicans led by Susan Collins has offered the President a counter-proposal that would cost less than a third and put the nation in the same economic recovery position by summer as the President’s proposal.
One point of deliberation has been income limits for $1,400 stimulus checks to individuals. These Republican senators are proposing those would be best to target to those needing them most, which data suggest is those earning up to $40K ($80K filing jointly, and phasing out completely at $50K/$100K). The result would be a cost of $220 billion instead of over $600 billion for this one provision alone. The President is not against imposing a lower income threshold for direct payments to individuals, but he has a much larger wish list of provisions he’d like included, some of which probably cannot be accommodated via the strict budget reconciliation process (for example, a $15/hr minimum wage might not be possible with budget reconciliation). Potentially having 10 Republican votes is what could make the difference between Democrats having to use the complicated and limiting budget reconciliation process vs. having a filibuster-proof majority, so these discussions are particularly intriguing.
Below is a table of some prominent provisions of Biden’s American Rescue Plan compared with the counter-proposal.
||Biden American Rescue Plan
|Counter-Proposal from 10 Republican Senators
|Emergency paid leave
||Fresh 14 weeks of EPSL/EFML, with some substantial changes||No new leave protections|
||$15 per hour, including elimination of sub-minimum wage for tipped staff and employees with disabilities||No changes proposed|
|Unemployment||Extend through Sept 30 with $400/wk enhancements, plus auto-extensions if pandemic continues||Extend through June 30 with $300/wk enhancements|
||Available through Sept 30||No COBRA subsidy proposed|
|Exchange premium tax credits
||Increase premium tax credits||No changes proposed|
||Impose new emergency COVID-19 standards that apply even to those not typically covered by OSHA, with extra funds for enforcement||No changes proposed|
|Direct payments to individuals
||$1,400 per adult and child (not limited to children <17 this time), using previous $75K/$150K thresholds that phase out completely at $99K/$198K (but strong consideration is being given to lower this to income thresholds proposed by Republican senators)||$1,000 per adult, using $40K/$80K income thresholds that phase out completely at $50K/$100K|
|Dependent care tax credit
||50% refundable credit $4K ($8K for 2+ children), phasing out at $125K||No changes proposed|
|Child tax credit
||Fully refundable this year
Increase to $3,600 for age <6 and $3,000 until age 17 instead of 16
|No changes proposed|
|State and local governments||$350 billion||No funding proposed|
IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.
This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.