With the $600 Covid-19 stimulus checks passed by the previous administration already running dry for most Americans, President Joe Biden’s proposal of $1,400 COVID-19 stimulus checks could be coming your way.
While the initial $600 was supposed to be $2,000 according to many House Democrats, the Biden administration is trying to make good on that promise by purposing an additional $1,400 in Biden’s American Rescue Plan. And many experts believe that this plan – or a trimmed down version of it – can pass through both the House and the Senate as soon as mid-to-end March.
In its current form, the American Rescue Plan is evaluated at around $1.9 billion but may get reduced to anywhere between $1-1.5 billion in the 50-50 split Senate. That being said, the $1,400 stimulus payments seem guaranteed to remain as they are lauded as “non-negotiable” in the plan.
Why would it take so long?
“Mid-to-end March” is relatively close from a political point of view but it’s also “a lifetime away” for many struggling Americans. So why can’t it happen sooner? It’s the tax-payers money after all, why do they have to wait that long to have it back?
Before the money can end up in people’s mailboxes or bank accounts, Biden’s plan must first pass through both the House and the Senate. And while the Democrats have a very clear majority in the House and are expected to pass the bill within the week, negotiations in the Senate can take a bit longer.
Currently, the two political parties are split evenly in the Senate with 50 senators for each. In the event of a tie, Vice-President Kamala Harris can break the tie in favor of Democrats by casting an additional vote.
The problem is that for the bill to pass in any format, the democrats need a 60-40 majority and not a 51-50 one. Given that it’s even possible for a democrat or two to break ranks, for the full bill to pass many Republicans will have to vote in favor. That’s why economists expect the bill to be trimmed down to $1,-1.5 billion.
There’s good news, however – even if Republicans refuse to pass the bill or delay it too long, the Democrats can use the Senate budget reconciliation process to pass the $1,400 stimulus checks as a separate emergency measure.
What is the Senate budget reconciliation process?
Budget reconciliation is a long-standing rule in the U.S. Senate that allows the chair of the Senate Budget Committee to initiate votes on specific budgetary issues. These votes are unique in that they only require a 51-50 majority to pass – a feat that’s more than achievable for Senate Democrats.
And given that the current chair of the Senate Budget Committee is none other than Vermont Senator Bernie Sanders, the reconciliation process is guaranteed to take place if Senate Republicans try to slow down the American Rescue Plan vote.
“Reconciliation, which is a Senate rule, was used by the Republicans under Trump to pass massive tax breaks for the rich and large corporations… that’s fine,” said Senator Bernie Sanders on Sunday. “We are going to use reconciliation… we’re going to do it to protect ordinary people, not just the rich and the powerful.”
Who would benefit from the $1,400 stimulus checks?
The checks will be received by any individual who’s earning $75,000 or less annually, including “child dependants,” i.e. children under the age of 17. You can read the details on who qualifies for this round of stimulus here.
People who make more than $75,000 will still receive stimulus checks too but for reduced sums – the higher a person’s salary is, the lower the stimulus checks. People who earn more than $99,000 per year will not receive any stimulus.
In addition to that, the full $1.9 trillion plan also includes additional funds for small businesses hit by the pandemic and quarantine restrictions, such as an increase to unemployment benefits from $300 to $400 per week, funds for Covid-19 vaccinations and testing, as well as a mandate to raise the national minimum wage to $15 per hour.
Any of these may be dropped or trimmed down during negotiations with Senate Republicans, unfortunately, with the exception of the $1,400 which can be passed through budget reconciliation.
Even just those $1,400 are expected to have a drastic effect on the economy, however. According to a recent study published in the Institute on Taxation and Economic Policy, a $2,000 stimulus check (the current $1,400 plus the recent $600) can give ~60% of Americans (those with an annual house income of less than $65,000) an average income boost of 11%. The bottom 20% of Americans (those with an annual house income of less than $21,300) would see their average income boosted by 29%.