President Joe Biden and Congress are eager to provide additional relief to Americans that continue to struggle financially during the Covid-19 pandemic. Details of a roughly $1.9 trillion package are being negotiated by Democrats and Republicans, with the hope of having a bill finalized by mid-March 2021.
Negotiations were slowed by the impeachment trial of former President Donald Trump; nevertheless, news outlets have been busy reporting opinions obtained from legislators and their advisors. It has been widely reported that the following issues will likely be addressed in the third stimulus package. Here’s what they might mean to you and your finances.
$1,400 stimulus checks. Despite protestations from some Republicans, Biden and Democrats are determined to deliver these checks to taxpayers by the end of March. Income limits are expected to be the same as under the second stimulus bill, but terms are still being negotiated. It seems likely dependent adults and college-age adults that were excluded previously will receive funds this time around.
Increase and extension of unemployment benefits. Discussions related to unemployment benefits have been contentious. As previously mentioned, the $600 supplemental benefits provided under the CARE Act were very controversial. Similar payments of $300 are being paid under the Appropriations Act, and Democrats are seeking to have $400 supplemental payments included in the third package. Extension of benefits is also a subject of debate. Some would like to see benefits extended until late-August, while others would like to see benefits extended through the end of the fiscal-year (Sept. 30).
Increased minimum wage. There continues to be talk of pushing the national minimum wage to $15/hour. Progressives propose implementing the increase from $7.25/hour to $15/hour between now and 2025. Many factions argue such an increase could cripple small businesses. Recognizing the importance of this debate, Biden has conceded he is willing to delay resolution of the minimum wage discussion.
Funding for schools. It is likely the third stimulus package will deliver over $150 billion of funding to schools. It seems the overriding goal is to get kids back to school. Among other things, the funds would be used for investments in school facilities and personnel to help students make up for what they missed while being out of school during the pandemic.
Help for parents. The stimulus package is likely to include provisions that will further enhance the Child Tax Credit and provide assistance to people paying for childcare. (The child tax credit currently provides a credit of up to $2,000 per child under age 17.)
Relief for states and localities. The bill will likely provide hundreds of billions of aid to state and local governments that have been hard hit during the pandemic. The funds would help make up for lost revenue and increased expenses resulting from Covid-19. It is also expected that public transit systems with receive aid.
Expansion of paid leave benefits. The bill will require businesses to provide pay benefits to employees impacted by Covid-19 when they miss work. Unlike traditional sick pay, employees will receive pay not only if they are suffering from Covid-19, but if they are required to miss work to attend the needs of a variety of other people.
Student loan cancellation. The debate around student loan cancellation rages on. Progressives seek cancellation of up to $50,000 of education-related debt. Biden will settle for $10,000. Many groups continue to oppose it altogether. Whether it will be part of this stimulus package is unknown.
This third stimulus package and its provisions play a central role in Biden’s proposed American Rescue Plan, which aims to speed up the United States’ recovery from the economic and health effects of the Covid-19 pandemic and the ongoing recession.
To learn more about the stimulus packages, read Rob Lane’s previous article, COVID Stimulus, Part Two: The Consolidated Appropriations Act.
Rob Lane, CFP is a financial advisor who believes that facts, process and solid decision-making go hand in hand. Investing is easy when markets move higher; Rob encourages people to trust process and the strength of their trusted relationships for confidence when markets fluctuate. He has a passion for law and politics and earned a J.D. and MBA from Gonzaga Schools of Law and Business.
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