StimulatingMarch 10, 2021 -
Categorized in: IAG News
Today the U.S. House of Representatives is likely to approve the latest stimulus package to offset COVID-induced economic shutdowns. It is now on its way to President Biden’s desk for signature into law.
While previous bipartisan stimulus packages have passed with overwhelming majorities in both the House and Senate, this latest $1,900,000,000,000 version barely passed along strict party lines.
What is the difference between this more contentious stimulus package and previous popular ones?
In reading through the bill, I found the following:
Some provisions draw on similar themes:
- Providing $1,400 per person “recovery rebates” to qualifying taxpayers (income under $75,000 if filing singly or $150,000 filing jointly).
- Extending $300 per week supplemental federal unemployment benefits (this time through September).
- Making the first $10,200 of unemployment benefits for 2020 tax-free if income is under $150,000.
- Allocating around $90,000,000,000 for COVID-related activities such as vaccine distribution, Defense Production Act activities, helping health care providers, and increasing the public health workforce.
- Extending increased Supplemental Nutrition Assistance Program benefits through September.
- Funding housing assistance programs
Other aspects of the bill have less unanimous support:
- Sending over $200,000,000,000 to state and local governments regardless of whether their tax receipts have risen or fallen.
- Letting COVID recovery funds expire in September 2021, but hundreds of billions of dollars for non-COVID-related programs that extend beyond 2021. The Congressional Budget Office estimates over $240,000,000,000 of these funds will not be spent until 2023 to 2028).
- Choosing not to target aid to people or state/local governments in need where it will make the biggest difference, but instead distributing funds regardless of need.
- Shifting the focus from helping the private sector recover to funding or expanding federal government programs.
The good news for investors is that this bill did not include any tax increases. The cost will simply be added to our country’s $28,000,000,000,000 debt.
It is possible that there will be two additional reconciliation bills making their way through Congress within the next 18 months. Current indications are that an infrastructure-focused reconciliation bill may be in the works for this summer or fall and an additional reconciliation bill is likely in mid-2022.
As always, we will keep our eyes and ears open for legislative changes that could impact your long-term financial plan.
Quote of the week: Rahm Emanual: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.”
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