(CBS Detroit) — The third stimulus check is already starting to reach bank accounts. But the $1.9 trillion economic relief package, which President Biden signed into law last Thursday, includes a lot more than a $1,400 payment. The American Relief Plan attempts to ease the economic pain brought on by the ongoing COVID-19 pandemic. It contains programs that support struggling families, communities and small businesses, and fight the spread of COVID through testing, tracing and vaccinations. Some of these efforts may also put more money in your pocket.
Exactly how much money depends on your financial situation. The programs and the rules surrounding them have changed somewhat from the last two stimulus packages. When that money arrives is more a function of how implementation plays out in the coming days and weeks.
Here’s what’s in the stimulus package.
Third Round Of Stimulus Checks
Given the $1,200 last spring and $600 this winter, a third payment seemed imminent if the economy continued to falter. The $1,400 number came about after former President Trump requested a $2,000 payout rather than the then-pending $600. Democrats quickly backed the larger amount, passing a bill in the House that would more than triple the second stimulus check. Republican Senators David Perdue and Kelly Loeffler, who were embroiled in close runoff elections in Georgia, also supported the increase.
A larger second stimulus check never came to pass, but the number stuck. And when Democrats Jon Ossoff and Raphael Warnock won those two January elections, tilting control of the Senate to their party, the effort gained some momentum. Democrats soon held the presidency and both houses of Congress and pushed through a third stimulus.
While $1,400 is the topline number, some people are receiving less or more, depending on their income and dependents.
The previous two stimulus checks phased out for individuals with an adjusted gross income (AGI) over $75,000 per year and married couples with an AGI over $150,000. (AGI is the total of one’s wages, interest, dividends, alimony, retirement distributions and other sources of income minus certain deductions, such as student loan interest, alimony payments and retirement contributions.) For every dollar of income over the threshold, the previous two stimulus payments decreased by five percent. So the $1,200 CARES Act payment shrank to $0 for incomes over $99,000 ($198,000), and the $600 second stimulus shrank to $0 for incomes over $87,000 ($174,000).
In early February, Democratic Senator Joe Manchin and Republican Senator Susan Collins of Maine proposed an amendment aimed at “targeting economic impact payments to Americans who are suffering from the effects of COVID–19, including provisions to ensure upper-income taxpayers are not eligible.”
The income threshold doesn’t change in the American Relief Plan. But the phase out happens much more quickly. So while the AGI to receive the full stimulus remains at $75,000 ($150,000), those earning $80,000 ($160,000) or more receive nothing. The phase out progresses at a constant rate — in this case, 32 percent. That means people receive $.32 less for every $1 they earned over the limit.
Those with older dependents could see more money. A dependent was defined as anyone under the age of 17 living in your household the last time around. The American Rescue Plan expands the pool of eligible dependents to include those over the age of 16. In that group is college students and older adults with certain kinds of disabilities. This change makes an estimated 13.5 million additional people eligible for stimulus payments, with up to $1,400 more per dependent going to the eligible taxpayer. Dependent stimulus payments are added to the taxpayer’s total and phase out at the same rate.
Other Assistance To Families
A third relief payment will account for about $422 billion of the $1 trillion or so meant to assist families. But some small portion of the remaining money could find its way into your pocket as well. Assistance to families also includes extended unemployment benefits, a more generous child tax credit, and more.
The current weekly federal unemployment insurance bonus of $300 expired on March 14. The American Rescue Plan extends it through Labor Day. Recipients with household incomes below $150,000 will not have to pay taxes on the first $10,200 in unemployment benefits. Those eligible for Pandemic Emergency Unemployment Compensation (PEUC), which covers people who have used up their state benefits, and Pandemic Unemployment Assistance (PUA), which covers freelancers and gig workers, will also see their benefits extended through early September. PEUC runs out after 53 weeks. PUA expires after 79 weeks.
Under the revised Child Tax Credit, the Internal Revenue Service (IRS) will pay out $3,600 per year for each child up to five years old and $3,000 per year for each child ages six through 17. Payments will be issued automatically on a periodic basis from July to December of 2021, with the remainder issued when the recipient files their 2021 taxes. (Many expect that “periodic” will actually mean monthly or possibly quarterly, but the IRS still has to determine that.) The benefit will not depend on the recipient’s current tax burden. In other words, qualifying families will receive the full amount, regardless of how much — or little — they owe in taxes. Payments will start to phase out beyond a $75,000 annual income for individuals and beyond $150,000 for married couples. The more generous credit will apply only for 2021, though Democrats will probably look to extend it.
The child and dependent care tax credit also becomes more generous. The value of the credit amounts to $4,000 for one child or $8,000 for two or more children. At a household AGI of $125,000, those amounts will start to decline. The credit currently maxes out at $2,100 and covers no more than about one-third of eligible expenses. It starts to phase out at an AGI of $15,000.
The American Relief Plan includes other money-saving programs that could benefit large numbers of Americans. The stimulus package provides another $27 billion in rental assistance and $10 billion in mortgage assistance. Those who lost jobs and have resorted to buying health insurance through COBRA will see Uncle Sam pay their premiums from April through the end of September. The cost of health insurance bought through a government exchange will be capped at 8.5 percent of a person’s AGI.
An extension the Supplemental Nutrition Assistance Program (SNAP) bonus is also part of the American Rescue Plan. The additional 15 percent in SNAP benefits provided by the second stimulus package is also extended from June to September. The 15 percent bonus provides about $27 more in food assistance per person per month, or over $100 for a family of four.
The $15 minimum wage, which was part of the stimulus package proposed by the President and first passed by the House, was not part of the final version.
The Rest Of The Stimulus Package
There’s a lot more to the economic relief package than stimulus checks and other aid to families. The American Rescue Plan also includes hundreds of billions of dollars to help communities and small businesses and hundreds of billions more to stop COVID and bolster the vaccination effort.
States and localities have been hit hard by declines in tax revenue, with 26 Democrat and Republican-led states experiencing budget shortfalls. Since most states are required by law to balance their budget, public jobs and services have been cut. As of mid-February, approximately 1.3 million state and local government jobs were lost, mostly in education. A budget shortfall could also necessitate a rise in taxes. With the allotted $360 billion, states and local governments can address this key area of need. This part of the plan also features $30.5 billion for transit systems, $15 billion for airlines, and $10 billion for critical infrastructure. Restaurants, one of the most hard-hit industries during the pandemic, receive $25 billion.
The best way to return the economy to some semblance of normal is to minimize the threat people face when resuming their pre-pandemic lives. That requires a bulked-up COVID response. To that end, over $76 billion is going toward vaccines and testing. That includes almost $48 billion to continue national testing and tracing, $15 billion to better distribute and administer vaccines, $6 billion to improve research and development and $1 billion to raise awareness.
Schools also receive $128 billion to help with reopening efforts, with another $39 billion set aside for colleges and universities. The bill reestablishes the requirement that employers provide paid leave to those who catch COVID and/or must quarantine and makes it easier to purchase individual health insurance.
Why Another Stimulus Package Is Still Needed
The economy shrank by 3.5 percent in 2020, the largest single-year decline since the end of World War II. Weekly unemployment figures remain historically high, with approximately 712,000 people initially applying for unemployment insurance in the first week of March. (For reference, a typical pre-pandemic week saw about 250,000 new unemployment applications.) An additional 478,000 sought Pandemic Unemployment Assistance.
Approximately 20 million people were receiving unemployment benefits of one kind or another as of late February. That’s about one out of every nine workers. While the official unemployment rate is 6.2 percent, the actual rate is probably closer to 10 percent, given all the people who have dropped out of the labor force. On the bright side, employers added another 379,000 jobs last month.
An economic bounceback depends on the widespread distribution of a COVID vaccine. And efforts to inoculate the public are improving. Shortages and winter weather had forced some areas to temporarily close vaccination centers and scale back administering the vaccine. Many who qualify had faced problems in scheduling appointments. Nevertheless, Americans have received over 109 million doses, with 21.4 percent of the population having received at least one dose and 11.5 percent completely vaccinated. Vaccination numbers continue to increase at a rate of about 2.4 million doses per day.
The Food & Drug Administration recently authorized Johnson & Johnson’s one-shot vaccine, with millions of doses already shipped. Biden has recently stated that the country will have enough doses to vaccinate all Americans by May. Actually putting needles in arms will likely take longer. Mask-wearing and a general lack of normalcy could continue into 2022. Currently, domestic COVID cases are nearing 29.5 million, while deaths have climbed past 535,000.
Originally published on Monday, March 1 @ 12:53 p.m. ET.
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