On January 14, President Joe Biden proposed the American Rescue Plan, a $1.9 trillion COVID-19 response package that would include additional direct stimulus payments to individuals, an increase in the minimum wage, additional grants and loans for small businesses, and fund OSHA programs and issuing national workforce safety guidelines. This proposal, which is unlikely to pass in this exact form, would build upon Congress’s $4 trillion in coronavirus relief packages passed since March. The White House and Congress are shooting to have a package wrapped up by March 14 when the current unemployment benefits expire.
The American Rescue Plan is a really ambitious proposal with a tight path to being implemented. It is likely that this would need to be passed through a legislative maneuver called Budget Reconciliation which would avoid a filibuster, and only need 51 votes in the Senate to pass. More on this below.
Other items in this proposal include:
- $350 billion for State and Local Governments
- $35 billion for state, local, tribal, and nonprofit programs to finance as much as $175 billion in low-interest loans and venture capital funds for small businesses
- $15 billion for small business grants
- Increase the federal minimum wage to $15 per hour, up from $7.25. It is not clear that this provision could be passed through reconciliation.
- Authorizes OSHA to issue standardized worker protections from COVID-19
- Hazard pay for frontline essential workers, including back payments for 2020
- Increase unemployment benefits to $400, up from $300 weekly payments, through September 2021 which are set to expire on March 14.
- Restore and extend through September 30 emergency paid leave requirements that expired December 31, 2020. Exemptions for employers with more than 500 and fewer than 50 employees would be eliminated. More info on the program here.
- More than 14 weeks of paid sick and family and medical leave for COVID-19 related reasons, with businesses with fewer than 500 employees receiving a payroll tax credit. Exemptions for employers with more than 500 and fewer than 50 employees would be eliminated.
- Additional $1,400 for direct payments to individuals, including adult dependents.
- $100 billion for health initiatives including expanding testing, supplies purchasing, and a national vaccination program.
So, what is budget reconciliation?
Reconciliation was created out of the Congressional Budget Act of 1974 to address concerns with a growing federal deficit. Not everything can be passed through this process however, and the parts that can be included would be subject to different constraints as part of the Byrd Rule, which limits what kind of policies can be included.
This process consists of two parts. The first part begins with a resolution “vehicle” directing House and Senate budget committees to draw up a legislation, a budget resolution, to set parameters on what can be passed via reconciliation, and by how much final bill is able to reduce or increase the federal deficit.
The second is the actual budget reconciliation, which must somehow change federal spending or revenue, like raising or lowering taxes, expanding health care subsidies, and infrastructure project funding. Once the bill reaches the Senate floor it cannot be filibustered, and is subject to 20-hours of debate. Any Senator can propose amendments during a “vote-a-rama” where amendments are introduced, explained, and subject to a 10-minute vote.
Some examples of reconciliation being used were for the 1980s Reagan-era spending cuts, the Bush-era tax cuts in 2001 and 2003, the Affordable Care Act, and the 2017 Trump-era tax cuts. In 2017 we saw more than 700 proposed amendments to the tax cuts. We are hearing that we can expect more than 1,000 amendments this time around. The majority of these are just messaging pieces and would not receive a vote. Many priorities, like the minimum wage increase, could be knocked out by a Byrd Rule challenge during this process.
The House and Senate Budget Committees are expected to prepare the initial budget “vehicle” the first week of February. Because of the massive scope of this package, it’s likely that other committees will be pulled in to work on parts of this. From there, it will take a few weeks to get the bill put together and will likely run up to the first couple weeks in March, putting it right up against the last stimulus’s expiration yet again.
It is possible that this package could be passed as-is, but it is wiser to view this as a list of priorities from the Biden administration. With such slim majorities in the House and Senate, the bipartisan Problem Solvers Caucus in the House, and a group of bipartisan Senators dubbed the “Senate Sweet 16” will hold significant influence on how this package actually shakes out.
