Here comes yet another $2 trillion in economic relief directly on the heels of last month’s nearly $1 trillion package. For those keeping score, that’ll bring the official tally to roughly $5 trillion spent to combat Covid.
President-elect Biden unveiled an outline of his economic recovery plan last week. With majority control of both the House and the Senate, we should expect semi-swift passage. Here’s a rundown of the major things we can expect to see.
To begin, with $600 payments now just landing in the bank accounts of about 250 million adults and children, it looks like this will be topped off to $2,000 per person. Given the very broad reach of these payments – which will be received by approximately 75% of adults and children – it is probably safe to say the main goal is to encourage consumer spending, rather than helping those most in need.
To address those most in need, Biden’s plan also aims to further enhance unemployment benefits for the current 19 million people who continue to struggle to find ample safe or steady work. Just before Christmas and after many months of intense negotiation, Congress recently agreed to add $1,200 per month to regular state-based unemployment benefits. If Biden’s plan becomes law, we should expect this to increase again to $1,600 per month and push the benefit period out another six months to September.
Biden’s plan also seeks to help those with children. Currently, almost all families receive a $2,000 tax credit for each child under the age of 17. The proposed plan is to increase this to $3,000 per child. Biden has also proposed making these child tax credits fully, rather than partially, “refundable.” That’s just a fancy word that means eligible families would get a check for the full $3,000 per child, even if they actually owed zero federal tax.
Biden also wants to expand the tax credit designed to help defray the high cost of childcare. Families currently receive a tax credit between 20% and 35% of childcare expenses. The current credit can reach as high as $3,000 per child with a family maximum of $6,000. The proposal is to expand the credit to $4,000 per child, subject to a maximum of $8,000 per family. And, unlike the current tax law, he also wants to make these childcare tax credits “refundable”, as well.
Among other proposals, Biden’s goal is to establish a multi-year transition to a national minimum wage of $15 per hour. This proposal would affect workers and businesses in some states more than in others. Additionally, Biden hopes to provide bigger health care premium subsidies for those who use the Affordable Care Act to gain coverage.
Oh, I almost forgot to mention the growing talk of student loan debt relief up to $10,000 per borrower. So, the next time your kids or grandchildren question the impact of their vote, just remind them of the two Georgia run-off elections!