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The House on February 27 approved 219-212 a budget reconciliation bill (H.R. 1319) reflecting President Biden’s $1.9 trillion COVID relief plan, sending the bill to the Senate for consideration. The American Rescue Plan Act would provide direct payments, a child tax credit expansion in the form of direct payments, an international tax change, extended unemployment benefits, COBRA subsidies and ACA tax credit enhancements, relief for pension plans, state & local funding, and other provisions. Two Democrats voted against the bill (Reps. Golden D-ME and Schrader D-OR) and no Republicans voted in favor.
The House bill includes a minimum wage increase to $15/hour, but the Senate Parliamentarian’s ruling that the provision violates budget reconciliation rules means it is likely to be stripped out by the Senate, where Democratic leaders are considering alternatives like imposing a tax penalty for corporations that don’t pay $15/hour or another amount. Other provisions being evaluated for compliance with budget reconciliation rules include COBRA subsidies and multiemployer pension provisions, and language on child tax credit payments to be sent out by the IRS was changed to comply with the rules.
If the House bill is changed by the Senate, a conference process to resolve differences may be necessary or, at the very least, another House vote on the final version will be required before the President’s signature. Other potential changes include steering more of the House bill’s $350 billion in state and local government funding toward broadband investment, as some Senate Democrats want. Democrats want the bill enacted before pandemic UI programs expire March 14, after which President Biden is set to outline his next major bill with infrastructure as the focus.
The Congressional Budget Office has confirmed in a letter to House Minority Leader Kevin McCarthy (R-CA) that the relief package would trigger mandatory cuts to Medicare of $36 billion and as much as $90 billion in other programs due to statutory Pay-As-You-Go (PAYGO) requirements. The cuts would take effect within 15 days of the end of the Congressional session barring the enactment of subsequent legislation that would offset the deficit increase, waive the bill’s effect on the PAYGO scorecard, or otherwise mitigate or eliminate the PAYGO requirements.
Some provisions of the House bill are described in brief below.
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