The $1.9 trillion rescue bill passed by the Senate this morning provides a wide range of critical improvements to the social safety net and aid to small businesses. It also provides funds for state and local governments, many of which have been ignored while our attention has been focused on debates about raising the minimum wage and the level at which unemployment benefits and individual payments are set.
Most notably, the legislation takes a major step forward in making health insurance through the ACA more affordable and includes a welcome expansion of child tax credits, which for the first time would give low- and moderate-income families in our country the kind of support that can be found in many other countries.
And, at one stroke, the legislation would ensure that state and local governments and school districts could all overcome the revenue shortfalls created by the pandemic and meet the challenges it has created in our communities.
This legislation is bold and far-reaching. It would restore our economy to health and take a necessary and long-delayed step forward in overcoming the inequities that the pandemic has revealed to all of us.
Individual Payments
The Senate bill would provide payments of up to $1,400 to families with an income of less than $160,000 per year and to individuals with an income of less than $80,000 per year.
Unemployment Insurance
People who are unemployed would get $300 more than their regular weekly unemployment benefits through September 6. Freelancers, gig workers, and independent contractors would continue to receive unemployment insurance during that time. Provisions that increase the duration of payments for those in the traditional state unemployment system would continue as well. The first $10,200 of unemployment payments would be tax-free for households with annual incomes less than $150,000.
Health Care
The legislation includes a major expansion of the Affordable Care Act, including subsidies for health insurance on the exchanges / marketplace for two years. Democratic leaders plan to continue the subsidies after that time.
Individuals and families would now pay no more than 8.5% of their income towards coverage, down from the current amount of nearly 10%. Also, those earning more than the current cap of 400% of the federal poverty level—about $51,000 for an individual and $104,800 for a family of four in 2021—would become eligible for help for the first time. Subsidies for lower-income individuals and families would be increased, in many cases eliminating their premiums entirely. People collecting unemployment benefits would pay no premiums in 2021.
The Senate legislation also provides more generous assistance to those who lost their jobs but want to remain on their employer health insurance plans through COBRA. These laid-off workers would not pay any premiums through the end of September.
Food Assistance
Those who receive food stamps would continue to receive a 15% increase in benefits, which had been scheduled to lapse in June, through September. The families of children whose schools are closed would be able to receive benefits that replace free and reduced-price meals through the summer if their state opts to continue it. In Pennsylvania, 1.8 million SNAP recipients would get an average increase of $27 a month, adding $50 million per month in total food assistance.
Housing
Funding in the amount of $20 billion would go to state and local governments to help low-income households cover back rent, rent assistance and utility bills.
For homeowners, $10 billion would help those who have difficulty paying their mortgages, utilities, and property taxes.
States and localities would receive $5 billion to assist those at risk of experiencing homelessness and an additional $5 billion for emergency housing vouchers for those who are currently homeless.
Children
The legislation includes a major expansion of the child tax credit. It would give low-income families $3,600 for each child under age 6 and $3,000 for each one under age 18, up from the current credit of up to $2,000 per child under age 17. The child tax credit would become fully refundable, so very low-income parents would receive benefits. And households could receive payments monthly, rather than in a lump sum once a year, which would make it easier for them to cover their expenses. More than 2.3 million children, or 90% of all children under 18, in Pennsylvania would benefit from the expansion of the child tax credit.
The legislation would also provide $39 billion to childcare providers, some of which must be used to help families struggling to pay the cost.
Earned Income Tax Credit
The Senate bill would also expand the earned income tax credit. Working adults who are not raising children at home now get only a small credit. The legislation would would raise the maximum EITC for these “childless adults” from about $530 to about $1,500, raise the income cap for them to qualify from about $16,000 to at least $21,000, and expand eligible childless workers to include younger adults aged 19-24 who aren’t full-time students and those 65 and over. The expansion of the EITC would benefit 700,000 childless workers in Pennsylvania.
Support for Businesses
The Senate bill includes $15 billion for the Emergency Injury Disaster Loan program, which would provide long-term, low-interest Small Business Administration loans.
It includes $25 billion for a new grant program, specifically for bars and restaurants. Businesses could receive up to $10 million for expenses including payroll, mortgage and rent, utilities, and food and beverages.
The Paycheck Protection Program, which is currently taking applications for second-round loans, would get an additional $7 billion, and the legislation would expand eligibility for non-profit organizations.
State and Local Governments
The legislation includes $350 billion in much-needed assistance to state and local governments. The state of Pennsylvania would receive more than $7 billion, and county and municipal governments would receive more than $5.5 billion. Every county and most municipalities in Pennsylvania would receive some aid with more than $1 billion going to Philadelphia and more than $300 million to Pittsburgh. This funding would help state and local governments cover revenue shortfalls created by the pandemic, respond to the COVID-19 emergency, and make investments in broadband and water and sewer systems. States would not be allowed to use these funds to reduce taxes or add to pension funds.
Education Funding
The legislation includes $168 billion in education funding—$126 billion for K-12 education, $40 billion for higher education, and an additional $2.75 billion for private schools and other uses. K-12 funding is for helping schools reopen and helping students catch up on what they have missed during the pandemic. States would be required to spend a percentage of the funds on summer learning, afterschool programs, and education technology. Some funding would be set aside for challenge grants focused on educational equity. An amendment added during the Senate floor would provide $800 million to support education and wraparound services for homeless children. It would also require school districts to develop a plan for the safe return to in-person schooling. About $7.2 billion would go toward the E-rate program to help residences and libraries connect to the internet.