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House Democrats reject plan to sharply curtail $1,400 stimulus payments in coronavirus relief package

Sen. Bernie Sanders (I-Vt.), left, and Sen. Ron Wyden (D-Ore.) make their way to the Senate floor on Capitol Hill in January. (Salwan Georges/The Washington Post)

Senior House Democrats on Monday night proposed sending $1,400 stimulus payments to Americans with up to $75,000 in annual income, rejecting an earlier plan under consideration to sharply curtail the benefits.

House Ways and Means Chairman Richard E. Neal (D-Mass.) released legislation that would send the full stimulus payment to individuals earning $75,000 per year and couples earning $150,000 per year. Congressional Democrats had explored curtailing that benefit to $50,000 for individuals and $100,000 for married couples, a position embraced by Sen. Joe Manchin III, a conservative Democrat from West Virginia.

The broadening of stimulus payment eligibility among middle-class households is the latest sign that Democrats are moving ahead without Republican support on President Biden’s $1.9 trillion economic relief package, which would also extend unemployment benefits, send hundreds of billions of dollars to schools and local governments, and strengthen vaccine delivery and health care. Even as the Senate proceeds this week with former president Donald Trump’s impeachment trial, the House Ways and Means Committee and other panels will be working to finalize and vote on the coronavirus legislation.

Compared with previous plans, Democrats are accelerating the rate at which the stimulus payments decline for higher-income earners, a move intended to prevent wealthy Americans from receiving the benefit. Under the new plan, singles earning $100,000 a year and couples earning $200,000 would receive no stimulus payments.

The stimulus checks would be based on taxpayers’ 2019 or 2020 income returns, according to a summary of the proposal. The plan would aim to give full payments to those who qualify based on their 2020 returns, even if those are not processed for months.

White House press secretary Jen Psaki on Feb. 8 said President Biden would support passing coronavirus relief via budget reconciliation. (Video: The Washington Post)

The new proposal comes amid days of internal disagreements among Democrats over how to structure the next round of stimulus payments, a core component of Biden’s plan. The legislation still must be passed through the House and Senate, and it is unclear whether Manchin or other conservative Senate Democrats will object to the proposal.

Along with the stimulus payments, the House Ways and Means Committee released details Monday of other significant parts of the aid package, including a new child income tax credit for millions of American households. That benefit would offer $3,600 per child over the course of a year for each child under 6, as well as $3,000 per child for each one age 6 to 17. Those child tax benefits would diminish for singles earning more than $75,000 a year and couples earning over $150,000.

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The measure would also extend federal unemployment benefits, now set to expire in mid-March, through the end of August and increase the benefit amount from its current level of $300 a week to $400. Biden’s initial plan called for funding additional unemployment benefits through September.

Additionally, Democrats included a $15-per-hour minimum wage in the package, although Biden has said that provision faces long odds in the Senate. The nonpartisan Congressional Budget Office released a report Monday that estimates the minimum-wage increase would cost 1.4 million jobs but lift 900,000 people out of poverty, intensifying the debate over that controversial provision.

“Our nation is struggling, the virus is still not contained, and the American people are counting on Congress to meet this moment with bold, immediate action,” Neal said in a statement.

The bill would also “dramatically” increase premium subsidies for Americans receiving their health insurance through the Affordable Care Act for two years, said Larry Levitt, executive vice president of health policy for the nonprofit Kaiser Family Foundation.

The design of the payments has emerged as one of the most hotly debated provisions in the rescue package. Centrist lawmakers such as Manchin have called for narrowing the payments to prevent them from going to higher-income Americans, arguing that those who have not lost their jobs do not need help. That idea was met with increasing resistance from other members of the party, including Senate Finance Committee Chairman Ron Wyden (D-Ore.), as well as Senate Budget Committee Chairman Bernie Sanders (I-Vt.) and House lawmakers in the Congressional Progressive Caucus.

Asked about the new thresholds after Neal’s plan was released, Manchin did not immediately attack them and said he was “just trying to make sure that people [receiving them] are truly in need.”

Wyden said in a statement Monday that he would push for unemployment benefits to be continued through September, as opposed to ending them in August, according to the new proposal. “[I] am going to work to find a resolution that preserves both relief payments and jobless,” Wyden said. “We can do both.”

Manchin has influence over the issue, because the Senate is split 50-50 between Republicans and Democrats, so Democrats need his vote as they aim to push the legislation forward without GOP support.

Wyden and Sanders have publicly criticized the proposals to lower the income thresholds to $50,000, saying middle-class families have suffered pay cuts and other economic shocks and need relief, too. Sen. Jon Ossoff (Ga.), whose election victory in January helped seal Democrats’ Senate majority, also opposes lowering the threshold on the payments, according to a spokeswoman.

The White House has repeatedly said it is willing to compromise on the thresholds, with White House press secretary Jen Psaki saying the administration is open to negotiations with Congress on the matter. However, on Sunday, Treasury Secretary Janet Yellen suggested that the administration was not on board with Democrats’ plans for lower income thresholds.

“The exact details of how it should be targeted are to be determined, but struggling middle-class families need help, too,” Yellen said on CNN.

Biden gave similar remarks to Psaki in an interview with “CBS Evening News,” saying he was “wide open” on the precise levels of the income threshold.

Here’s the new Democratic plan for $1,400 stimulus checks

The debate about the payment thresholds represents one of many disputes Democrats may face as they try to pass Biden’s $1.9 trillion stimulus package through Congress. There is a wide ideological gulf between the party’s moderate and liberal wings, which is likely to produce numerous policy fights — over the $15-an-hour minimum wage; the scale of unemployment assistance; and the overall cost of the bill, among other things — on the way to passing their first major piece of legislation under Biden.

The split within the party appeared to intensify over the weekend. Manchin told WV News last week that he supported the next round of payments not going to individuals earning more than $50,000 or couples earning more than $100,00.

“An individual of $40,000 income or $50,000 income would receive it. … And a family who is making $80,000 or $100,000, not to exceed $100,000, would receive it," Manchin said. "Anything over that would not be eligible, because they are the people who really are hurting right now and need the help the most.”

But on Twitter and on CNN this past weekend, Sanders slammed Democrats for embracing a plan that would cut out individuals earning $52,000. He also pointed out the potential political downside for the new Democratic administration to be sending fewer payments than Trump did. Wyden has also said in a statement that families that had received the first two payments would expect a third.

“Unbelievable … working class people who got checks from Trump would not get them from Biden. Brilliant!” Sanders said on Twitter.

Rep. Pramila Jayapal (D-Wash.), chairwoman of the Congressional Progressive Caucus, said Monday she is in “nonstop” conversations with White House officials about “why this makes no sense, politically or policy-wise.”

While passing a budget resolution through Congress earlier this month that set the stage for approval of the broader relief bill, Manchin and Sen. Susan Collins (R-Maine) co-sponsored an amendment to exclude affluent families from the stimulus payments. The plan did not define an income amount, leaving that open to interpretation. Sanders and all Democrats voted for the proposal.