US Senate passes record $1.9 trillion stimulus bill amid Republican deficit warning

President Joe Biden’s signature $1.9 trillion Covid-19 relief bill passed the Senate 50-49 on Saturday, following a more than 25-hour marathon of amendment votes that was completed only after a lengthy interruption while Democrats settled an intra-party dispute over unemployment aid.

The measure, the American Rescue Plan Act, now heads back to the House, where Majority Leader Steny Hoyer said a vote will be held on Tuesday. Although some House progressives have complained about changes made by the Senate, none so far have threatened to withhold votes. Democrats aim to have it signed into law next week.

Enactment would hand Mr Biden his first legislative victory and set the stage for work this spring on a massive infrastructure and manufacturing recovery bill that he wants.

The Democratic drive in the Senate stalled out for nearly 12 hours on Friday after West Virginia Democrat Joe Manchin — a pivotal vote in the 50-50 Senate — baulked at a deal to extend supplemental unemployment benefits into October.

As Republicans tried to lure Mr Manchin to vote for a proposal by Senator Rob Portman of Ohio that would extend the benefits only through July 18, Democrats from Mr Biden on down furiously lobbied Mr Manchin and reworked their earlier plan. Mr Manchin finally signed on to a deal that would provide $300 a week in extra benefits through September 6 and make the first $10,200 of unemployment insurance benefits non-taxable for households with incomes of less than $150,000.

The Portman amendment passed with Mr Manchin’s support but was then overridden by the Democratic deal.

That cleared the way for votes on three dozen amendments — most of which failed — and final passage. In the end, all Senate Democrats and independents lined up in favor of the bill, a feat of unity for Senate Majority Leader Chuck Schumer, despite the stumble on unemployment insurance.

He brokered key compromises restricting the eligibility of higher-income Americans to receive the bill’s $1,400 direct payments as well as extending unemployment benefits at a lower level than in the House version. The legislation is double the size of the Obama-era stimulus and exceeded many earlier Wall Street estimates for how big a package could Democrats pass with the thinnest margin of control.

Obamacare redux

The bill would enact the biggest health care expansion since the Affordable Care Act, a temporary plan to slash the child poverty rate and send checks soon to most Americans. In addition, state and local governments and schools would get an infusion of aid that Democrats hope will propel a speedy economic recovery long before they face voters in 2022.

The deals on stimulus payments and unemployment aid, as well as the addition of a dozen smaller changes, ensured that moderate Democrats like Manchin and Arizona’s Kyrsten Sinema were on board along with progressives like Senate Finance Chairman Ron Wyden. That may also help in the House, where progressives were already angered over the loss of a provision to raise the minimum wage because of arcane Senate budget rules.

“A new day has come and we tell the American people that help is on the way,” Mr Schumer said on the Senate floor before the final vote. “This bill will deliver more help to more people than anything the federal government has done in decades.”

Growing deficit 

Republicans united in opposition to the bill. They argued that much of the measure is unnecessary given improving economic indicators, like Friday’s stronger-than-expected jobs report, and that it’s a danger to the long-term health of the economy because of the growing US budget deficit. The Congressional Budget Office estimated the deficit would reach $2.3 trillion this year before the passage of the new bill adds $1.2 trillion more to that total in fiscal 2021.

“The Senate has never spent $2 trillion in a more haphazard way,” Senate Minority Leader Mitch McConnell said.

The bill will send $1,400 payments to individuals earning less than $75,000 and couples earning less than $150,000 based on either 2019 or 2020 tax returns. The payments phase out fully for those individuals making $80,000 and couples making $160,000. Those are lower phase-outs than in the original House-passed bill.

The amendment on unemployment insurance also would extend tax rules regarding excess business-loss limitations for one additional year, through 2026.

The legislation includes $160 billion for vaccine and testing programs to help stop the spread of the coronavirus, and $350 billion for state and local governments, some of which have lost revenue during Covid-19 lockdowns.

It would also expand the child tax credit to $3,000 from $2,000 for each child 17 and younger. The Senate also adopted an amendment from Republican Lisa Murkowski and Mr Manchin to direct $800 million toward alleviating youth homelessness.