Biden gets his COVID bill, but only after changes.
It could alter the country forever.
I’m Isaac Saul, and you’re reading Tangle: an independent, ad-free, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum — then “my take.” You can can reach me anytime by replying to this email. If someone forwarded you this email, they’re asking you to sign up. You can do that by clicking here.
Today’s read: 10 minutes.
We’re focusing on the massive COVID-19 relief bill and skipping today’s reader question (have something you want to ask? Just reply to this email and write in). Also, the results from last week’s poll of Tangle readers, a very important note about the filibuster, and a major announcement from the Tangle team…
Mazel tov!
Big congratulations are in order for Tangle’s social media manager Magdalena, who gave birth to a beautiful baby boy yesterday — her first child. She’ll be posting an update on the Tangle Instagram page (which you should be following) but please bear with us these next few weeks. Magdalena has become an irreplaceable part of our team, my first real employee at Tangle, and we’ve told her to come back whenever she’s ready. That means you’ll likely notice a little less action from us on social until then, as she gets her parenting sea legs. We are very excited to shower the new baby in Tangle onesies.
Quick hits.
Sen. Joe Manchin (D-WV) is flexing his power, saying he’ll block President Biden’s next infrastructure package if Republicans aren’t included in negotiations and insisting he’ll force Republicans to confront the reality of climate change. (Axios)
Jury selection in the trial for former Minneapolis police officer Derek Chauvin will begin today. Chauvin is charged with the murder of George Floyd, the event that sparked months of civil unrest this summer across America. (Minneapolis Star Tribune)
The Albany Times Union and the New York Senate Democratic leader are calling on New York Democratic Gov. Andrew Cuomo to resign. Cuomo has so far refused, saying it would be “anti-democratic” to step down. (Fox News)
The Biden administration has proposed sweeping plans for an interim power-sharing agreement between the Taliban and the Afghan government in an effort to move toward a peace agreement. (The Washington Post)
Former President Donald Trump sent a cease-and-desist letter to national Republican fundraising groups, telling them to stop using his name to raise money or sell merchandise. So far, the groups don’t seem to be taking the threat seriously. (Politico)
BONUS: Sen. Kyrsten Sinema (D-AZ) started a firestorm with her enthusiastic thumbs down vote to reject a $15 minimum wage proposal as part of the $1.9 trillion stimulus package. Sinema, a moderate Democrat, said after the vote that she supports a minimum wage hike but not as part of this relief package. (USA Today)
What D.C. is talking about.
The American Rescue Plan. On Saturday night, the Senate passed the first major bill of the Joe Biden presidency: a $1.9 trillion stimulus package that will touch nearly every part of the U.S. economy. In a divided Senate, the legislation passed on a 50-49 vote — strictly along party lines — with one Republican senator absent.
Here’s a rough accounting of what’s in the bill: There are $1,400 checks that will go out to any individuals making up to $75,000 a year, and will be phased out completely at $80,000. For couples filing jointly, it’s double that: $2,800 checks to those making up to $150,000 a year and phasing out completely at $160,000. Unlike in the first stimulus, adult dependents (read: college students) and disabled adults are eligible for the checks this time.
The bill extends the enhanced federal unemployment benefits, adding $300 per week to state unemployment benefits until September 6th. It will also make the first $10,200 of the benefits from 2020 non-taxable, meaning recipients won’t owe taxes on that money from last year to the federal government if they make less than $150,000 a year.
There were some major changes to the Child Tax Credit: the number of people eligible for the credit expanded and the benefit itself increased by about 80 percent per child. The result is that most parents will now receive up to $300 per month per child under six (up to $250 for those over the age of six), a benefit 93% of children — or 69 million — will qualify to receive, according to some estimates. Using this Washington Post calculator, I found that a married couple grossing $85,000 a year with two kids under the age of six and one between six and 16 years old would receive $850 a month from July to December, plus $5,100 when they file their taxes in 2021, for a total of $10,200.
The increase is supposed to last for a year, though Democrats intend to make it permanent.
There is vaccine money: $8.75 billion focused on distribution, $20 billion to more vaccine development and therapeutics, $25 billion on testing and reimbursing hospitals for lost revenue, $3 billion on a national stockpile. There’s $130 billion for K-12 schools to reduce class sizes and accommodate social distancing, to upgrade ventilation systems and to hire more janitors and buy more PPE.
There is $350 billion going to state and local governments, which is perhaps the most controversial part of the bill after recent reporting found state budgets to be doing much better than initially expected. There’s $10 billion set aside for infrastructure projects. There is an overhaul of the Affordable Care Act that expands its eligibility and caps the maximum premium at 8.5% of someone’s income; there are also incentives for states to expand Medicaid by having the federal government pay for new recipients.
$27 billion is going to emergency rental assistance, $10 billion is going to homeowners struggling to cover mortgages, and $5 billion will go to caring for the homeless.
Some other odds and ends: There is $25 billion targeted directly at small and midsize restaurants in the form of grants that don’t need to be repaid so long as the restaurants use them for operating costs. There’s also language allowing federal and postal workers to take up to 600 hours in paid leave. Currently, gig economy workers do not need to report income until they make $20,000, but this bill lowers that benchmark to $600 in an effort to raise new tax revenue. There are also provisions that make student loan forgiveness free from income taxes.
This is not a full accounting, but it covers most of the major items. The marathon vote to pass the bill was the longest in Senate history. What didn’t make it into the bill? The $15 minimum wage increase was removed after the Senate parliamentarian ruled that it wasn’t eligible for legislation passed with just 50 votes. The eligibility for stimulus checks was also narrowed and the total enhanced unemployment benefit was reduced from $400 per week to $300 per week as part of a compromise with Sen. Joe Manchin (D-WV). Funding for a Bay Area Rapid Transit subway and a bridge in upstate New York were also both removed.
Now, the bill heads to the House, where it needs one more stamp of approval before it’s signed by President Joe Biden. There aren’t expected to be any more hiccups, and this bill could become law by the end of the week.
What the right is saying.
The right opposes the bill with three main arguments: 1) It’s far too large at a time when the economy is growing and the virus is receding. 2) There is billions of dollars of spending that is not directly related to the pandemic or pandemic-relief. 3) Throwing so much money into it risks “overheating” the economy and triggering inflation.
The Wall Street Journal editorial board ran down the list of ways this bill will allow non-working Americans to earn money from the government, calling it the “Covid Welfare State.”
“Democrats say all these income transfers are needed to ensure people don’t go hungry or become homeless,” the board concluded. “But their bill would also extend last year’s 15% food stamp boost through September and provide another $27 billion in rental and utility assistance, on top of the $25 billion in the December relief bill to cover back rent for nonpaying tenants. All of this arrives when the Covid vaccine rollout is accelerating, the economy is recovering at a rapid pace, and the national jobless rate is already down to 6.2%. The goal of this Democratic program isn’t Covid relief. The point is to expand and solidify the role of government as the guarantor of every American’s income unlinked to any obligation to work.”
In the Foundation for Economic Education, Antony Davies and James R. Harrigan said the bill is “short on relief for struggling families.” They hammered Republicans for not fighting the bill, which complicates what could be simple.
“If even one of them had an ounce of curiosity and access to a calculator, he would be able to figure out that for $2 trillion, the government could cut a check to every household in the US for more than $16,000,” Davis and Harrigan wrote. “If the government only cut checks to the poorest one-third of households, each would receive almost $50,000. Only a politician could design a program to cost as much as giving every poor household $50,000 and have it actually give every poor household far less. It should be clear that this sort of thing is designed at least as much to empower the government as it is to provide relief to people in financial distress. As usual, the government looks after itself first.”
In Fox News, Liz Peek wrote that “the important news is that Congress is set to pass a sloppy aid bill stuffed with $350 billion in handouts to blue cities and states and tens of billions for Dem-aligned special interest groups like the teachers unions. A bill that even left-leaning economists like Larry Summers warn is too big.”
“Republicans voted against the American Rescue Plan (ARP) not because they are hard-hearted or determined to undermine a popular president,” she wrote. “That would be stupid and, despite Biden calling some Republicans Neanderthals, most politicians have a pretty keen sense of what their constituents want.
“No, the GOP opposed the ARP because there remains $1 trillion unspent from prior rescue packages, much of the money in the new bill won’t go out this year and only a slim portion impacts vaccine availability or other urgent needs,” she added. “As important, we don’t need $2 trillion in additional funds injected into an economy that is rapidly recovering and which will grow even faster as the vaccines allow more businesses around the nation to open. This is indisputable, and backed by the latest jobs report, which showed 379,000 people going back to work in February, mainly in industries emerging from lockdowns.”
What the left is saying.
The left supports the bill, though some were upset that Democrats dropped the minimum wage increase. There were three main arguments: 1) The bill gets immediate aid to low-income and unemployed Americans, and could have been bigger. 2) It makes long-term changes to reduce child poverty and improve health care accessibility. 3) It will boost vaccine distribution, testing, and production of PPE and shorten the pandemic.
In Vox, Emily Stewart argued that this bill will get help to people who need it.
“Pew Research Center released a survey on how Americans are experiencing the pandemic economy. Its findings were pretty staggering: 39 percent of upper-income adults said their financial situations had improved over the past year, while 32 percent of lower-income adults said they’re worried about being able to buy food, and similar numbers said they’re worried about the cost of health care, paying their mortgages, and losing their jobs,” she wrote.
“While the stimulus bill isn’t perfect and certainly could have been more generous — unemployment insurance benefits kept at $400 instead of $300, the stimulus checks with a higher phaseout — it’s going to get meaningful assistance to a lot of people. The US is still some 10 million jobs short of where it was pre-pandemic, and expanded and extended unemployment benefits will be there to support workers as those jobs begin to return.”
In The Nation, Rev. Dr. William Barber II and Rev. Dr. Liz Theoharis made the case that the bill should have also included a minimum wage increase, which would have helped “40 percent of African-American workers and 62 million poor and low-income Americans of every race.”
“Twenty-five million people have fallen sick in the United States and 500,000 have died in the past year; 19 million are collecting unemployment; 25 million are facing hunger; and 30 to 40 million are facing evictions,” they wrote. “While politicians debate raising the minimum wage, 30 percent of people in households with incomes of less than $25,000 a year report not having enough to eat. More than one of five people in households with incomes of less than $50,000 reported not having enough to eat in February.”
In USA Today, Jillian McGrath said the Child Tax Credit plan “boosts working families with children” and we should “make that permanent.”
“And for the first time ever, the poorest families with little or no income would receive the full benefit,” she wrote. “Finally, the 39% of children in families too poor to receive the full child tax credit will no longer get left behind. These proposed changes will have a seismic impact across America, but they are poised to make an even bigger difference to families who need help the most… Plus, the benefits would be delivered monthly, helping put food on the table and pay rent at a time when jobs are scarce and food insecurity is on the rise. This plan is expected to go a long way to combating child poverty, cutting the rate in half.”
My take.
On Friday night, my fiancé Phoebe and I were sitting at our kitchen table sketching out our finances on a notepad. She had lost her job two weeks before as an office manager at a production company that specialized in live theater. It took months, but a second PPP loan never arriving was the straw that broke the camel’s back. I had, no joke, started writing “$400/week” on the piece of paper (assuming, from my reporting, that the bill was going to pass as it did in the House) when my phone buzzed with a news notification: Democrats had agreed to reduce their weekly unemployment benefit to $300.
Given the circumstances, it’s tough to unmoor myself from this bill and this moment. But it was a taste of the reality millions of unemployed Americans are living right now — a literal “kitchen table” moment.
I’m personally grateful for the federal government’s action. The $300 per week “enhancement” is more than twice as much as the state unemployment Phoebe was going to receive, and even for our family of two it will make a huge difference as we plan for a wedding, Phoebe gears up for graduate school and we navigate the next few months. In our case, it also seems appropriate, given the fact it’s the government’s COVID-19 regulations that are keeping her company from being able to make any money.
From a purely political perspective, I’d rather be the Democrats than the Republicans. Just as it was true for Trump, who understood this, sending Americans cash, boosting unemployment and making life easier is a good way to win over voters. Republicans are in the uncomfortable position of warning about hypothetical inflation and risks around debt, an argument that is likely to perform a lot worse than “here’s a $1,400 check for you and $300 a month for each of your children.”
I’ll tell you what I love about the bill: I love that it targets restaurants, which have somehow been left out of the bailouts until now, despite the fact that 3 million waitresses and waiters and an estimated 15.3 million people total are employed in the restaurant industry. I love the direct stimulus checks and the income brackets they target. I love the enhanced unemployment benefits, both for personal reasons but also because I think there is justification to extend them through the summer.
Here’s what I hate: the changes to requirements for declaring money that gig workers now face. Democrats keep saying that the “rich 1%” will help cover the cost of this bill — but this kind of change is proof that’s a lie. Democrats have to find revenue and they’re pulling it from everywhere, but the last people they should be piling taxes on are gig economy workers. It’s expected to cost Uber drivers, DoorDash workers and Airbnb hosts an estimated $8.4 billion through 2031.
Is it a “blue state bailout?” Kind of. Adjusted for population, “blue” states will get $1,278 per capita and “red” states will get $1,017 per capita, according to Tax Foundation analysis. The formula to allocate funds is based on unemployment, so states and cities with higher shares of unemployed workers will get more money — something Republicans have decried as a punishment for not imposing stricter restrictions. There’s some merit there, but it’s also true many blue states are the most populous and have the highest cost of living in their cities, so it makes sense that a slightly larger amount of money goes that way.
Regardless, state tax revenues are surprisingly strong and the rest of this bill is already pouring money into American hands, schools, vaccine rollouts, hospitals and Medicare programs. It seems to me it would have made more sense to target the money based on changes in tax revenue, not unemployment (an issue this bill already targets). Given the recovering economy, receding virus and all the money I expect will be spent in the economy this spring, it’s hard to justify the sheer size of the money going to state and local governments.
Fortunately, this bill seems to have a bit less “pork” than previous COVID-19 bills, especially after funding for the subway rail in San Francisco and the upstate New York bridge were removed. That being said, it’s disingenuous to call it just a “COVID-19 relief bill.” While many provisions are temporary, it’s also true that a serious piece of it is health care reform and child tax credit reform, as well as a major bailout for state governments. If you support these reforms, then this is a perfectly reasonable way to get them. If you oppose them, it could be maddening watching them being sold in a package with the coronavirus label on it. It’s clear this is a major and successful advancement of Democratic and progressive priorities centered on the working poor.
By far the biggest part of this bill is the Child Tax Credit change. As Jason DeParle put it, “though framed in technocratic terms as an expansion of an existing tax credit, it is essentially a guaranteed income for families with children, akin to children’s allowances that are common in other rich countries.” Some experts say it could cut child poverty in half (despite the certitude of some headlines, there’s robust debate on whether that’s true). Regardless, there’s no debate it’s going to have a huge impact, most of all for low-income families. The opposition to this bill notwithstanding, few Republicans have attacked this specific component, and for good reason: it’s a winner with voters, it could transform life for low-income Americans and it could alter the lives of millions of children by never exposing them to poverty.
Here’s the truth: Nothing like the last few months has ever really been tried before.
Trillions of dollars of government funding is entering the economy, and we essentially just built a guaranteed income for tens of millions of families, one I expect will end up being permanent. Fears about the future are still hypothetical but the tangible benefits will be felt immediately. Maybe the check will come due in the form of inflation, or people refusing to go back to work and another major economic downturn. Maybe judgment day on our now $28 trillion national debt is around the corner. Or maybe President Biden just lifted millions out of poverty and gave millions more a better livelihood with little downside for the vast majority of Americans who may see a negligible bump in taxes.
I honestly don’t know, and only a prophet could say with certainty, but this bill looks poised to transform the country for a long time.
Caught my eye.
I’m not sure where to put this, but yesterday during the “Harry-Meghan Oprah interview” about the Royal family (something I choose to know nothing about), a bunch of British viewers were exposed to America’s television ads. And they were… gobsmacked. I found their responses pretty fascinating and thought-provoking.
This Twitter thread highlighted some of the responses, including things like: “If these medicine ads are what it’s like to not have an NHS I never want to experience that…” “Nah…how are the side effects of the medicine in American ads more lethal than the thing they’re treating???” “These American ads tho... totally forgot about MEDICINE being advertised out there…”
“I’m watching the Meghan interview recording and yet again I can’t understand why American TV ads are like ‘ask your doctor for…’ or ‘tell your doctor…’ why the f— would you be the one to tell a DOCTOR what medicine to give you????? Maybe I’m too European to get it but wtf.”
“American ads are so scary, just mad drugs and ppl suing each other,” another user said. “I remember the first time I saw American TV. Drugs, cars, food. Drugs that stop your food allergy symptoms. Processed shite that replaces real food. Drugs that help dampen the other drugs symptoms. ‘Now over to Stu for Sports.’”
A story that matters.
Quietly, and with little fanfare, moderate Sen. Joe Manchin (D-WV) has subtly shifted his position on the filibuster this weekend. Reminder: the Senate requires 60 votes to pass most major legislation because of the filibuster rule. Manchin has said repeatedly (sometimes while screaming at reporters) that he’ll never vote to abolish the filibuster. But yesterday, he twice indicated he may be in favor of “filibuster reform,” soft language for what would effectively open the door for Democrats to push through major legislation with just 50 votes. Manchin said he’d consider the reforms if Republicans don’t play ball in negotiating, reinforcing the senator’s new status as one of the most powerful lawmakers in America. (The New York Times, subscription)
Numbers.
4.4%. The percentage of Tangle readers who do not reside in the United States, according to the poll we conducted last week.
29.2%. The percentage of Tangle readers who reside in the northeastern United States, the most of any region, according to the poll we conducted last week.
1.8%. The percentage of Tangle readers under the age of 18, the least of any age group, according to the poll we conducted last week.
42%. The percentage of Tangle readers who said “worried” best described their current state of mind about America, the most of any response.
34.8%. The percentage of Tangle readers who said “exhausted” best described their current state of mind about America, the second-most of any response.
36.9%. The percentage of Tangle readers who said they read Tangle to know what the “other side” is thinking, the most of any response.
0. To my disappointment, the number of poll respondents who currently live on the continent of Antarctica.
Did you know?
Most writers on Substack and most news organizations keep the vast majority of their content behind a paywall. I’m trying to do the inverse: I’m keeping as much of Tangle free as possible because I don’t want reliable news to be inaccessible for people who can’t justify spending money on it. Instead, I’m asking for the generosity of my readers who can afford $4.16/month ($50 a year) or $5/month to subscribe to Tangle and support the growth of this media company. If you’re not yet, please consider becoming a subscriber:
Have a nice day.
On Friday, the United States administered nearly three million coronavirus vaccines in a single day. 58.9 million adults have now received at least one dose of the vaccine, including 30.7 million who have been fully vaccinated. 116.4 million doses have already been delivered to states, territories and federal agencies. Globally, the vaccine distribution is ramping up too, with more than two billion doses expected to be delivered by the COVAX initiative in 2021, a joint endeavor of nations across the planet.
Please correct me if I am wrong: Gig economy workers must pay income tax on all of their earnings. Until now, only earnings over $2,000 were reported. Now, earnings over $600 will be reported, as it is for all other independent contractors. Not being reported does not mean you don't owe tax on it. You owe the tax, whether it is reported or not. So this bill makes no change to the tax of gig workers who report their income honestly.
Totally agree with the commentators from the "caught my eye" section. Having traveled extensively, and lived abroad, it is beyond me why the US allows such rampant TV and print advertising for branded drugs. I've switched to streaming almost exclusively, in part to avoid the loop described - eat like crap, get a drug to help, get another drug to help the first, then call the lawyer to sue everyone. Advertising in the pharma industry would be an interesting subject to cover sometime.