Biden limits eligibility for relief payments under pressure from moderate Senate Democrats

President Joe Biden has agreed to narrow eligibility for a new round of $1,400 stimulus payments in his $1.9 trillion coronavirus relief bill amid pressure from moderate Senate Democrats who’ve pushed for more “targeted” spending in the bill.

Under the new structure, the checks would phase out faster for those at higher income levels, compared to the way the direct payments were structured in Biden’s initial proposal and the version of the bill passed by the House on Saturday.

The change comes as the Senate prepares to take an initial procedural vote to move forward on the bill as early as Wednesday afternoon. Biden and Senate Democratic leaders are scrambling to keep their caucus united since they cannot lose a single Democrat in the 50-50 Senate with Republicans united against the legislation.

Under the plan passed by the House, individuals earning up to $75,000 per year and couples making up to $150,000 per year would qualify for the full $1,400 stimulus payment. The size of the payments then begins to scale down before zeroing out for individuals making $100,000 per year and couples making $200,000.

Under the changes agreed to by Biden and Senate Democratic leadership, individuals earning $75,000 per year and couples earning $150,000 would still receive the full $1,400-per-person benefit. However, the benefit would disappear for individuals earning more than $80,000 annually and couples earning more than $160,000.

That means singles making between $80,000 and $100,000 and couples earning between $160,000 and $200,000 would be newly excluded from a partial benefit under the revised structure Biden agreed to.

The changes were confirmed by a Democratic aide who spoke on the condition of anonymity to describe internal deliberations.

White House press secretary Jen Psaki said Biden has always been open to a faster phaseout for higher-earning individuals and “he is comfortable with where the negotiations stand.”

“He is comfortable and knows there will be tweaks on the margin,” Psaki said at the White House briefing Wednesday. “What his firm viewpoint is, is that it needs to meet the scope of the challenge, it needs to be the size he’s proposed, it needs to have the core components in order to have the impact on the American people.”

The stimulus checks are one element of a wide-ranging package that also includes $350 billion for state and local aide; $130 billion for schools; $160 billion for vaccinations, testing and other health-care-system support; an enhanced child tax credit and other provisions including rental assistance and food assistance.

Sen. Jeanne Shaheen, D-N.H., was among those who had called for changing the eligibility levels for checks, telling reporters this week: “I think we could drop it below the $200,000 and still get households that really need it.”

She said she would hope to redirect the savings from that change toward other needs, such as hospitals.

Narrowing eligibility for the stimulus checks was just one change moderates such as Sens. Shaheen and Joe Manchin, W.Va., had been seeking. Several were also eyeing limiting money for state and local governments, and changing the structure of federal unemployment benefits in the bill, to keep them at $300—their current level—rather than raise them to $400 as proposed by Biden and passed by the House.

Senate Democrats do not intend to adopt the suggested change to unemployment benefits, and they will stay at $400-per-week, the aide said. The unemployment benefits are set to expire March 14; the Biden bill would extend them through August. Democrats are aiming for final passage of the bill ahead of the March 14 deadline.

About 12 million fewer adults and 5 million fewer children would get the stimulus payments under the new Biden-Senate compromise, according to preliminary estimates from the Institute on Taxation and Economic Policy, a left-leaning think tank. About 280 million Americans—200 million adults and 80 million children—would be eligible for the checks under the new structure.

Centrist Senate Democrats had initially pushed for more-aggressive restrictions on the stimulus payments. Senior Democratic officials had at one point considered dropping the full benefit for those making more than $50,000 per year, a change they ultimately abandoned after a backlash led by Senate Finance Chair Ron Wyden, D-Ore., and Senate Budget Chair Bernie Sanders, I-Vt.

Still, liberal lawmakers bristled at the new changes. House liberals have suggested it could be difficult for them to approve the package if it’s watered down significantly in the Senate. If the Senate passes the package, as it is expected to this week, the measure will to go back to the House for final approval.

“I don’t understand the political or economic wisdom in allowing Trump to give more people relief checks than a Democratic administration,” Rep. Alexandria Ocasio-Cortez, D-N.Y., said in a statement. “People went far too long without relief last year—if anything we should be more generous, not more stingy. It’s also an insensitive compromise for the roughly 80 percent of Americans that live in urban areas, which are known for higher costs of living.”

Senate moderates were discussing further changes. GOP senators were preparing amendments aimed at further targeting the legislation, which could peel off Democratic votes as the legislation moves through the Senate.

Democrats are advancing the package under a process called “budget reconciliation” that allows it to pass with a simple majority instead of the 60 votes normally required. With 50 votes in the Senate, Democrats must stay united to pass the legislation with Vice President Kamala Harris breaking the tie.

Attention has focused on Senate moderates who have voiced skepticism about various elements of the bill. Psaki expressed optimism Wednesday that Democratic moderates such as Manchin would support the bill.

“Sen. Manchin and others in the Senate are negotiating with each other about what package they can support moving forward as it relates to the American Rescue Plan. That’s ongoing now,” Psaki said. “But Senator Manchin has been clear that he supports a big package. He believes it should meet the moment. And so we’re looking forward to working with him and getting this across the finish line.”

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.