House Democrats reject plan to sharply curtail $1,400 stimulus payments in new stimulus proposal
WASHINGTON - Senior House Democrats on Monday night proposed sending full $1,400 stimulus payments to Americans with up to $75,000 in annual income, rejecting an early plan to sharply curtail the benefits.
House Ways and Means Chairman Richard Neal, D-Mass., released legislation that would send the full benefit to singles earning $75,000 pear 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, D-W.Va., the most conservative Democrat.
Compared to prior plans, Democrats are accelerating the rate at which the benefit declines for higher-earners, a move intended to prevent wealthy Americans from receiving stimulus payments. The phase-out diminishes at the point at which singles earning $100,000 and couples earning $200,000 would receive no stimulus payments.
The proposal comes amid days of internal disagreements among Democrats over how to structure the next round of stimulus payments, a core component of President Biden's $1.9 trillion stimulus plan currently moving through Congress. 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.
"There's a discussion right now about what that threshold will look like," White House press secretary Jen Psaki said Monday. "It's still being negotiated at this point."
Centrist lawmakers such as Manchin have called for targeting the payments to prevent them from going to high-earning Americans, arguing that those who have not lost their jobs do not need help. That idea has been met with increasing resistance from other members of the party, including Senate Finance Chairman Ron Wyden, D-Ore., and Senate Budget Chairman Bernie Sanders, I-Vt., as well as House lawmakers in the Congressional Progressive Caucus.
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, D-Ga., whose election victory in January helped seal Democrats' Senate majority, also opposes lowering the threshold on the checks, according to a spokeswoman.
The White House has said it is willing to compromise on the thresholds, with Psaki repeatedly saying the administration is open to negotiations with Congress on the matter. 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. Asked whether she supports a phaseout higher than $50,000 per person, but not necessarily as high as $75,000, Yellen responded: "Yes, I - I think the details can be worked out. And the president is certainly willing to work with Congress to find a good structure for these payments."
Biden gave similar remarks in an interview with CBS Evening News, saying he was "wide open" on the precise levels of the income threshold.
The dispute comes as House committees prepare to take up the legislation this week. It is uncertain how the matter will get resolved.
White House senior economist Jared Bernstein floated a compromise during a news briefing Friday, suggesting that lawmakers could design the benefit to diminish faster for higher earners. Under prior proposals, the size of the stimulus check diminished by 5% as incomes rose. Bernstein suggested that the phaseout of checks for those at upper incomes could be sped up, meaning that those at higher income levels would receive less.
"If you look at the distribution of who gets the checks . . . virtually none of it goes to the very top of the scale, and the vast majority goes to the middle and the bottom," Bernstein said, citing research by the Institute for Taxation and Economic Policy, a left-leaning think tank. "What's important to the president is that we don't lose sight of people in the middle of the income scale who continue to struggle."
The debate about the check 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."
Manchin has great 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.
But on Twitter and on CNN this 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 of sending fewer payments than Trump had. 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.
The push among senior Democrats to lower the threshold to $50,000 was designed to appease Manchin, which elicited pushback from other lawmakers. Rep. Pramila Jayapal, D-Wash., chair 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."
"The idea we should cave to one Democrat in the Senate does not make any sense to me," Jayapal said.
While passing a budget resolution through Congress earlier this month that set the stage for approval of the broader relief bill, Sens. Susan Collins, R-Maine, and Manchin co-sponsored an amendment to exclude affluent families from the stimulus checks. The plan did not define an income amount, leaving that open to interpretation. Sanders and all Democrats voted for the proposal.
Under the lower threshold, about 71% of Americans would receive the full benefits and an additional 17% would get the partial benefit, said Kyle Pomerleau, a fellow at the American Enterprise Institute who specializes in tax policy. That compares with about 85% of families under the initial plan.
Psaki on Friday said that a family earning $300,000 a year may not need a stimulus payment. She also noted the payments would phase out, meaning a nurse earning $60,000 could still get a partial benefit if not the full check.