Stimulus Update: Will the Democrats' New Deal Provide Financial Relief?
- Lawmakers on the left have been negotiating for months to pass new legislation.
- A tentative deal has been reached that could help keep insurance premiums down.
- It could also offer incentives for the purchase of electric vehicles.
Lawmakers have been working on stimulus legislation, and a new agreement could have the necessary support to pass.
When President Joe Biden took office, lawmakers on the left were quick to pass a COVID-19 relief bill that offered stimulus checks for most Americans as well as an expanded Child Tax Credit to give parents some extra help. Because of this legislation, called the American Rescue Plan Act, many people received thousands of dollars in their bank accounts.
After this bill passed, however, no additional steps have been taken to offer financial help directly to Americans -- despite surging inflation and millions of people signing a petition asking for more aid. Democrats, who have a slim majority in Congress, have been negotiating on a new bill that they could pass along party lines, but there have been many stops and starts.
On July 27, 2022, key lawmakers on the left announced an agreement had been reached. The new proposed legislation is called the Inflation Reduction Act and there's a very real chance it will become law -- although it's not guaranteed. The big question is, if it does get to the president's desk, will it include financial help for those who are struggling?
Are there stimulus checks in the Democrats' new deal?
The proposed Inflation Reduction Act does not include stimulus checks or any type of direct payment for the majority of Americans. This may come as an unpleasant surprise to the many who are currently struggling.
The Act does include some provisions that could help ease people's financial pain, though. For instance, it includes new tax credits for the purchase of used electric vehicles. These would offer up to $7,500 in savings for new electric cars and $4,000 for used EVs. With gas prices a key driver of inflation, this could make it possible for some people to afford to switch to more efficient cars.
It also includes a three-year extension of Obamacare subsidies that have lowered health insurance premiums. These subsidies were originally passed as part of the COVID-19 relief measures and were set to expire later this year but would now be in effect for longer. This could save families from a huge premium hike.
It does not, however, include an extension of the expanded Child Tax Credit which deposited payments of $250 or $300 per month per child into people's bank accounts from July to December of last year and which resulted in millions of Americans getting more money back at tax time.
Will the legislation pass?
Whether Americans will get the limited relief this legislation provides or not depends on whether Democrats can rally their party behind the proposed bill.
There are 50 senators who typically vote with the Democrats, which means most legislation is unable to advance because Republicans can filibuster it and 60 votes are needed to overcome this procedural maneuver.
Democrats can use a different technique called reconciliation to get certain bills passed with a simple majority rather than with a filibuster proof majority. However, this requires 51 votes -- so that means all 50 senators must be on board and Vice President Kamala Harris must break the tie to allow the bill to move forward. However, two moderate senators -- Joe Manchin and Kyrsten Sinema -- have expressed reluctance in passing large-scale legislation that other members of their party have been pushing for.
Manchin has announced he is on board with this new proposal, which is a major step forward. If the other Democrats can maintain unity, there's a very real chance the Inflation Reduction Act will become law.
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