The White House reiterated its commitment to delivering $1,400 relief checks to the vast majority of American households, following a report detailing disagreement over the dollar amount and eligibility requirements among senior aides to President Joe Biden.
“The president’s proposal is to finish the job on $2,000 checks by delivering 1,400 additional dollars in direct relief to American families,” a White House spokesperson told HuffPost. The payments would be part of a $1.9 trillion COVID-19 relief package.
Congress in late December approved $600 checks, thwarting the push by progressives for $2,000 payments to help Americans alleviate the economic impact of the coronavirus pandemic.
Two of Biden’s top economic advisers, Heather Boushey and David Kamin, have questioned the efficacy of the new cash payments and fretted that their price tag could deprive the White House of the fiscal wiggle room to spend on other, potentially more urgent priorities, Bloomberg News reported on Monday.
White House officials have already signaled that they remain open to additional means-testing of the payments.
But Boushey and Kamin have “privately expressed reservations about the size of the checks” as well, according to Bloomberg. The revelation comes a day after 10 Senate Republicans’ unveiled a scaled-back $600-billion relief plan, which would reduce checks from $1,400 to $1,000, as an alternative to Biden’s plan.
The Bloomberg report immediately prompted an outcry among progressive activists, many of whom already consider $1,400 inadequate.
“The size of the checks is literally the main thing they definitely shouldn’t change,” tweeted Saikat Chakrabarti, a former chief of staff to Rep. Alexandria Ocasio-Cortez (D-N.Y.) and co-founder of the No Excuses PAC, which is pressuring Democratic members of Congress to support ambitious COVID-19 relief.
The suggestion that Boushey and Kamin are concerned about depleting funds for other priorities was especially galling to progressives who have spent years arguing against the idea that the federal government has finite funds. They argue that while the government must occasionally raise taxes or cut spending to avoid excessive inflation, no evidence has emerged that current economic conditions merit such austerity.
“We are in a low-interest rate, low-inflation period where the velocity of money has been reduced given the pandemic,” Rep. Ro Khanna (D-Calif.) told HuffPost. “I have yet to hear a single coherent argument on how our economy will suffer if we give people $2,000 checks.”
Political considerations surround these discussions, as well. Biden and congressional Democrats promised voters on the eve of the Georgia Senate runoff elections on Jan. 5 that if granted control of the chamber, Democrats would move immediately to ensure that low- and middle-income households would receive a total of $2,000 in relief.
Some of Biden’s critics on the left maintain that in their efforts to court voters, Biden and the two Democrats who won the runoffs ― Raphael Warnock and Jon Ossoff ― deliberately blurred the distinction between a $1,400 supplemental check that would bring the total to $2,000 and an additional $2,000 payment on top of the $600. For the sake of alleviating potential political fallout, they have called for Biden to just pass a round of $2,000 checks.
To those critics, further reducing $1,400 in relief payments would amount to a compounded betrayal of election-eve promises.
“It’s already bad that they went from $2,000 to $1400,” Chakrabarti tweeted. “Whenever you are asking voters to do math to support your policy change, ask yourself if your change is really worth the political cost.”
I have yet to hear a single coherent argument on how our economy will suffer if we give people $2,000 checks.
Rep. Ro Khanna (D-Calif.)
Given the White House’s denial that it is open to whittling down the dollar amount of relief, the more acrimonious fight among Democrats is likely to be over any adjustments to the income-based phaseouts.
The two previous rounds of cash payments ― Congress also sent Americans $1,200 payments in March ― began phasing out when a single individual’s income hit $75,000 or a married couple’s income crossed $150,000. For every dollar above those amounts that a person or a married couple earned, the payments decreased by 5% of that dollar, resulting in a reduction of $50 for every additional $1,000 earned.
In the case of the $1,200 checks that Congress sent out in March, that gradual wind-down meant single people would receive no money if they earned $99,000 a year or more, and married couples would receive no money if they earned $198,000 a year or more.
Because the December payments were smaller but the pace of the phase-out was the same, the benefits disappeared for individuals earning $87,000 a year and married couples earning $174,000.
By contrast, absent changes to the pace of the phase-out, the proposed $1,400 payments would encompass a larger group of households than either of the first two rounds of checks. In such a scenario, single people would begin receiving no money if they earn $103,000 or more and couples would receive no money if they earned $206,000 or more.
But the effect of any changes that the White House entertains to hasten the phase-out period or otherwise narrow the universe of relief check recipients could vary greatly, depending on the method that the White House employs.
The White House could choose to simply impose an income cap on the households eligible for any cash relief to ensure that the universe of beneficiaries for the $1,400 payment is similar to what it was for the $1,200 or $600 checks.
At the same time, a trio of prominent economists ― at least one of whom, Raj Chetty, has ties to Democratic politicians ― have called for targeting the payments to families earning less than $75,000 a year, based on their research that families with lower incomes spent the money they received in the first two rounds faster than those earning more than that level. That suggests they support beginning the cash benefit phase-out at a lower income level than $75,000, potentially cutting the benefits of middle-class earners who were entitled to the full checks during the first two rounds of relief.
Jim Kessler, a former aide to Senate Majority Leader Chuck Schumer (D-N.Y.) and vice president of the business-friendly Democratic think tank, Third Way, tweeted approvingly about the economists’ proposal.
Khanna, an influential member of the Congressional Progressive Caucus, warned against plans that curtail the benefits of middle-class families eligible for the full cash benefit during previous rounds of relief payments.
“We should not be alienating working-class and middle-class Americans by excluding them from Covid relief,” he said. “The argument is so obvious it’s surprising it has to be stated.”
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