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March 8, 2021

What to expect in Washington (March 8)

The Senate approved the American Rescue Plan Act (H.R. 1319) after a 24-hour vote-a-rama that stretched until after noon on Saturday, with modifications but not drastic changes to the $1.9 trillion COVID relief plan outlined by President Biden and passed by the House. House Majority Leader Steny Hoyer (D-MD) announced that the House will vote on the Senate-passed bill on Tuesday, March 9, and progressive leaders are signaling they won't block the bill despite the minimum wage increase being dropped, changes to the unemployment insurance (UI) extension, and clipping the wage thresholds for direct payments.

Signaling satisfaction among progressives, Budget Committee Chairman Bernie Sanders (I-VT) demonstrably celebrated the Senate bill as it was being approved, and Finance Committee member Elizabeth Warren (D-MA) touted inclusion of her proposal for tax-free student loan forgiveness. Congressional Progressive Caucus Chair Rep. Pramila Jayapal (D-WA) released a statement saying, "despite the fact that we believe any weakening of the House provisions were bad policy and bad politics, the reality is that the final amendments were relatively minor concessions. The American Rescue Plan has retained its core bold, progressive elements originally proposed by President Joe Biden and passed in the House relief package. "

Below is a table of some key provisions and differences between the House and Senate bills.


House-passed H.R. 1319 (2/27)

Senate-passed H.R. 1319 (3/6)


-Pandemic programs through Aug. 29

-$400/week add-on

-Pandemic programs through Sept. 6

-$300/week add-on

-first $10,200 not taxable for households with incomes below $150,000

Excess business loss

No provision

Extend TCJA's 461(l) disallowance of excess business loss an additional year, through 2026

Direct payments

$1,400, cut off at $100,000/ individuals, $200,000/couples

$1,400, cut off at $80,000/individuals, $160,000/couples

Pension relief offset

COLA freeze for pension-related limits

expansion of the scope of IRC Section 162(m) deduction limits on executive compensation, to deny the deduction for compensation in excess of $1 million for the eight highest paid employees, plus the CEO and CFO, at publicly traded companies, effective for tax years after 2026

State & local funding

$350 billion

Adds authority to use for water/sewer/broadband infrastructure, prohibition against using for tax cut or deposits into any pension funds


Extended through end of 2021, structured as refundable payroll tax credit against hospital insurance tax

Same extension as House, plus expanded to "recovery startup businesses" (average annual gross receipts under $1 million)

COBRA subsidies



Other tax provisions in both

  • repeal of the Section 864(f) worldwide interest expense allocation election
  • lower 6050W third-party network transactions reporting threshold from $20,000 to $600

Among Democrats generally, "People on the floor, in our caucus, it was almost like tears in their eyes. I mean, I felt it," said Senator Debbie Stabenow (D-MI) in a CBS report, describing the scene after members spent an overnight in the chamber and passed the bill hours after a new day had dawned. No Republicans voted for the bill and they expressed opposition to its size and substance before and after the vote. Senate GOP leader Mitch McConnell (R-KY) tweeted, "Instead of working together to fight COVID-19, Democrats decided to exploit the crisis by jamming through unrelated liberal policies they couldn't pass honestly."

Senator Joe Manchin (D-WV) said on NBC March 7 that he was unaware of proposed UI changes by Democratic leaders before they were announced on Friday, which halted Senate voting from midday until late that night for negotiations to find a compromise he could support. "These things happen when such a mammoth piece of legislation is put together," he said. Manchin said on ABC that he didn't ask to be chamber's most high-profile swing vote, that he continues to "look for that moderate middle," and "you've got to work a little bit harder when we've got this toxic atmosphere."

Looking forward - Enactment of the bill will clear the way for President Biden to outline his Build Back Better plan, which seems wide open in terms of what priorities it will include, if and to what extent it includes tax increases, and whether it can attract GOP support. The COVID bill's consideration was illustrative of the challenges President Biden faces in moving his agenda amid intraparty tensions, and while tight margins give extra power to individual members, the process may have demonstrated that Democrats are able to thread the needle and hold together when enough of their common priorities are addressed.

The Washington Post reported Senator Chris Coons (D-DE), who opposed the minimum wage amendment, described "some new dynamics" in the Senate majority requiring what he called "serious efforts" on issues ranging from immigration to infrastructure. "This was a reminder that in a 50-50 Senate, if any one member changes their mind on an amendment or vote or an issue, it can change the outcome," Coons said.

As a practical matter, the minimum wage increase was left on the table: it was ruled out of bounds for a reconciliation bill, and 8 Democratic members voted against Senator Sanders' amendment that would have required 60 votes for the change. Senator Manchin repeated that he backs an increase only to $11/hour, not $15, but he also said all members want some increase above the current $7.25 and "President Joe Biden knows how to get a deal done." A wage bill would likely have to move under regular order given that reconciliation prohibits it, though some progressives want that ruling ignored or the filibuster repealed.

As for the parties coming together, a March 7 new York Times analysis (by longtime Capitol Hill reporter Carl Hulse) said, "The supposed honeymoon period of a new president would typically provide a moment for lawmakers to come together, particularly as the nation enters its second year of a crushing health and economic crisis. Instead, the tense showdown over the stimulus legislation showed that lawmakers were pulling apart and poised for more ugly clashes ahead." Democrats "worry that voters would punish them more harshly in the 2022 midterm elections for failing to take advantage of their power to enact sweeping policy changes than for failing to work with Republicans and strike bipartisan deals," it said.

The analysis said, "Anticipating the Republican recalcitrance to come, Democrats are increasingly coalescing around the idea of weakening or destroying the filibuster to deny Republicans their best weapon for thwarting the Democratic agenda," but acknowledged it would require the support of some moderates currently opposed. Manchin and Senator Kyrsten Sinema (D-AZ) oppose filibuster repeal, but others recently called for the change, including Senators Tina Smith (D-MN) and Amy Klobuchar (D-MN).

On NBC, Senator Manchin said "I'm not going to change my mind on the filibuster" but mentioned the possibility of changes like requiring a talking filibuster. "And now if you want to make it a little bit more painful, make him stand there and talk, I'm willing to look at any way we can. But I'm not willing to take away the involvement of the minority," he said.


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Washington Council Ernst & Young
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