The U.S. House passes a giant year-end spending bill combining $900 billion in Covid-19 relief aid with $1.4 trillion in regular government funding and a bevy of tax breaks for businesses


The House easily passed a $900 billion pandemic relief package Monday night that would finally deliver long-sought cash to businesses and individuals and resources to vaccinate a nation confronting a frightening surge in COVID-19 cases and deaths.

Lawmakers tacked on a $1.4 trillion catchall spending bill and thousands of pages of other end-of-session business in a massive bundle of bipartisan legislation as Capitol Hill prepared to close the books on the year.

The lopsided 359-53 vote was a bipartisan coda to months of partisanship and politicking as lawmakers wrangled over the relief question, a logjam that broke after President-elect Joe Biden urged his party to accept a compromise with top Republicans that is smaller than many Democrats would have liked.

The relief package, unveiled Monday afternoon, sped through the House in a matter of hours. A Senate vote that would send the bill to President Donald Trump appeared likely to follow soon.

The bill combines coronavirus-fighting funds with financial relief for individuals and businesses. It would establish a temporary $300 per week supplemental jobless benefit and a $600 direct stimulus payment to most Americans, along with a new round of subsidies for hard-hit businesses, restaurants, and theaters and money for schools, health care providers, and renters facing eviction.

The 5,593-page legislation — by far the longest bill ever — came together Sunday after months of battling, posturing and postelection negotiating that reined in a number of Democratic demands as the end of the congressional session approached. President-elect Joe Biden was eager for a deal to deliver long-awaited help to suffering people and a boost to the economy, even though it was less than half the size that Democrats wanted in the fall.

“This deal is not everything I want — not by a long shot,” said Rules Committee Chairman Jim McGovern, D-Mass., a longstanding voice in the party’s old-school liberal wing. “The choice before us is simple. It’s about whether we help families or not. It’s about whether we help small businesses and restaurants or not. It’s about whether we boost (food stamp) benefits and strengthen anti-hunger programs or not. And whether we help those dealing with a job loss or not. To me, this is not a tough call.”

The Senate, meanwhile, was also on track to pass a one-week stopgap spending bill to avert a partial government shutdown at midnight and give Trump time to sign the sweeping legislation.

Treasury Secretary Steven Mnuchin, a key negotiator, said on CNBC Monday morning that the direct payments would begin arriving in bank accounts next week.

Democrats promised more aid to come once Biden takes office, but Republicans were signaling a wait-and-see approach.

The measure would fund the government through September, wrapping a year’s worth of action on annual spending bills into a single package that never saw Senate committee or floor debate.

The legislation followed a tortured path. Democrats played hardball up until Election Day, amid accusations that they wanted to deny Trump a victory that might help him prevail. Democrats denied that but their demands indeed became more realistic after Trump’s loss and as Biden made it clear that half a loaf was better than none.

The final bill bore ample resemblance to a $1 trillion package put together by Senate Republican leaders in July, a proposal that at the time was scoffed at by House Speaker Nancy Pelosi, D-Calif., as way too little.

Majority Leader Mitch McConnell, R-Ky., took a victory lap after blocking far more ambitious legislation from reaching the Senate floor. He said the pragmatic approach of Biden was key.

“A few days ago, with a new president-elect of their own party, everything changed. Democrats suddenly came around to our position that we should find consensus, make a law where we agree, and get urgent help out the door,” McConnell said.

On direct payments, the bill provides $600 to individuals making up to $75,000 per year and $1,200 to couples making up to $150,000, with payments phased out for higher incomes. An additional $600 payment will be made per dependent child, similar to the last round of relief payments in the spring.

The $300 per week bonus jobless benefit was half the supplemental federal unemployment benefit provided under the $1.8 billion CARES Act in March. That more generous benefit and would be limited to 11 weeks instead of 16 weeks. The direct $600 stimulus payment was also half the March payment.

The CARES Act was credited with keeping the economy from falling off a cliff during widespread lockdowns in the spring, but Republicans controlling the Senate cited debt concerns in pushing against Democratic demands.

“Anyone who thinks this bill is enough hasn’t heard the desperation in the voices of their constituents, has not looked into the eyes of the small-business owner on the brink of ruin,” said Senate Democratic leader Chuck Schumer, a lifelong New Yorker who pushed hard for money helping his city’s transit systems, renters, theaters and restaurants.

Progress came after a bipartisan group of pragmatists and moderates devised a $908 billion plan that built a middle-ground position that the top four leaders of Congress — the GOP and Democratic leaders of both the House and Senate — used as the basis for their talks. The lawmakers urged leaders on both sides to back off of hardline positions.

“At times we felt like we were in the wilderness because people on all sides of the aisle didn’t want to give, in order to give the other side a win,” said freshman Rep. Elissa Slotkin, D-Mich. “And it was gross to watch, frankly.”

Republicans were most intent on reviving the Paycheck Protection Program with $284 billion, which would cover the second round of PPP grants to, especially hard-hit businesses. Democrats won set-asides for low-income and minority communities.

The sweeping bill also contains $25 billion in rental assistance, $15 billion for theaters and other live venues, $82 billion for local schools, colleges, and universities, and $10 billion for child care.

The governmentwide appropriations bill was likely to provide a last $1.4 billion installment for Trump’s U.S.-Mexico border wall as a condition of winning his signature. The Pentagon would receive $696 billion. Democrats and Senate Republicans prevailed in a bid to use bookkeeping maneuvers to squeeze $12.5 billion more for domestic programs into the legislation.

The bill was an engine to carry much of Capitol Hill’s unfinished business, including an almost 400-page water resources bill that targets $10 billion for 46 Army Corps of Engineers flood control, environmental and coastal protection projects. Another addition would extend a batch of soon-to-expire tax breaks, such as one for craft brewers, wineries, and distillers.

It also would carry numerous clean-energy provisions sought by Democrats with fossil fuel incentives favored by Republicans, $7 billion to increase access to broadband, $4 billion to help other nations vaccinate their people, $14 billion for cash-starved transit systems, $1 billion for Amtrak and $2 billion for airports and concessionaires. Food stamp benefits would temporarily be increased by 15%.

The Senate Historical Office said the previous record for the length of legislation was the 2,847-page tax reform bill of 1986 — about one-half the size of Monday’s behemoth.

So you know how folks throw around adjectives and superlatives all of the time? And sometimes you just don’t believe them?

If you hear anyone describing the latest stimulus bill from Congress as “huge” or “giant” or even “ginormous,” believe them. It’s so large that aides had trouble printing it:

And again while trying to upload it to the internet:

Eventually, the text was made available on the House website. It’s 5,593 pages long. You can take a peek here (downloads as a PDF).

Note that this language could change, since there has not yet been a vote, with Sen. Mitch McConnell (R-KY) saying on December 21, 2020, that lawmakers are “going to stay here until we finish tonight.”

Here’s what the text says:

What’s In.

Spending. The bill costs $2.3 trillion which sounds like a lot considering earlier this month, some in Congress were balking at anything over $900 billion. The majority of the price tag ($1.4 trillion) and a lot of the bill (about 1,815 pages) is a catchall budget package to keep the lights on for the remainder of the fiscal year.

More Spending. In addition to the general budget provisions, there are special Covid-related spending add-ons, including transportation dollars, additional money for health care, including vaccine development & distribution, and additional funding to schools, including private schools.

The Usual Suspects. A budget bill wouldn’t be a budget bill without special interests and earmarked projects like those “sense of Congress” sections and requests for reports (fun fact: the word “report” or “reports” appears more than 1,000 times in the bill). I may do a review of those in a separate article, but I’m a tax writer and I know that’s not what you’re here for...

Unemployment Related Provisions

Unemployment Assistance. Around the 2,000 page mark, the bill tackles unemployment benefits.

The bill would extend Pandemic Unemployment Assistance (PUA) benefits created under the CARES Act through March 14, 2021. Individuals receiving benefits as of March 14, 2021, could continue through April 5, 2021, as long as they have not maxed out their week count (it had been 39, but would be upped to 50).

The bill would also extend the federal supplement unemployment insurance benefits, but at half the former rate (just $300 per week), starting after December 26, 2020, and ending March 14, 2021.

Finally, the bill would extend the Pandemic Emergency Unemployment Compensation (PEUC) benefits through March 14, 2021. As with PUA, individuals receiving benefits as of March 14, 2021, could continue through April 5, 2021, as long as they have not maxed out their week count (it had been 13 but up to 24).

Returning To Work Requirements. One of the real sticking points of continued unemployment compensation is a concern about paying benefits when individuals refuse to go back to work. Under the bill, states must provide a suitable method (including phone line, email, or online portal) for employers to notify the state when an individual refuses to work or accept an offer of work when they do not have good cause. The state must also provide a “plain language notice” about return to work laws, rights to refuse to return to work or to refuse suitable work, and information on contesting a claim denial. The notice must also include an explanation of what constitutes suitable work, including a claimant’s right to refuse work that poses a risk to health and safety.

Second Round Of Stimulus Checks

Stimulus Checks. The tax-related bits of the bill kick in around page 1,966. New checks worth $600 per person (yes, for children, too) are included in the new relief package. As before, checks will begin to phase out for those who earn $75,000 ($150,000 for married couples filing jointly). Adult dependents - those over age 17 - still won’t qualify. However, those individuals who file jointly with a person who uses an ITIN will be allowed to collect a check (though the person with the ITIN will not). You can read more details on stimulus checks in this more detailed article.

Payroll Tax Provisions

Extension of Deferred Payroll Taxes. On August 8, 2020, President Trump issued a directive to the Department of Treasury to allow for the deferral of payroll taxes for the period of September 1, 2020, through December 31, 2020. Under the terms of the directive, penalties and interest on deferred unpaid tax liability were to accrue beginning on May 1, 2021. The bill would extend the repayment period through December 31, 2021, meaning that penalties and interest on deferred unpaid tax liability will not begin to accrue until January 1, 2022.

Employee Retention Tax Credit. The agreement extends and improves the Employee Retention Tax Credit. Specifically, under the CARES Act, the credit only applied to wages paid after March 12, 2020, and before January 1, 2021: the bill would extend the wage period through July 1, 2021. The credit - which used to be equal to 50% of the qualified wages each quarter - has been bumped to 70% and can be used in conjunction with PPP money for wages that are not paid for with forgiven PPP proceeds. And best of all, the $10,000 per employee limit which used to be the aggregate for all quarters is now the limit per quarter. One more tweak: the gross receipts test has been changed to 80% of receipts for the same calendar quarter in 2019.

Paycheck Protection Program

Paycheck Protection Program. The bill would expand the PPP program to allow some businesses to receive an additional loan. The second loan, called a “PPP second draw” loan, is targeted to smaller and harder-hit businesses. Those are businesses with 300 or fewer employees who have used or will use the full amount of their first PPP. They must demonstrate at least a 25% reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same 2019 quarter. Generally, businesses can borrow up to 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year. The maximum loan amount is $2 million, and for forgiveness purposes, the 60/40 cost split between payroll and non-payroll costs will continue to apply.

The bill also makes clear that PPP forgiveness is not taxable. It further makes clear that deductions are allowable for expenses paid with the proceeds of a forgiven PPP loan (additionally, tax basis and other attributes of the borrower’s assets will not be reduced). That’s retroactive to the date of enactment of the CARES Act (March 27, 2020).

The bill creates a simplified forgiveness application (”not more than one page in length”) for loans up to $150,000. The application will require a description of the number of employees the borrower was able to retain because of the covered loan, the estimated total amount of the loan spent on payroll costs, and the total loan amount. And of course, borrowers will have to attest that they provided the right documents and complied with the loan requirements.

I know you’ll have more questions on this: I am planning a deeper dive and I’ll link to it when it’s available.

Individual Income Tax Breaks

Earned Income Tax Credit (EITC) & Child Tax Credit (CTC) Tweaks. The bill would allow families to receive EITC and CTC based on their 2019 income. That significantly impacts those families whose incomes were reduced because of COVID since your credit is typically higher as you earn more money.

Charitable Giving. In a welcome break, the bill would change the maximum dollar amount for above-the-line adjustment for charitable giving from $300 per return to $600 for a joint return). You can find out more about the temporary deduction here (note that the linked article still has the $300 limit since there has not yet been a vote). Additionally, the suspension of limits on cash gifts has been extended through 2021.

Expanded Flexible Spending Arrangements (FSAs). The bill would allow taxpayers to carry amounts from FSAs forward into 2021 (and again into 2022). This would apply to FSAs for health care and dependent care.

Medical Expense Deduction Floor. Beginning in 2021, the medical expense deduction floor is moved permanently to 7.5%. That means that you can deduct (assuming you itemize) medical expenses that exceed 7.5% of your adjusted gross income. Previously, the needle had moved to 10% (and then came down again).

Volunteer Firefighters and Emergency Medical Responders Benefits. The bill would exclude certain state and local benefits for volunteer firefighters and first responders from income.

Change In Education Benefits. Beginning in 2021, the qualified tuition deduction would be replaced. Instead, the phase-out limits on the Lifetime Learning credit would be increased to $80,000 ($160,000 for married filing jointly).

Full Deduction For Business meals. 3-Martini Lunches Are Back. The bill includes a provision to increase the business meals deduction to 100% (it’s currently 50%) for 2021 and 2022.

Social Services

Rental Assistance. The package would allow for an extension of the eviction moratorium through January 31, 2021. There are also $25 billion for rental relief, to be used for future rent and utility payments and back rent owed or utility bills.

Food Assistance. The bill increases food stamp benefits (Supplemental Nutrition Assistance Program, or SNAP). It would also expand the Pandemic-EBT program to cover families with children in child care and provide support for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) to allow participants to purchase additional fruit and vegetables. Seniors are also included, with funding for senior nutrition services, including Meals on Wheels, and the Commodity Supplemental Food Program to provide food boxes to more senior citizens.

What’s Out

Student Loan Extensions. The bill will not extend federal student loan forbearance provisions (those are currently set to expire on January 31, 2021).

State and local funding. Originally included in the bill, state and local funding have been removed. However, Congress did extend the deadline for states and cities to use pre-approved money in the CARES Act. States like mine (Pennsylvania) that had not spent all of their funding would lose it if not spent by the end of the year; the deal would instead extend the deadline until the end of next year.

Liability Protection. Providing liability protection for corporations as a result of the pandemic has been a serious stumbling block between the Senate and the House. The framework had originally suggested that there was “[a]greement in principle as the basis for good faith negotiations” but it faltered.


The total price tag of the bill is estimated to be $2.3 trillion, but again, that includes funding of about $1.4 trillion in “catchall” government spending.

Once More With Feeling

This is a summary only: remember, it’s a huge bill. And keep in mind that it’s not yet law. Keep checking in for updated coverage.

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