House Set to Pass President Biden’s COVID-19 Relief Bill
Democrats in the House of Representatives are expected to vote on and pass President Biden’s $1.9 trillion COVID-19 relief proposal this evening. Known as the American Rescue Plan, the bill includes a recently added provision that would increase the overall funding amount for emergency rental assistance to $20.25 billion from $19.05 billion. This additional funding is intended to create a set-aside of $1.2 billion for high-need grantees. The set-aside funding would be distributed based on the number of very low-income renter households paying more than 50 percent of income on rent or living in substandard or overcrowded conditions, with the goal of better targeting resources to communities with the greatest needs. The provision would also reduce the initial tranche of funding to each grantee to 40% from 50% of their total allocation. This change would help ensure that states and communities that are unable to spend down their funds are not given excess resources. The provision also changes the date to reallocate unspent funds from September 30, 2022 to March 31, 2022, and it removes language stating that emergency rental assistance cannot count as “income” for means-tested programs. It also provides an additional $20 million in funding for fair housing activities during the COVID-19 pandemic.
Along with providing funding for rental assistance, the bill includes one-time direct payments of $1,400 to qualifying individuals, it increases and extends the unemployment benefits set to expire in mid-March, and provides additional funding for small businesses, to aid states and for efforts to test and vaccinate the American population against the COVID-19 virus. The House bill also includes a proposal that would gradually increase the federal minimum wage to $15 per hour. On Thursday, the Senate parliamentarian (also known as a rules referee), ruled that the minimum wage increase is not permitted under the budgetary rules Democrats are using to pass the COVID-19 bill with only a simple majority. It is expected that the minimum wage provision will be removed in the Senate bill next week in order to ensure the bills passage, with Senator Joe Manchin (D-WV) having already voiced his opposition to the minimum wage provision in the final package.
FED Chairman Delivers Economic Report to Congress
Federal Reserve Chairman Jerome Powell delivered his testimony on the state of the U.S. economy in his Semiannual Monetary Policy Report before House and Senate Committees this week. Testifying before the Senate Banking, Housing and Urban Affairs Committee on Tuesday, Chairman Powell warned that the United States still has a long way to go to reach full employment but also expressed cautious optimism during his testimony that the economy will recover from the COVID-19 pandemic this year. Chairman Powell avoided commenting on the direct level of federal support needed for the economy but he did support the passage of a rescue package for families and businesses impacted by the coronavirus downturn. Chairman Powell testified that job losses have been most severe for Hispanics and African Americans, and that unemployment remains particularly elevated for all minority groups as well as those who hold lower-wage jobs. He stated that State and local governments are also confronting challenging budget conditions due to weak tax collections and extraordinary expenses related to the COVID-19 pandemic.
During his Thursday testimony before the House Financial Services Committee, Chairman Powell stated that the three U.S. banking regulators— the Federal Reserve Board, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC)—are working on a draft joint Community Reinvestment Act (CRA) modernization proposal. In May 2020, the OCC finalized a rulemaking to modernize the CRA without the support of the other two regulators, despite publishing a joint notice for proposed rulemaking to modernize the CRA with the FDIC in January 2020. In October 2020, the Federal Reserve Board issued an advance notice of proposed rulemaking to modernize regulations implementing the CRA. President Biden plans to appoint a new Comptroller and it is expected that the three banking regulators will issue a joint, final CRA rule this year.
To view the Federal Reserve’s Semiannual Monetary Policy Report, click here.
To view Chairman Powell’s testimony before the Senate Banking, Housing and Urban Affairs Committee, click here.
To view Chairmen Powell’s testimony before the House Financial Services Committee, click here.