Congressional Democrats sounded the alarm Tuesday over key parts of the $1.9 trillion relief package they just voted for, saying they’re concerned the Biden administration isn’t doing enough to get checks out the door quickly to families and small businesses.
Treasury Secretary Janet Yellen told House lawmakers that implementing the massive law is a work in progress and that tax increases likely will be needed to pay for more of President Biden’s spending plans.
Rep. David Scott, Georgia Democrat, said he’s concerned that some members of the public can only use an IRS tool to check the status of their payment and not to fix or change their delivery information.
“All of us need to hurry up,” Mr. Scott told Ms. Yellen and Federal Reserve Chairman Jerome Powell. “We put these things in place so we could reach those who have been excluded very quickly — they need the money as quickly as everyone else.”
Democrats used a fast-track budget process, known as budget reconciliation in Washington-speak, to speed the $1.9 trillion package through the Senate without any Republican votes.
The rescue package was the biggest legislative accomplishment so far for Mr. Biden and his Democrats. They desperately want it to roll out smoothly and show voters they know how to run Washington.
It could be months before Democrats score another legislative win in the narrowly divided Congress. The budget reconciliation move can typically be used only once a year.
“Everybody cannot get this payment through electronic accounts,” Mr. Scott said.
More than a dozen Democrats on the House Ways and Means Committee separately pressed Ms. Yellen and IRS Commissioner Charles Rettig in a Tuesday letter on Treasury’s outreach efforts to make people aware of their eligibility.
“We are concerned that families facing the most severe burdens are the least likely to receive the newly enacted relief measures, which often require the filing of a tax return or providing other information to the IRS,” they wrote.
President Biden said that by Wednesday, 100 million direct payments of up to $1,400, a key feature of the package, will have gone out.
“For someone who doesn’t have direct deposit, they’re getting a check in the mail for all of that,” Mr. Biden said as he touted the $1.9 trillion law in Ohio.
Ways and Means Democrats also pressed Mr. Rettig this week on reports that certain Social Security and Veterans Affairs beneficiaries were not getting the payments to which they were entitled.
White House press secretary Jen Psaki said people who don’t regularly file federal income taxes would still receive direct payments if they’re eligible and benefit from any U.S. tax program.
“The IRS and the Treasury Department [will] certainly look into them as they arise,” Ms. Psaki told reporters aboard Air Force One. “As I understand, it’s been limited.”
Rep. Al Green, Texas Democrat, said he’s concerned about how $10 billion in new funding for small businesses will get into people’s pockets.
He said past rounds of funding in the program had to first pass through the Agriculture Department before it was distributed.
“In Texas, that probably is not the best way to do business,” he said. “I have people who question me daily about when will the money be available for us as end-users to benefit from it?”
He said he believes Ms. Yellen is doing the best she can and that her “heart’s in the right place.”
“I just want to be able to answer those questions when they are posed to me,” Mr. Green said. “I have people question me daily: When will I get the money?”
Congressional Republicans, along with more than 20 state attorneys general, have demanded answers from Ms. Yellen on language in the new law that says states can’t use the $350 billion in state and local aid to offset revenue decreases from tax cuts.
Ohio Attorney General Dave Yost sued, saying it’s an unconstitutional infringement on states’ ability to set their tax laws.
Rep. Brad Sherman, California Democrat, told Ms. Yellen he’s concerned that as his state tries to conform to the newly-enacted law, it might unwittingly approve a tax cut that runs afoul of the limitations.
Ms. Yellen was noncommittal on that state-specific case, though Treasury has indicated the administration believes the language passes constitutional muster and that it isn’t a blanket ban on states’ ability to cut taxes.
“We’re working to provide guidelines on what will and won’t count and it’s premature for me — until we have completed that — to offer you an answer on the specifics,” she said. “We’ll do it quickly.”
Ms. Yellen and Mr. Powell were testifying on oversight of coronavirus relief spending Congress has authorized.
Ms. Yellen said the administration is going to look at potential tax hikes to accompany forthcoming spending priorities dealing with infrastructure, climate change and education.
She said a longer-term plan to bolster the economy “probably would be accompanied by some revenue-raisers.”
“The Biden administration is not going to propose policies that hurt small businesses or Americans,” she said.
Rep. Ann Wagner, Missouri Republican, was skeptical.
“Certainly raising taxes on business and industry is going to affect consumers and households and American families in a very adverse way,” Ms. Wagner said.
Mr. Biden’s emerging pitch to spend up to $3 trillion on a massive infrastructure and climate-change package immediately fell flat with congressional Republicans.
Senate Minority Whip John Thune, South Dakota Republican, said the GOP isn’t going to get hoodwinked into supporting an “infrastructure” package that’s funded by tax increases in a different bill.
“If they want to sit down with Republicans, which they should, the Republicans would work with them on an infrastructure package,” Mr. Thune said. “But if they decide to do that as a ploy to lure Republicans in to vote for the easy stuff and then do all that stuff, the controversial stuff through reconciliation, I don’t think our guys are going take the bait on that.”
On the broader economy, Ms. Yellen said in prepared testimony that the U.S. economy could see a return to full employment in 2022.
Mr. Powell said the economic situation is much improved compared to the throes of the pandemic but that “the recovery is far from complete.”
He said February’s jobless rate of 6.2% “underestimates the shortfall” in the economy and that labor market participation is still “notably below” pre-pandemic levels.
Last month, the Congressional Budget Office had estimated that it would take until 2024 for employment to return to where it was pre-pandemic.
Mr. Powell downplayed concerns that the massive recent infusion of government spending into the U.S. economy could fuel runaway inflation — fears that have come from both Republicans and figures on the left like former Obama and Clinton economic adviser Larry Summers.
“We might see some upward pressure on prices,” Mr. Powell said. “Our best view is that the effect on inflation will be neither particularly large nor persistent.”