The pandemic stimulus package image

Stimulus Package

Published: March 8, 2021

On Saturday afternoon, March 6th, the Senate passed the COVID-19 relief plan, which contains $1.9 trillion in financial assistance and aid for American families. The plan, which has amendments from the bill previously passed by the House of Representatives, must go back to the House for a final vote. It is expected to be voted on and approved by the House Tuesday, and from there it will go to President Biden for approval. While there were some changes, it is largely the same as the original program proposed by President Biden in January.

Plan Highlights
For individuals and households:

  • Up to $1,400 in additional stimulus checks for those qualifying, plus $1,400 per eligible dependent – payments are targeted to lower and middle-income households
  • Extension of $300 a week unemployment benefits until September 6th
  • Tax relief on first $10,200 in unemployment benefits for households earning up to $150,000, applicable for the 2020 tax year
  • Child-care tax credit up to $3,000 per child ($3,600 for children under 6) for 2021
  • Expansion of Earned Income Tax Credit (EITC)
  • Federal moratorium on evictions and foreclosures until the end of September
  • Health insurance subsidies and elimination of the maximum income cap on the Affordable Care Act for two years
  • Allocation to aid those with food insecurity, extending a 15% increase in food stamp benefits through September and $880 million for Women, Infants, and Children (WIC)
 
Pandemic response:

  • Assistance to facilitate children returning to in-person schooling
  • Aid to childcare providers to help with overhead, provide assistance to families unable to pay and purchase personal protective equipment, etc.
  • Additional aid to small businesses through the Paycheck Protection Program (PPP) and other programs
  • Funding to support expansion of coronavirus response, including testing, vaccination, contact tracing, and mitigation
  • Assistance to rural public health care workers
 
Aid to states and municipalities:

  • Funding to allow states to continue to provide free- and reduced-price meals through the summer to children whose schools are closed
  • Housing aid to assist low-income households with rent assistance and utility bills
  • Aid to assist those who are homeless or at risk of homelessness

 

We will be watching the markets carefully and anticipate that the response will be positive, particularly when considered in concert with recent good news on downward trending COVID-19 cases plus increased vaccine supply. However, given that the plan has been in the works since January, it is likely that expectations for a stimulus program have been partly incorporated into the market already. The reaction, therefore, could be less than or more short-lived than expected. We will continue to monitor the changing situation but are optimistic regarding a resumption to normality during the latter half of 2021.  

Important Disclosures

This material is provided for informational or educational purposes only and should not be construed as investment, accounting, tax or legal advice. Always consult a financial, tax and/or legal professional regarding your specific situation. This communication is not intended as a recommendation or as investment advice of any kind. It is not provided in a fiduciary capacity and may not be relied upon for or in connection with the making of investment decisions. Nothing herein constitutes or should be construed as an offering of advisory services or an offer to sell or a solicitation to buy any securities or a recommendation to invest in any specific investment strategy. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future returns. The views expressed herein are as of a particular point in time and are subject to change without notice. The information and opinions presented herein are general in nature and have been obtained from, or are based on, sources believed by Klingenstein Fields Advisors (“KF Advisors’) to be reliable, but KF Advisors makes no representation as to their accuracy or completeness. Although the information provided is carefully reviewed, KF Advisors cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided. KF Advisors represents two investment advisers registered with the Securities and Exchange Commission: Klingenstein, Fields & Co., L.P. and KF Group, LP. If you are a KF Advisors client, please remember that it remains your responsibility to advise KF Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.