By Kristina Peterson, Andrew Duehren and Richard Rubin 

WASHINGTON -- Senate Democrats were poised to pass President Biden's $1.9 trillion coronavirus relief package Saturday by the slimmest of margins, following an intraparty standoff over unemployment benefits.

Sen. Joe Manchin (D., W.Va.) brought the chamber to a standstill for much of Friday, when he balked at a Democratic proposal to extend federal jobless benefits until Oct. 4. After hours of negotiations, Democrats struck a new deal to extend the current $300 weekly benefits through Sept. 6 and make a portion of the 2020 benefits nontaxable for some households.

The final change to the Senate bill highlighted centrist Democrats' powerful influence in the evenly divided chamber, where a single Democratic defection would have derailed the bill. Senate Democrats lowered the weekly payments to $300 from their $400 level in the House bill, phased out $1,400 direct payments more quickly for some households and stripped out a minimum-wage increase that had passed the House last weekend.

After the relief package passes the Senate, it will head to the House, which must approve the revised legislation before sending it to the White House for Mr. Biden's signature. Liberal House Democrats have said they want to see what the Senate passes before indicating whether they will support it. But they have also emphasized the need for the relief package and will be under pressure not to derail Mr. Biden's first legislative push.

White House press secretary Jen Psaki said Friday night that Mr. Biden supported the last round of Senate changes to the bill. Democrats have been working to pass a new relief bill before current federal unemployment benefits expire in mid-March.

The legislation will provide $300 in unemployment benefits through Sept. 6, send $1,400 direct payments to many Americans, direct $350 billion to state and local governments, fund vaccine distribution, and expand the child tax credit, among other aid.

As part of the agreement reached Friday, the first $10,200 of the 2020 unemployment benefits will be nontaxable for households making less than $150,000.

"This is the longest extension of benefits possible tonight," said Senate Finance Committee Chairman Ron Wyden (D., Ore.), noting that the agreement also moved the expiration date past August, when Congress is traditionally in recess. "This is the best that can be done for people hurting now."

Democratic leaders held open an amendment vote during the negotiations with Mr. Manchin for nearly 12 hours, making it the longest recorded vote in modern Senate history.

Republicans said the delay showcased the lengths to which Democrats were going to avoid working across the aisle.

"What this proves is there are benefits to bipartisanship when you're dealing with an issue of this magnitude," said Senate Minority Leader Mitch McConnell (R., Ky.), pointing to the bipartisan relief legislation passed last year. "Not a single spectacle like today, not one."

The stall on the Senate floor revolved around Mr. Manchin's willingness to side with Republicans in an effort to shorten the duration of unemployment benefits, underscoring the precariousness of the Democrats' majority.

Most Democrats in the 50-50 Senate had signed on to an effort unveiled Friday morning by Sen. Tom Carper (D., Del.) to lower the weekly federal jobless benefits to $300 a week, but extend them through Oct. 4 instead of Aug. 29 in the House version.

The final Democratic agreement differed from Mr. Carper's original proposal by extending the jobless benefits to Sept. 6 rather than Oct. 4, and adding an income cap to the benefits that would be exempt from taxation.

"We have reached a compromise that enables the economy to rebound quickly while also protecting those receiving unemployment benefits from being hit with [an] unexpected tax bill next year," Mr. Manchin said in a statement Friday.

Mr. Manchin did vote for a GOP amendment from Sen. Rob Portman of Ohio that extended the $300 weekly benefits through July 18, but it was then superseded by the Democratic deal.

Mr. Portman said Democrats were providing benefits that aren't needed because the economy is recovering.

"The Democratic proposal makes it even more advantageous to be on unemployment by changing retroactively a longstanding policy that says UI benefits are taxed as income," he said on the Senate floor, referring to unemployment insurance.

After Democrats struck their deal on unemployment benefits, the chamber still slogged through the marathon of amendment votes known in the Senate as "vote-a-rama."

Senate Democrats are using a process known as reconciliation, which allows them to pass legislation tied to the budget with a simple majority, rather than the 60 votes most bills require. Vice President Kamala Harris had been expected to cast the tiebreaking vote, but her presence appeared unlikely to be needed Saturday, since Sen. Dan Sullivan (R., Alaska) had to leave early Friday for the funeral of his father-in-law, leaving Republicans with 49 votes.

Because the process allows the majority party to pass legislation on their own, Senate rules carve out a place for lawmakers in the minority to make their voices heard, by allowing them to vote on an unlimited number of amendments. After the delay on Friday, lawmakers plowed through amendments through the night and Saturday, working on the legislation for more than 24-hour consecutive hours.

Many of the amendments offered late Friday and Saturday were designed to emphasize Republicans' criticisms of the relief bill, including how its funding for schools is structured and its overall price tag. Some garnered bipartisan support though, with one amendment directing $800 million toward aid for homeless youth.

The Senate blocked an amendment from Budget Committee Chairman Bernie Sanders (I., Vt.) to increase the minimum wage to $15 an hour. That was a plank of the bill passed by the House, but it was stripped out of the Senate version when the chamber's parliamentarian ruled it didn't comply with the rules. All 50 Republicans and eight Democrats opposed Mr. Sanders's amendment.

An amendment from Sen. Jon Tester (D., Mont.) asking Mr. Biden to review and approve the Keystone XL oil pipeline, which the president blocked in his first days in office, also came up short in a 51-48 vote. The amendment needed 60 votes to pass under the rules tied to the budget.

The impact of the new tax exemption on unemployment benefits would vary by person. Some with relatively low incomes overall wouldn't get much of a benefit, but a middle-income person could save more than $1,000.

The move would reduce or eliminate surprise tax bills for those who qualify. Withholding varies across states, so many people hadn't been paying enough during the course of 2020.

The new Democratic agreement retained a measure from Mr. Carper's amendment to extend by a year limits on how much high-income earners can deduct certain business losses. Those limits, created in the 2017 tax law, were suspended by last year's coronavirus relief package, to the frustration of progressive Democrats. They are now in effect but are scheduled to expire in 2025 like other pieces of the 2017 law. The Democratic plan would generate revenue by extending the provision through 2026.

Write to Andrew Duehren at andrew.duehren@wsj.com and Richard Rubin at richard.rubin@wsj.com

 

(END) Dow Jones Newswires

March 06, 2021 12:17 ET (17:17 GMT)

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