Relief to stimulus

As you take a closer look at your financial footing amid the headwinds of a pandemic, it’s an excellent time to examine the possible impact of a Joe Biden presidency on money matters.

The balance of Congress has shifted following the Georgia runoffs, providing possible momentum for President Biden’s agenda.

A new COVID check, taxes, health care — it’s all on the line. Here’s how.

Another round of checks

Look for another round of pandemic relief shortly after Biden’s inauguration, says Bernard Yaros Jr., an economist with Moody’s Analytics.

“In February, we expect that there’s going to be a COVIDspecific relief package,” Yaros says. That measure will likely once again extend unemployment insurance benefits, with enough support for another round of checks issued to Americans, “whether it’s 2K or slightly lower,” he says.

Small businesses are likely to receive more grants and forgivable loans, as well.

“And we’re also thinking, you would probably get some additional funding for rental assistance,” Yaros adds.

With Democrats gaining two seats in the Senate from the Georgia runoffs, there is now a greater possibility of moving from “relief” to “stimulus” mode in late 2021.

“That’s because now that the Democrats have a simple majority in the Senate,” Yaros said. “They can pass changes to the tax code as well as implement changes in spending.”

Moody’s Analytics economists expect the Biden administration will dedicate increased funding for enhancements to “social safety nets,” possibly including:

• Expanding eligibility for Medicare.

• Retooling Obamacare into Bidencare.

• Rolling out paid sick leave protections.

• Offering universal pre-K for 3- and 4-year-olds.

• Providing some kind of student debt forgiveness.

But on these initiatives, Democrats will “have to pick and choose,” Yaros says.

“Among the more moderate Democrats, they’re not going to want to increase the deficit too much. That’s obviously going to be a limiting factor,” he adds.

And while Vice President Kamala Harris holds the deciding vote in the event of a Senate tie, the 50-50 split between Democrats and Republicans doesn’t constitute filibusterproof power.

Reversing Trump tax cuts

Higher taxes are expected to partially fund the widening of these social safety nets.

Yaros says Biden is likely to succeed in reversing Trump’s tax cuts, raising the corporate income tax rate to 28%, increasing the tax rate for taxable incomes of more than $400,000 and eliminating some tax breaks for those making more than $1 million.

But the tax hikes may be smaller than widely anticipated, says Michael Zezas, head of U.S. public policy research at Morgan Stanley.