What a Dem-majority Senate means for your wallet

From taxes to healthcare, these costs may change in 2021

Jan 11, 2021 | Editorial | Government | Budgeting | Current Events
Article headline image

Twin wins in Georgia turn the tide in Congress

Senate hopefuls Jon Ossoff and Reverend Raphael Warnock secured their seats in Congress last week, beating out two Republican incumbents. ICYMI, no Georgia candidate was able to clinch 50% of the vote back in November, so both races headed to a January runoff. Dems were up against a historical losing streak, and stocks soared at the prospect of a divided government. But with the twin wins, Democrats will soon take control of both houses of Congress and the White House, something they haven't had since 2011. If you’re wondering what all this means for your bottom line, here’s everything you need to know:

Expect more stimulus and aid for renters

The day before Georgians headed to the polls, President-elect Biden all but guaranteed electing Ossoff and Warnock would lead to $2,000 stimulus checks — or $1,400 on top of the $600 that may have already hit your bank account. Because of how the payments are structured, an estimated 8.8 million more families will get a check, and this time around, college students and other adult dependents won’t be hung out to dry either. Millions more 17- and 18-year olds, college kids, and adult children with disabilities will be eligible for a $2,000 boost. More relief is likely on the way for struggling renters, too. Last month’s stimulus package extended the eviction moratorium through January 2021 and set aside $25 billion for rental assistance. But with 1 in 5 renters behind on rent, Democrats think more aid is needed, and lots of it. Congress may sign off on an aid package that echoes the Heroes Act proposed in May. Think an additional 12-month eviction ban, $100 billion for rental assistance, and $75 billion for homeowners at risk of foreclosure. It’s estimated that US renters are now behind on rent by a whopping $70 billion.

Affordable Care Act 2.0

Biden was Obama’s right-hand man in 2010 (literally) when the President signed the Affordable Care Act into law. So it’s no surprise that the former VP’s healthcare plans involve expanding and shoring up the ACA. Biden’s plan will help make insurance more affordable, capping plan costs for Americans at 8.5% of their income — down from nearly 10% under the ACA. Picking up a prescription at Walgreens? Biden wants to make that more affordable, too. His plan will repeal laws that prohibit Medicare from negotiating prices with drug manufacturers, limit price increases for many prescriptions, and let Americans buy cheaper pharmaceutical alternatives from other countries. Ten years in, undocumented immigrants will get their chance to buy into the public option, but their plans won’t be subsidized. And choosing to remain uninsured will cost you again — Biden plans to bring back the individual mandate (that requires most Americans to have health insurance or pay a tax penalty) that Trump axed in 2017.

Weed and clean energy clean up, while Big Tech slumps

If 2020 taught us anything (other than how to perfect our banana bread), it’s that stock analysts don’t have a crystal-ball view into how the market will behave. But as Ossoff and Warnock widened their leads, some stocks shifted in notable ways. Some analysts anticipated an initial selloff if both Dems won seats in the Senate, that didn’t exactly happen. The Dow Jones Industrial Average (DJIA) gained over 400 points as the deciding votes were tallied on Wednesday. Construction equipment manufacturer Caterpillar (CAT) jumped 5.6% to an all-time high on the same day, maybe fueled by expectations of a massive infrastructure package. Apple and Facebook dipped 3.3% and 2.8% respectively, perhaps because Dems favor increased regulations for Big Tech. Meanwhile, marijuana stocks rallied on hopes of federal reform, and clean energy stocks surged, with the Invesco Solar ETF gaining more than 8%.

A bigger tax bill for the 1%

The Senate wins won’t change Biden’s tax plans, but they will put his ambitious wishlist within reach. The President-elect aims to raise $3.3 trillion in tax revenue over a decade by increasing taxes on the highest earners and corporations. The top 1% of individual earners will have about 7.7% less left over after taxes, and the corporate tax rate will be raised from 21% to 28%. But the majority of Americans won’t see their taxes go up — quite the opposite. The bottom 80% of US taxpayers will benefit from cuts in 2022 worth between $540 and $760 in after-tax income — or around the same value as the most recent stimulus check, on average.

Everything else on your wallet’s radar:

  • Minimum wage increase: Jon Ossoff said, er — tweeted it himself. “We can raise the minimum wage to $15. But we have to win the Senate.”
  • Buying a home: A $15,000 tax credit for first-time buyers would cover about 4% of the cost for a median-priced home and help more people — especially BIPOC — afford the dreaded down payment.
  • Student loan forgiveness: Biden called on Congress to forgive $10,000 of loan debt per borrower and supports free tuition at two-year public and community colleges.