What's in the American Rescue Plan, Exactly?
On March 11th, President Biden signed the $1.9 trillion American Rescue Plan he proposed to combat the recession and increased unemployment and poverty caused by the decrease in economic activity during the coronavirus pandemic. The package passed Congress along party lines and after dozens of hours of deliberation. The passage is a step towards what Biden and many Democrats, including the two Georgia senators whose victories handed Democrats narrow control of the Senate, campaigned on: quick aid for families, the unemployed, small businesses, vaccine rollout, and schools to help battle the fallout.
The law includes a continuation of unemployment benefits, loans for small businesses, and funding for vaccine distribution. The package also contains an increase in child tax benefits, money for state and local governments, and, notably, $1,400 checks for those earning under $75,000 each year for a single earner household and $150,000 for joint filers. The version passed by the House includes a raise to the $15 minimum wage by 2025, despite the Senate parliamentarian striking the measure due to the package being a budget reconciliation, meaning it can only have components that relate to the government’s revenue and spending.
Democrats and progressives such as Senator Bernie Sanders (I-VT) have long pushed to raise the federal minimum wage, but this measure was not included in the bill. The Congressional Budget Office released a report last month on the potential effects of this graduated raise from $7.25 to $15.00 an hour, predicting a $54 billion rise in the federal deficit in the first ten years of its implementation; CBO anticipates the government would pay an additional $16 billion in interest on the debt due to higher interest rates and inflation. CBO also concluded that prices of goods and services would climb due to the need to pay higher wages and that 1.4 million workers, almost one percent of the workforce, would become unemployed because of the proposed raise. Conversely, the number of people in poverty would be reduced by 0.9 million.
The White House, working with centrist and conservative Senate Democrats, recently reached an agreement that the phase-out of those eligible to receive the direct check would be at $80,000 per year for single filers and $160,000 annually for couples, which is lower than the version of the bill originally passed by the House. Moderates like Joe Manchin (D-WV) advocated for the lower limits, and his vote proved crucial: The Democrats needed everyone in their party to support the package, as they have a slim 51-50 majority in the Senate, with Vice President Kamala Harris’s tie-breaking vote.
Republicans have criticized the American Rescue Plan, claiming it used the coronavirus crisis as an excuse to push through a liberal agenda. Senate Minority Leader Mitch McConnell tweeted in late February, “The partisan bill Democrats are preparing is stuffed with non-COVID-related liberal goals and more band-aid policies as if the country were going to stay shut down another year.” During a press conference held by the House GOP leadership, House Republican Conference Chair Liz Cheney (R-WY) claimed that Biden was “[waging] a war on the American worker”, after outlining her belief that the president was not fulfilling his promises to help Americans and that his stimulus plan was not in the interest of the public.
Many moderate lawmakers on the right, including many who proposed a $600 billion package, have scrutinized the president over the lack of congressional bipartisanship he has given to the process, shown through the decision by the party to put the bill through reconciliation. These senators note that the president campaigned on a return to normal politics and bipartisanship. “This is the smartest and best place for the president to start on his unity promises,” Senator Shelley Moore Capito (R-WV) said to Politico.
In response to these criticisms, White House Press Secretary Jen Psaki explained, “[Biden’s] first priority is getting relief to the American people. The vast majority of the public, Democrats, Republicans, independents, are with him in that.” 62% of Americans support the American Rescue Plan, with 53% saying that the size of the $1,400 direct payments is appropriate, according to a recent Monmouth University survey.
Americans began to feel the impacts of the bill a few days after; the administration is working to fulfill its promise of getting 100 million checks out by the end of the first 100 days. Other portions of the package, such as spending for schools, are expected to be felt throughout the year.