President Biden Signs Transformative $1.9 Trillion American Rescue Plan
Even before President Joe Biden assumed office on January 20th, he made it clear that the American Rescue Plan was going to be his Administration’s top legislative priority. Only two months after his inauguration, the bill became law, delivering $1.9 trillion in aid to small businesses, families, schools, state and local governments, and several other industries. The American Rescue Plan funds everything from Medicaid expansion to aircraft manufacturers. This post will provide an overview of some of the biggest and most impactful programs in the American Rescue Plan
Aid for Individuals and Families
Perhaps the most popular provision in the bill, President Biden was insistent on giving another round of stimulus checks to most Americans. Echoing calls from former President Trump, the American Rescue Plan will deliver $1,400 checks to all Americans making less than $75,000, $2,800 to joint filers, and a lesser amount to individuals making between $75,000 and $80,000. The Earned Income Tax Credit is being expanded, including by allowing taxpayers as young as 19 to qualify, reduced from the previous floor of 25 years old. In perhaps the largest expansion of entitlement spending in a generation, Democrats expanded the Child Tax Credit, a program that will now award families up to $3,600 per year, per child. The credit will also now be sent to families monthly starting in July, rather than once a year. While the bill only authorizes this expansion temporarily, Democrats seem poised to make the expansion permanent later this year.
The Federal Pandemic Unemployment Compensation program, which provides $300 per week to unemployed workers on top of state-level benefits, has been reauthorized through September 6th. The House version of the bill provided $400 per week, but moderate Democrats in the Senate negotiated down to the final amount in a bid to eliminate incentives to remain unemployed. The Pandemic Unemployment Assistance program, which provides benefits to unemployed gig workers who do not qualify for traditional benefits, will also be extended for an additional seven months. As tax day draws near, the new law will exempt the first $10,200 of unemployment benefits from income taxes.
The Federal Government has increased the share of state Medicaid expenses it will provide to the twelve states that have not yet expanded Medicaid eligibility under the Affordable Care Act (ACA). Subsidies provided under the ACA to assist those whose incomes are too high to qualify for Medicaid will also be expanded. Individuals and families with income between 100% and 400% of the federal poverty line will receive increased premium subsidies and a lower cap on maximum premium expenses. The Department of Health and Human Services will receive about $90 billion this year for a tranche of programs, including funding for COVID-19 testing and contact tracing, vaccine production, hiring public health workers, and bolstering community and tribal health centers. Lastly, the bill covers 100% of premiums for COBRA health insurance coverage, which provides health insurance to those who have lost employer-sponsored health insurance.
Small Business Aid
The Paycheck Protection Program, which provides small businesses refundable loans to keep workers on payrolls, will be bolstered with greater funding and eligibility, and the Senate is considering a separate bill to extend the duration of the program. A new grant program was created for the food service industry, which will receive over $28 billion in funds to cover losses for restaurants, bars, food trucks, and caterers. Companies with more than 20 locations will be excluded from the restaurant program, and $5 billion will be set aside for businesses with less than $500,000 in revenue in 2019. No restaurant may receive more than $10 million total or $5 million per location. The Disaster Loan program, distributed through the Small Business Administration, will receive an additional $15 billion for small businesses whose revenues were affected by the pandemic. An additional $10 billion will be provided for the State Small Business Credit Initiative, and $1.5 billion will fund Shuttered Venues Operating Grants, a new program that will provide grants to performing arts companies that have been shut down due to the pandemic.
State and Local Government Aid
As many state and local governments face budget crunches due to pandemic-caused revenue shortfalls, Democrats have been pushing for massive funding transfers since last year when Republicans were in control of Congress. A non-starter for the Republican caucus, Democrats were finally able to pass the measure, which will provide $360 billion to fund new projects and patch up budgets. $195 billion will go to state governments and Washington, DC, $130 billion will go to local governments, and $25 billion will go to tribal and territorial governments. The funds can be used for specific purposes ranging from assisting businesses and households hurting from the pandemic, providing premium pay to essential workers, making investments in infrastructure, and addressing revenue shortfalls.
$30.5 billion is being provided to federal, state, and local transit agencies, who can use the funds for payroll, PPE purchases, and other expenses. Airports will receive a share of an additional $8 billion so long as they keep at least 90% of employees on payroll through September 30th. Airline workers received an extension of the program keeping pilots, flight attendants, and other employees on payroll despite lagging travel numbers. $15 billion is provided to keep these workers employed through September 30th. A new aid program was created to assist troubled aircraft manufacturers. Manufacturers who have lost 15% of revenue or laid off 10% of employees will be eligible for assistance to cover 50% of payroll costs for a maximum of 25% of a company’s workforce.
Other Programs and the Way Forward
Amid the $1.9 trillion American Rescue Plan is a swath of funding programs and policy changes. Among those not summarized above are an increase in food stamp benefits, assistance for renters, and over $122 billion for schools to reopen and expand services. While the ink is barely dry on this legislation, Democrats in Congress are already talking about the rest of their legislative agenda. Congressional leaders are weighing their options on bills to bolster infrastructure, reform immigration laws, protect the right to vote, and combat climate change. Look back to the O’Neill and Associates blog for analysis of these bills as talks progress.