The American Rescue Plan Act--Believe It!
Elections have consequences. Voting does matter. Hard work pays off. Good things happen.
Take yourself back to last October, just six months ago.
Could you have imagined that a bill would be signed into law in this country that would cut childhood poverty in half, give the poorest 20% of Americans a 20% boost in income, lower federal taxes by an average of $3,000 while raising net incomes by nearly 4%, give 70% of those tax reductions to Americans earning less than $95,000 a year, create 7.5 million jobs, give $130 billion to schools, and invest $40 billion in childcare?
Could you have imagined that our government would enact of a piece of legislation that Bernie Sanders would call "the most significant piece of legislation to benefit working people in the modern history of this country”?
You couldn’t have, because it would have been literally impossible.
But thanks to the November election, today Congress passed the America Rescue Plan Act, which accomplishes all of these things and more, and sent it to a President who will sign it into law.
Wait a minute.
Wasn’t it nauseating to watch Joe Manchin force cuts in unemployment benefits during negotiations on the American Rescue bill—cuts that meant that 17 million fewer Americans would benefit from the bill? Absolutely.
Wasn’t it shocking to see seven Democratic Senators vote against including raising the minimum wage to $15 in that bill? Yes.
Does the bill include provisions that have nothing to do with the economic fallout from the pandemic? It does.
Isn’t Rep. Ilham Omar right when she says that the final bill is “a really disappointment development. We obviously are now ultimately sending money to less people than the Trump administration.”? Manchin’s cuts were disappointing, and it’s true that Donald Trump claimed that he supported higher payments than what ended up in the bill. But $422 billion in stimulus payments will be paid out. And Omar is completely ignoring $1.3 TRILLION in other, profound benefits that also help real Americans.
I’ve been looking into the details of the American Rescue bill the past couple of days, and, even with Mancin’s cruel cuts, Sanders’ sky-high praise of the American Rescue is no exaggeration.
If you consider yourself a progressive, you have just won a staggering victory.
If you have despaired of the Democratic Party ever being a unified party that fights for and enacts truly bold, progressive legislation, you have reason for some cautious optimism. Democrats in the Obama era watered down legislation like the ACA in order to get Republican support. That meant that their opening gambits were not bold bills, but weak-tea compromises. The Republicans never voted for any of those bills anyway, and the watered-down bills were justifiably LESS popular—and more difficult to defend.
That didn’t happen this time. The Democrats unveiled a $1.9 TRILLION package of progressive solutions, and despite Manchin’s demands, they passed a $1.9 TRILLION package of progressive solutions by keeping their caucus united—no mean feat. Every Democrat voted for it, and every White Supremacist QAnon Party member voted against it.
Who gets this $1.9 trillion, exactly? Here are the big buckets:
· 27% of the total is going to state and local governments and schools, much of which will make up tax and revenue losses related to the pandemic, avoid massive public-sector layoffs, and help schools reopen.
· 22% of the total bill comes is $422 billion set aside for $1,400-per-person stimulus checks.
· 13% ($246 billion) is for extending additional unemployment funding of $400 a week.
· 12% goes to COBRA subsidies, Affordable Care Act subsidies, lunch programs for children, testing and contact tracing, airlines, medical supplies, small business loans, and grants to restaurants, bars, and music venues.
· 8.5% goes to direct containment measures such as vaccines and testing.
· 15% of the funding goes to policy priorities and projects that are NOT directly related to the current crisis—what the opposition is calling “pork.” This includes $1.5 billion for Amtrak, $480 million for museums and Native American language preservation, $1.5 million for a bridge connecting between Canada and New York State, $50 million for family planning agencies like Planned Parenthood, and $50 million for environmental justice grants for minorities and low-income Americans.
What’s important to remember is that 99% of the money is going to Americans and that 85% of it is pandemic related. The opposition is already claiming that only 9% of the spending in the bill is focused on the pandemic. What they mean is that only money for vaccines and testing have anything to do with COVID-19, and that they are ignoring the catastrophic impact the pandemic has had on businesses and American workers. Not a great message.
There is nothing in the bill that benefits rich Americans. Just ponder THAT for a moment.
Politically, the American Rescue Plan Act puts the Democrats in a very strong position going into the 2022 mid-term elections. Every current White Supremacist QAnon Party member is now on record as having opposed a bill that is supported by 69% of American voters. (84% of Democrats, 65% of independents and 54% of Republicans, according to polls released this week, support the bill.) The Act gives 70% of the tax benefits to Americans who earn less than $95,000 a year—real cash benefits to 70% of all Americans. This time, the Democrats won’t be defending an ineffective compromise bill.
Let’s look at two powerful aspects of the American Rescue Plan Act and see how they will actually impact Americans and how they will play out politically:
· The most potentially transformative piece of the Act is its expansion of the child tax credit. Before the Act, Americans got a $2,000 yearly tax credit for children from birth through age 16. The American Rescue Plan Act increases this to $3,000 for children aged 6 to 17, and to $3,600 for children 5 and younger. Another new wrinkle is that the tax credits will be sent to eligible families via regular direct deposits starting in July, so they can use the benefits as cash in real time without waiting for tax time to realize them. In addition, these child tax credits will be expanded to 17 MILLION Americans who had been previously ineligible or party ineligible. This is the provision that will cut childhood poverty in half.
· The American Rescue Plan Act brings about the biggest expansion of federal assistance for health insurance since the Affordable Care Act. Millions of Americans will save hundreds of dollars, if not more, each year on health insurance. A hypothetical 45-year-old making $58,000 now gets no aid under the ACA. With the bill, they'd be entitled to a $1,250 tax credit, or 20% off their premiums, according to the Congressional Budget Office. A 64-year-old making $19,300 already gets generous subsidies that reduce premiums to $800 a year. But with the bill, that person would pay NO premiums for a standard plan.
The expanded child tax credit, with its profound impact on childhood poverty, is set to expire in one year. The Democrats put this item in the bill because they want to make it permanent. In the 2022 midterms, White Supremacist QAnon members will be forced to campaign to end a real benefit that cut childhood poverty in half. The real cost savings for health insurance that the Act will give millions of Americans will further expose the reality that the White Supremacist QAnon Party has had no healthcare plan for eleven years now. Those benefits are also temporary, so the opposition will again be fighting to end an existing benefit. The American Rescue Plan Act will put even more pressure on red states to expand Medicaid. Fourteen states that Trump won in 2020 have expanded Medicaid; twelve red states have refused. This bill offers real relief to real Americans, including Trump supporters. There is no better way to expand your base. This is why the White Supremacist QAnon Party is talking about Dr. Suess and Mr. Potato Head, and not the American Rescue Plan Act.
Legislative wins tend to lead to other legislative wins. This victory gives the Democrats a big win that could translate into political momentum. The Democrats will be under enormous pressure to either kill or defang the filibuster in order to pass the minimum wage and bills on climate change and infrastructure. These measures are extremely popular with the American voters, too.
Again, Bernie Sanders: “I am very proud to say that with this bill, the Congress is finally responding to the pain so many working families in Vermont and all over this country are feeling. Not only are we going to boost stimulus to working parents and their kids by $1,400, we are going to cut childhood poverty in America in half by providing parents with a monthly check of up to $300 per child. I will say that again, because it cannot be understated: with the American Rescue Plan, we are going to cut childhood poverty IN HALF.”
If you are an American progressive, get your head around the profound impact this bill will have. Understand the details in the bill. Take some time to celebrate a major victory. Then get back to the work of keeping up the pressure on Biden and the Democrats (especially Joe Manchin and Kyrsten Sinema) to keep delivering.
The following sections give more details about the provisions in the American Rescue Plan Act.
Vaccinations and testing
$160 billion for vaccine and testing programs to help end the pandemic. A national vaccine distribution program that would offer free shots to all U.S. residents regardless of immigration status. Community vaccination centers. Mobile units for rural areas. Rapid-results testing.
Aid to local governments
More than $360 billion in aid for state, local, tribal and territorial governments who have been hammered by higher costs and lower tax revenues due to the pandemic. This money will help them avoid deep cuts to jobs, public health, safety, and education until the pandemic subsides. The Senate bill added $10 billion for critical infrastructure, including broadband internet, and $8.5 billion for rural hospitals.
Unemployment
The supplemental unemployment benefits approved in early stimulus bills runs end on March 14. The Senate bill ensures that a weekly federal unemployment benefit of $300 (reduced from $400 in the House bill) will be extended through September 6 (reduced by a month compared to the House bill) for the unemployed, unemployed people who have exhausted their regular benefits, self-employed people, and gig workers. Households earning up to $150,000 a year will not have to pay taxes on the first $10,200 in unemployment benefits, thus avoiding surprise IRS bills for millions of Americans this spring.
Health coverage
100% coverage for continuing health insurance for laid-off workers. The House version included subsidizing 85% of COBRA premiums for eligible Americans. The bill helps small businesses by reimbursing employers with fewer than 500 employees $1,400 a week and tax credits for the cost of paid leave for employees. The bill does not mandate that employers offer paid leave. The bill would give the Affordable Care Act a boost by increasing subsidies for people who use it purchase health insurance. The Act includes $160 billion for vaccine and rapid-results testing programs to help end the pandemic. A national vaccine distribution program that would offer free shots to all U.S. residents regardless of immigration status. Community vaccination centers. Mobile units for rural areas.
Aid to local governments
More than $360 billion in aid for state, local, and territorial governments that have been hammered by higher costs and lower tax revenues due to the pandemic. This money will help them avoid layoffs and deep cuts to public health, safety, and education until the pandemic subsides. The Senate bill added $10 billion for critical infrastructure, including broadband internet, and $8.5 billion for rural hospitals.
Tax Credits and Childcare
A one-year provision that gives expanded tax credits to low- and middle- income families and make them refundable for 2021. The child tax credit is expanded to $3,000 from $2,000 for each child aged 6 to 17. Children 5 and younger will be eligible for $3,600. The bill would make the full value of the credit available to low-income people who are currently ineligible or receive only a portion. And for the second half of this year, it would have the federal government send advance payments of the credit to Americans in periodic installments. The bill also includes $25 billion to help open child-care centers and $15 billion in grants to support essential workers in meeting childcare costs.
Schools
$130 billion to help K-12 schools open (and, thereby, help women re-enter the workforce) by hiring additional staff to reduce class size, modify spaces and purchase resources. $40 billion for colleges and universities to do likewise. If the Dems can pass a bill forgiving student loans in the future, the American Rescue Act makes that forgiveness tax free.
Rental assistance
The moratoriums on eviction and foreclosure moratorium extended through September. $45 billion to help low-income households who have lost jobs pay rent, mortgages and utility bills. $5 billion to states and localities to offer emergency housing for families facing homelessness.
Airlines and Airports
$14 billion to extend past March 31 a payroll support program for eligible airlines and $1 billion to do the same for contractors to the air carriers. The $8 billion for airports to make changes to facilities or personnel to prevent the spread of Covid-19.
Small businesses
$25 billion to restaurants and $1.25 billion to venue operators to them survive after pandemic lockdowns and closures. $15 billion for targeted Economic Injury Disaster Loans and an additional $7.25 billion for forgivable loans in the Paycheck Protection Program.
Senate Democrats also added the following new provisions to the final bill that were not in the House version:
· The Senate bill provides $510 million for the FEMA Emergency Food and Shelter Program. That money would support homeless services providers for overnight shelter, meals, one month’s rent and mortgage assistance and one month’s utility payments.
· The Senate version expands the Employee Retention Tax Credit for start-up companies and other businesses hit by the pandemic.
· The bill also increases the value of the federal COBRA health insurance program from 85 percent to 100 percent.
· The bill adds a $10 billion infrastructure program to help local governments continue crucial capital projects.
· The bill makes all coronavirus-related student loan relief tax-free.
· The bill increases the total amount of Amtrak relief funding by $200 million.
· For education funding, the bill sets aside $1.25 billion for summer enrichment; $1.25 billion for after-school programs and $3 billion for education technology
· The Senate bill also adds $8.5 billion in funds for the Provider Relief Program to assist rural health care providers.
Links:
Analysis by the non-partisan Urban-Brookings Tax Policy Center
Poverty-Reduction-Analysis-American-Family-Act-CPSP-2020.pdf (squarespace.com)
The American Rescue Plan is Popular and Holds Bipartisan Support (dataforprogress.org)
Child tax credit expansion sets up showdown with GOP (apnews.com)
Study: Poorest Americans would get 20% income boost from Biden relief package - Axios
COVID bill to deliver big health insurance savings for many - ABC News (go.com)