Seven weeks into President Biden’s term, his first major piece of legislation, the American Rescue Plan Act, is set to become law. The House passed a final version of the bill this afternoon, and it now heads to Biden’s desk, where he is expected to sign it on Friday.
But the $1.9 trillion relief package, which he proposed even before taking office, is more than a stopgap measure to shore up the economy or respond to the coronavirus pandemic. As our economics reporter Jim Tankersley wrote in a recent analysis, it amounts to a major federal investment in low- and middle-income Americans, reducing their tax burdens and sending many of them thousands of dollars in cash. In that, it is virtually without precedent in recent American politics.
The bill, Tankersley writes, seeks to “power a rapid increase in economic growth by aiming money at people who need help right now to pay their bills, buy groceries and stave off eviction or foreclosure — as opposed to higher earners who would be more likely to save the money.”
It contains a number of provisions that have little to do directly with the coronavirus and that aim to strengthen the country’s frayed social safety net. Those provisions include an increase in health care subsidies under the Affordable Care Act and increased tax credits for families with children, particularly the poorest families. (One thing that is not included, of course, is an increase in the minimum wage to $15 an hour, a provision that left-leaning lawmakers had pushed for but was ruled out by the Senate’s parliamentarian.)
The $1.9 trillion package enjoys broad public support, with 70 percent of Americans expressing a favorable opinion of it, according to a Pew Research Center poll released yesterday. That includes nearly all Democrats and more than two in five Republicans — although no Republican lawmakers in Congress voted for the bill.
Read on for a rundown of what’s in the bill — and, yes, a clarification on who exactly will receive those much-discussed $1,400 checks.
Stimulus checks and unemployment insurance
Like previous Covid-19 relief bills, this legislation includes direct checks to Americans, as well as an extension of the federal supplement to state unemployment benefits. An original Democratic proposal had included an extension of $400 a week in supplemental assistance. But after moderate Democrats objected, the number was lowered to $300 — exactly half the amount that was given out in the first relief bill 12 months ago.
The legislation includes a round of $1,400 stimulus checks for individuals making less than $75,000 a year and for married couples earning under $150,000. Those earning slightly more will get reduced checks, and people who make over $80,000 or couples making over $160,000 will not receive any. Biden said over the weekend that the stimulus payments would start landing in Americans’ bank accounts later this month.
Funding for vaccinations, school reopenings and local governments
The bill includes $14 billion aimed at speeding up vaccine distribution, and $130 billion to help schools reopen safely by providing for improved ventilation, hiring extra janitors and distributing more personal protective equipment. It also will send $350 billion to state and local governments, which have had their finances threatened by the economic downturn over the past year.
In separate news, Biden announced today that he would move to secure another 100 million doses of Johnson & Johnson’s single-shot vaccine by the end of 2021. The hope is to make enough shots available to vaccinate children across the country if the vaccines are approved for them, and possibly to administer booster doses if needed to combat virus variants.
This bill goes well beyond the Trump-era Covid relief packages in a number of areas, particularly health care. It includes $34 billion to temporarily strengthen provisions of the Affordable Care Act, including significant increases to subsidies for middle-income Americans who buy private health insurance on the exchange marketplace.
The stimulus payments would be $1,400 for most recipients. Those who are eligible would also receive an identical payment for each of their children. To qualify for the full $1,400, a single person would need an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income would need to be $112,500 or below, and for married couples filing jointly that number would need to be $150,000 or below. To be eligible for a payment, a person must have a Social Security number. Read more.
Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read more
This credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. Read more.
There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.
The bill would provide billions of dollars in rental and utility assistance to people who are struggling and in danger of being evicted from their homes. About $27 billion would go toward emergency rental assistance. The vast majority of it would replenish the so-called Coronavirus Relief Fund, created by the CARES Act and distributed through state, local and tribal governments, according to the National Low Income Housing Coalition. That’s on top of the $25 billion in assistance provided by the relief package passed in December. To receive financial assistance — which could be used for rent, utilities and other housing expenses — households would have to meet several conditions. Household income could not exceed 80 percent of the area median income, at least one household member must be at risk of homelessness or housing instability, and individuals would have to qualify for unemployment benefits or have experienced financial hardship (directly or indirectly) because of the pandemic. Assistance could be provided for up to 18 months, according to the National Low Income Housing Coalition. Lower-income families that have been unemployed for three months or more would be given priority for assistance. Read more.
The Congressional Budget Office has projected that middle-aged, middle-class citizens should see their insurance premiums cut by more than half as a result of this bill. The provision will expire after two years, setting up yet another fight in 2022 over the fate of the health care law.
Child tax credits
Biden’s bill increases the annual Child Tax Credit to $3,000, a bump of $1,000, and raises it to $3,600 for parents of children under 6. The plan also closes a loophole that had excluded the lowest-income households by allowing people to collect the full benefit even if they pay little or no tax.
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