On Thursday, March 11, President Biden signed the American Rescue Act, a broad-reaching package designed to boost health programs and various struggling sectors of the economy. We have all heard about the law’s flagship policy — $1400 stimulus checks for around 85% of Americans — but it also includes many other provisions with important impacts. Here is a guide to some of these underreported sections and what they mean.
Economic relief for households
Many families and individuals are eligible for financial support in addition to stimulus checks. The American Rescue Plan extends child poverty aid and weekly $300 unemployment benefits, targeting relief to those that need it most. For the next year, tax credits for families with children will be extended and sent as a steady revenue stream, with most of the benefits going to the lowest-earning families. This is a much-needed provision, especially for parents who have been forced to stay home with their children as many schools remain online.
The short-term impacts of this bill are immense. The child tax code changes are expected to help lift nearly 10 million children out of poverty, many of whom are AAPI, Latino, or Black. It may have more enduring effects, as well. The Biden team and Congressional Democrats have made it no secret that they hope these temporary tax changes become permanent.
Relief for schools and local governments
Individuals are not the only ones receiving support in this relief bill. State and local governments have borne many of the costs of shutdowns and healthcare responses, and their budgets are feeling the strain. As a result, around 5 percent of state government employees have lost their jobs since the start of the pandemic, and community health officials may lack adequate resources for testing, vaccination, and contact tracing. With a generous injection of $350 billion, Congress is giving state and municipal governments the funding they need to provide essential services and reconcile budget deficits. Compared with last year’s CARES Act, the American Rescue Plan offers localities greater flexibility on how to spend their allotted money.
Schools have struggled, too. Many are strapped for cash, even under normal circumstances, and there are costs associated with both making in-person classes COVID-safe and transitioning to online learning. This bill sends around $170 billion to K-12 schools and higher learning institutions, which is expected to have a huge impact. Research has shown that online learning can leave gaps in students’ learning, so returning to the classroom is a top priority.
Health insurance subsidies
In a time when people’s incomes are falling and expected health expenses are rising, health insurance is more important than ever. The American Rescue Plan supports healthcare coverage in two key ways: by expanding Obamacare, and by making the existing COBRA health insurance framework more generous. COBRA allows employees who were recently laid off and would otherwise lose insurance to continue buying into their existing plans — but that can be prohibitively expensive for some. To address this, the government has promised to pay for COBRA premiums until September, thereby expanding coverage for people who have recently lost their jobs.
Biden’s COVID bill also boosts the number of insured Americans by expanding Obamacare’s coverage. Currently, Obamacare subsidizes health insurance for people whose incomes are too high for Medicaid but who still make less than four times the federal poverty level. Thursday’s legislation increases both the generosity and reach of subsidies through 2022. This provision is a big win for Democrats, who hope that it will be popular enough to remain in place even beyond next year.
Implications for Biden’s future
The COVID relief bill paints an ominous picture for the future of some of President Biden’s bolder legislative goals. No Republicans in either chamber of Congress voted for the American Rescue Plan, and progressives were forced to concede some of their more aggressive proposals in the face of complaints from moderate Democrats. Senators such as Joe Manchin (D-WV) opposed expansions of unemployment credit and a federal minimum wage increase to $15 — measures that were removed from the final version of the bill.
We have already crossed the halfway point of President Biden’s symbolic first 100 days, and hopes that he will successfully be able to reach across the aisle are dwindling. Given the slimness of Democrats’ majorities in both chambers of Congress, Biden must fully unite his party to pass important legislation. We can also expect Republicans to regain control of the Senate, the House, or both; the unspoken rule of midterm Congressional elections is that the President’s party always loses ground. Therefore, Biden has only a small window in terms of both time and political capital to achieve his campaign promises.
The next two years in Washington will be critical. Obama’s landmark legislative accomplishment, the Affordable Care Act, was passed during his first two years by a very narrow margin, without a single GOP vote. For Biden to succeed, he will need to take a cue from the Obama playbook, and act fast. If he does not, we can expect more Washington gridlock and a one-term presidency.