What Is the American Rescue Plan?

The American Rescue Plan was proposed by President Joseph R. Biden on Thu., Jan. 14, 2021, to facilitate the United States’ recovery from the devastating economic and health effects of the COVID-19 pandemic. The $1.9 trillion package includes direct stimulus payments of $1,400 per person, extending unemployment compensation, raising the minimum wage, continuing eviction and foreclosure moratoriums, and increasing the Child Tax Credit while making it fully refundable. It provides funds for state and local governments to help compensate for lost tax revenues, money for schools from kindergarten through eighth grade to safely reopen amidst the pandemic, and subsidizes COVID-19 testing and vaccination programs.

Biden announced that he would follow the plan after his inauguration with the Build Back Better plan, which will help rebuild the country’s infrastructure.

Key Takeaways

  • The American Rescue Plan is President Joseph R. Biden’s proposal to facilitate the United States' recovery from the devastating economic and health effects of the COVID-19 pandemic.
  • The package weighs in at a cost of $1.9 trillion.
  • It mixes efforts to mitigate the economic effects of the pandemic with strategies to fight the virus itself.
  • Biden intends to follow the plan with one to help rebuild the U.S. infrastructure, called the “Build Back Better” plan, which he will propose after his inauguration.

Understanding the American Rescue Plan

The American Rescue Plan would be the latest stimulus package to be enacted by Congress during the COVID-19 pandemic, following in the wake of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 and the nearly $900 billion stimulus aid included in the Consolidated Appropriations Act of 2021, passed in December 2020. 

It extends some aspects of those bills while also creating new recovery stratagems. These include:

  • Direct Financial Payments—The plan provides for direct $1,400 stimulus payments to people making less than $75,000 annually, building on the $600 payments in the second stimulus package to reach the $2,000 mark originally requested by former president Trump in December.
  • Extended Unemployment Benefits —The 2021 act extended unemployment benefits of $300 a week through March 14, 2021, and the American Rescue Plan continues the payments through the end of September while upping the amount to $400. By contrast, the CARES Act provided $600 payments.  Currently, more than 18 million Americans rely upon unemployment benefits.
  • Higher Minimum Wage —Biden has included in his plan a longstanding goal of the Democratic Party to increase the federal minimum wage, which hasn’t changed since 2009, from $7.25 to $15.
  • Continued Eviction and Foreclosure Moratoriums —The current moratoriums, which would end in March, have been continued through September. As of January 2021, 14 million Americans had fallen behind in their rent, with another 11 million in danger of foreclosure.
  • Increased Food Aid —The plan proposes extending emergency nutritional assistance to the 43 million children and their families enrolled in the SNAP program to the end of 2021. The $3 billion cost includes financial aid to restaurants to prepare meals for the program.
  • Expanded Child Tax Credit—This credit would be temporarily increased from $2,000 to $3,000 for all children under 18 and to $3,600 for children under six. It would also, according to the New York Times, make the credit refundable, meaning that even those who don’t owe income tax can claim it and receive the money.

The plan sets a goal of administering 100 million doses of the COVID-19 vaccine within the first 100 days of the Biden administration, as well as reopening the majority of kindergarten through eighth-grade schools in that same window. At a projected cost of $400 billion, it involves money to increase vaccination production and distribution, as well as aid to states and local communities to assist in “testing and transportation, additional cleaning and sanitizing services in [the] schools, protective equipment, and ventilation systems.” It also helps subsidize the cost of quarantining people who have contracted the virus.

Important

Federal unemployment benefits would be extended through the end of September 2021 at a weekly amount of $400.

Funding Breakdown for the American Rescue Plan

As reported in the New York Times, $130 billion would go toward helping schools reopen, with an additional $40 billion going to aid colleges with distance learning and other coronavirus-related strategies. On top of funds for school reopening, $440 billion would go to communities, including grants and loans for small businesses. Emergency funding for state, local, and territorial governments will weigh in at $350 billion.

The plan will expend $160 billion to fight the coronavirus, with measures that include paying for a national vaccination program ($20 billion), increasing COVID-19 testing ($50 billion), and manufacturing more protective gear and supplies, strengthening supply manufacturing, and utilizing emergency response personnel ($40 billion). It would also create a public health jobs program and allow 14 weeks of paid sick and family and medical leave for people dealing with closed schools or care centers, lasting through September. Eligible workers would get a $1,400 leave benefit. A refundable tax credit would help state and local governments, as well as businesses with fewer than 500 employees, shoulder the costs.

Prospects for Passage of the American Rescue Plan

Though the Democrats control both the House and the Senate, their majorities are slight, and the Biden administration faces a significant challenge in getting this plan approved by Congress without Republican support. However, there have been some early signs of bipartisan interest, including Sen. Marco Rubio (R-Fla.) urging Biden in a letter to include the $1,400 stimulus payments in his bill. And if the Biden administration can marshall unanimous Democratic support, then it will be the vote of Vice-President Kamala Harris that breaks the 50-50 tie in the Senate to enact the legislation.