President Biden’s American Rescue Plan

President Biden’s $1.9 trillion American Rescue Plan is a set of strategic actions designed to combat COVID-19 and the related economic downturn.  Key elements of the plan, based on Biden’s speech, announcements (https://www.whitehouse.gov/briefing-room/legislation/2021/01/20/president-biden-announces-american-rescue-plan/) and current news reports, includes the following:

  • $400 billion to combat COVID-19, including:

    • $160 billion to execute a national vaccination program ($20 billion), expand testing ($50 billion), mobilize a public health jobs program, and take other necessary steps to build capacity to fight the virus.  The plan envisions funding 100,000 public health workers to engage in vaccine outreach and contact tracing.  Expanding the Federal Medicaid Assistance Percentage (FMAP) to 100% for the administration of vaccines.

    • $170 billion for K-12 through higher education, including $130 billion to help K-12 reopen within 100 days and $35 billion for public colleges and universities and private historically Black Colleges and Universities and other Minority Serving Institutions.

    • $10 billion for expanding domestic manufacturing for pandemic supplies, including authority to use the Defense Production Act.

    • $30 billion appropriated to the Disaster Relief Fund to finance ensure sufficient supplies and protective gear, and to provide 100% federal reimbursement for critical emergency response resources to states, local governments, and Tribes, including deployment of the National Guard.

    • $11 billion to support to the international health and humanitarian response and build the capacity of the international community to fight COVID-19, its variants, and emerging biological threats.

    • $5 billion in funds for states to use to support educational programs and the learning needs of students significantly impacted by COVID-19, including K-12, higher education, or early childhood education programs.

    • Expanded paid sick and family leave:

      • Expansion of the Families First Coronavirus Response Act to include healthcare workers, first responders employers, businesses with over 500 employees, and under 50 employers

      • Expansion of paid sick and family and medical leave to provide over 14 weeks of paid sick and family and medical leave to help parents with additional caregiving responsibilities

      • Provide a maximum paid leave benefit of $1,400 per-week for eligible workers, which will provide full wage replacement to workers earning up to $73,000 annually

      • Enhance the refundable tax credit to 100% of the cost for employers with less than 500 employees to cover the cost of the expanded leave requirements

      • Reimburse state and local government for the cost of this leave

      • Extend emergency paid leave measures until September 30, 2021

  • $1 trillion for actions to address economic impacts of the pandemic.

    • $465 billion to make $1,400 in direct payments to individuals and households, calibrated by income.  The American Rescue Plan calls for a second round in stimulus of $2,000, which includes the initial $600 authorized in December 2020 and a supplemental payment amount included in subsequent legislation.

    • Increase the UI benefit by $400 a week and extended all forms of unemployment and pandemic assistance insurance through September 2021.

    • Fully fund states’ short-time compensation programs (includes workshare) and additional weeks of benefits. 

    • Extend nationwide restrictions on evictions and foreclosures moratoriums and continue applications for forbearance on federally-guaranteed mortgages until September 30, 2021.  Also calling for funds for legal assistance for households facing eviction or foreclosure.

    • $30 billion in rental ($25 billion) and utility payment ($5 billion) assistance for eligible individuals and families.  $25 billion was previously approved in rental assistance.

    • $5 billion for homeless assistance through states and local governments

    • Enhance and expand food and nutrition programs, including, but not limited to:

    • $3 billion for Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)

    • 15% benefit increase under the Supplemental Nutrition Assistance Program (SNAP) 

    • Continue funding for the FEMA Empowering Essential Deliveries (FEED), which cover’s California’s Senior Plates Program, as partnership between local governments, restaurants, and senior citizen who are not otherwise eligible for low-income food programs like Meals on Wheels

    • Remove the state match for receiving SNAP funds

    • $1 billion for nutrition programs in the US territories

    • Increase the federal minimum wage to $15 an hour and end the tipped minimum wage and sub-minimum wage for people with disabilities

    • Call on employers to provide hazard pay to frontline essential workers

    • Expand and enhance funding for child care:

      • $25 billion emergency stabilization fund to support child care providers, including family child care homes, cover their costs and operate safely

      • $15 billion for the Child Care and Development Block Grant to support the cost to families for child care.  In December 2020, $10 billion was approved.

      • Expand the child care tax credit to provide for the expensing of 50% of health care costs per year up to $8,000.  Currently the limit is $4,000.

    • Modify the Child Tax Credit by making the credit refundable for the 2021 tax year, increasing the value of the credit to $3,600 for children 6 and under, making 17 year old children eligible for one year, and increasing the value of the credit to $3,000 for children 7 to 17.

    • Modify the Earned Income Tax Credit by increasing the credit for childless adults from $530 to $1,500, raising the eligibility income limit from about $16,000 to about $21,000, eliminating the age cap for older workers, and expanding eligibility for younger workers.

    • $1 billion for states to cover the additional cash assistance under Temporary Assistance to Needy Families (TANF)

    • Subsidize the continuation health coverage (COBRA) through the end of September 2021

    • $4 billion to expand mental health services

    • $20 billion for the Veterans’ Health Administration

    • $800 million in supplemental funding in various federal programs that serve victims of gender-based violence, including domestic violence and sexual assault

  • $440 billion to support small businesses; protect educators, public transit workers, and first responders from lay-offs; and keep critical services running at full strength.

    • $15 billion in flexible, equitably distributed grants will help small businesses

    • $35 billion investment in successful state, local, tribal, and non-profit small business financing programs, which is expected to leverage $175 billion in capital.

    • Support from the Community Credit Corporation at the US Department of Agriculture to restaurants, bars, and other businesses that have suffered disproportionately.

    • $350 billion would help state and local governments bridge budget shortfalls, including funding to retain essential public workers, including police officers, firefighters, nurses, and educators.  This is double the amount in the CARES Act.

    • $3 billion to the Economic Development Administration to make grants to state and local governments to support bottom’s up economic development.

    • $20 billion for COVID-19 impacted public transit agencies

    • $20 billion in Indian Country to support Tribal governments’ response to the pandemic

  • IT and Cybersecurity Enhancements:

    • $9 billion to launch a major new IT and cybersecurity initiative through the Technology Modernization Fund for the purpose of completing modernization projects at federal agencies

    • $200 million to hire experts to support the federal Chief Information Security Officer and US Digital Service

    • $300 million for Technology Transformation Services in the General Services Administration to drive secure IT projects forward without the need of reimbursement from agencies

    • $690 million for CISA will bolster cybersecurity across federal civilian networks

According to news reports, the President has said that paying for these new initiatives will be achieved by “closing tax loopholes for companies that ship American jobs overseas or that allow American companies to pay zero in federal income taxes.”  President Biden, the plan is intended to “lift 12 million Americans out of poverty and cut child poverty in half. That’s 5 million children lifted out of poverty.  Our plan would reduce poverty in the Black community by one-third. It would reduce poverty in the Hispanic community by almost forty percent.”

According to news reports, the Institute on Taxation and Economic Policy found that the American Rescue Plan would amount to a 29% increase in the annual income of the poorest 20% of Americans.

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