President Joe Biden’s $1.9 trillion COVID-relief package, also referred to as the American Rescue Plan, has started to roll out. One of the largest economic rescue packages in the history of the United States, it aims to speed up the nation’s recovery from the devastating effects of the pandemic— the US economy, livelihoods, and the recession are just some of the impacts of this life-changing period. Voted on and approved by the United States House of Representatives and Congress, these checks have begun reaching bank accounts. This attempt to help the economy recover from the impacts of the Covid-19 pandemic specifically aims to help underprivileged Americans.
There are three main checks that are a part of this package. The first check is the $1,400 stimulus payment. If people qualify, they can receive up to $1,400. There are, however, some guidelines for eligibility. People making over $80,000 a year and couples making over $160,000 a year with their combined incomes do not qualify for this stimulus check. This makes it different from the last two stimulus check packages signed by former President Donald Trump. Adding on to this differentiation, adult dependents, children, and families with mixed-status citizenship are also eligible for this check. People are looking forward to the complete distribution of these checks, and when some of the nation’s biggest banks, such as Wells Fargo and Chase, announced that they would delay sending them out, they faced immense backlash and criticism from those waiting with bated breath. According to the University of Pennsylvania, it is also expected that about a third of this payment will settle down as savings for the benefitting households, which defeats the purpose of a plan aimed towards stimulating the economy.
The second check is the $300 weekly unemployment benefits, with the inclusion of a new tax break (when the government offers a reduction in taxes). This will reduce the tax burden on households with regards to the unemployment money they received in 2020, which has a range of implications for different people. People who received unemployment benefits in 2020 but no longer do, will receive a tax cut (up to $10,200), resulting in a net gain for them. However, people who did not receive these benefits in 2020 but will get them in 2021, will benefit less from this plan in terms of how much money they receive, and they will not have any tax cuts.
Check number three is an expanded child tax credit, worth more than the stimulus checks. This check is also worth more than the first two, and a larger group of people can qualify for it. Families can claim up to $3,600 per child per year for children under the age of 6, and up to $3,000 per child per year for children between the ages of 6 and 17. However, the credit amount will begin to decrease for single people earning more than $75,000 a year, heads of households earning more than $112,500 a year, and couples earning more than $150,000 a year with their combined incomes. This plan has also removed the previous price floor that required people to earn $2,500 annually to receive the child tax credit, making it much more accessible to a greater number of recipients!
As for student loans, there seems to be light at the end of the tunnel. President Biden has mentioned that he supports waiving $10,000 in student loans per person. However, there was a Democratic Senate proposal to waive $50,000 in student loans. Biden feels that this is not a move America can make at the moment. Moving on to the plan for vaccines. As of March 25, 2021, Biden has achieved his previous goal of getting 100 million people vaccinated by his hundredth day in office (April 30th). He is extending his goal to vaccinate 200 million people by his hundredth day in office. President Biden has plans to allocate $160 billion for a program that will help state governments vaccinate every single resident in America. There are also plans for funding to reopen schools and get most of the kindergartners through eighth-graders back in physical schools within the first 100 days of Biden in office.
Additionally, this package also holds the promise of creating as many as 7 million new jobs for those whose careers were impacted by the pandemic. There is good news for small businesses across the nation. The package will provide small businesses, severely impacted by the pandemic, with grants, lending, and investment to assist them in getting their businesses back up and running. There is a ban on any evictions and foreclosures of residences from now until September 30th. The plan includes $30 billion for assisting renters and smaller landlords who are dealing with low to moderate-income households. This may just save millions of people from being homeless.
It is estimated by the Penn Wharton Budget Model (from the University of Pennsylvania) that the package will increase the Gross Domestic Product (GDP) of the United States by 0.6% this year. However, in years after 2021, the additional debt arising from this package might result in a decrease in GDP of 0.2% in 2022 and about 0.3% by 2040. There are also concerns that this will potentially overinflate the economy, stopping consumers from spending money as a result of drastically increased prices. Despite the alarms, it is believed that the economy might survive this inflation for two reasons: they are banking on consumers gradually starting to spend more on durable goods (products that do not need to be purchased very often)- as they are usually purchased when the economy seems to be improving- as well as the trend that interest rates usually stay low for a couple of years (according to the Chairman of the Federal Reserve, Jerome Powell).
Interestingly enough, this bill was passed because Biden promised Georgia voters he would make the checks his main priority if they elected Democratic senators, essentially giving Democrats control. Sure, “every single Republican” opposed the passing of this bill. Nothing comes without conflict, especially not change as big as attempting to reconstruct the economy after a shutdown of almost a year. Many Republicans claim that this bill is just “excessive spending” and it is just going to make “recovery efforts more difficult.” While there might be plausible unintended effects in the long term, it still holds the promise of change. Of relief. Of moving on, for all citizens and residents of the United States.
Written by Seher Anand
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