Yeah, Ted. I know. Mexico is fun as long as you don’t get called home within 24 hours. Granted, I’ve never been to any of those resorts in Cabo or wherever – my spring breaks in undergrad were far more muted – but I’ve been to Mexico City and I’d go back for the tacos alone. Even so, if you told me I could choose between a weekend jaunt to Tulum or the federal government passing a massive relief bill that will change the fabric of this country for the better, I’m going for the latter.
Some of you are definitely thinking I only feel that way because I’m a wonky political nerd who can’t just kick it and have a good time at Senor Frogs. All of that is true. But I’m also willing to bet anyone bothering to read this article is similarly intimidated by bottomless frozen margaritas and cares at least a little bit about hallmark legislation. Or you’re my mom.
So if you’re unconvinced that a $1.9-trillion bill passed on a party-line vote is actually better than a paradisal vacation destination, let me sum it up this way: That trip south of the border is probably only lasting a few days. The positive impact of the American Rescue Plan should have cascading effects for decades to come.
To this point the headlines of the bill’s negotiations have largely been reserved for two items: the $1,400 direct payments and the failure to include a $15-per-hour federal minimum wage. But make no mistake. The American Rescue Plan, the largest federal aid package since the Great Depression, is bold, progressive, and transformative. You probably don’t have time to read the whole thing without turning it into a stunt, but here are the highlights:
- $1400 stimulus checks for individuals making under $75,000, heads of households making under $112,500, and joint filers making under $150,000.
- An extension of unemployment benefits through Sept. 6 with a $300 weekly federal supplement. The first $10,200 of those benefits will be tax-free for those with incomes below $150,000.
- $350 billion in state aid.
- $14 billion for vaccine distribution.
- $34 billion to expand the ACA and lower the cost of insurance premiums purchased on government exchanges.
- The federal government will cover 100% of COBRA payments for the unemployed through September of this year.
- $22 billion for emergency rental assistance.
- $10 billion in aid for homeowners struggling with bills or mortgage payments.
- $5 billion for housing for the homeless.
- $86 billion to shore up failing pension funds that would have left millions without money for retirement.
- A significant expansion of the child and dependent care tax credit, which will be worth up to $4,000 for one individual or $8,000 per year for two individuals or more. The credit is also refundable, meaning those who owe $0 in federal income tax due to impoverished circumstances can claim the value of the credit as a refund from the federal government. Previously, this credit maxed out at $2,100. The maximum income level for claiming the full credit is now an AGI of $125,000 up from $15,000.
- Perhaps the most important part of the bill: A wonky change in the child tax credit that effectively makes it a monthly child allowance that will pay parents up to $3,600 per year for each child they have that is five years old or younger and $3,000 for children between the ages of five and 17. More on this in a minute.
- And, finally, the thing you all probably care most about: No taxes will be owed on any student loan debt that is forgiven between now and the end of 2025.
Ok. You get all that?
I know it’s a lot to absorb, but the myriad benefits are wide-ranging, real, and do an impressive job of targeting relief toward the poor and middle class families that have borne the brunt of the pandemic’s economic havoc. In a comparison with the 2017 Tax Cuts and Jobs Act by the Tax Policy Center, the ARP targets about 70% of the benefits toward low and middle-income homes, as opposed to the TCJA, which gave approximately 50% of its benefits to the top 5% of earners in the U.S.
Not all of these changes are permanent, but they expand the social safety net significantly, and may well become permanent in the future. The monthly child allowance, in the form of an expansion of the child tax credit, has been seen by many as a historic shift, and while the benefit is scheduled to expire at the end of 2021, there is a major push among Democrats to make the move permanent. Doing so would be an enormous boon to low-income families, providing much needed resources to give children in destitute conditions access to better food, more stable housing, and a richer elementary education. Not only does this expansion increase access to the benefit to some of our nation’s poorest, it increases the maximum benefit by 80 percent. The funds will also be released to families monthly, rather than as a year-end tax credit, providing cash flow that will be injected right back into the economy.
This benefit will be pivotal to millions weathering the current storm, and implementing it permanently would bring the U.S. in line with a number of high-income western countries, while changing poverty in this nation forever.
Of course, all of this is not to say the bill is perfect. The lowering of phase-out levels to individuals on their direct $1,400 payments does little in the way of deficit prevention, while providing opposition campaign fodder for disgruntled voters confused that they received less relief than advertised. The senate negotiations that lowered supplemental UI benefits from $400 to $300 per week and curtailed the extension by a month were performative nonsense, serving no purpose but to make Joe Manchin feel good about bootstraps at the expense of additional aid that could have made a real difference to millions of unemployed. While valid arguments exist on both sides of the $15 minimum wage debate, leaving the federal rate at $7.25 because of an unelected parliamentarian’s whims is absurd.
But progress comes in stages, and even if the ARP doesn’t cover every policy goal needed to ensure economic stability and institutionalize equal opportunity, it still marks a tangible leap toward a more perfect Union. It has set the standard on what kind of forward-thinking policies President Biden wants to deliver. It has shifted progressive positions closer to the center. It has shifted the idea of what kind of positive change is possible when you have the courage to take significant legislative action without tamping down your goals in the face of gamesmanship from the political opposition.
Banking on broad distaste for a bill that is supported by three quarters of the electorate is a bold strategy to be sure, but I guess making a point to bluntly oppose any Democratic legislation or court appointments appears to be the GOP’s default at this point. Look no further than this week’s senate vote to confirm former-Supreme Court nominee Merrick Garland to the post of Attorney General, in which 20 Republicans, including Mitch McConnell, crossed party lines and approved Garland to be the most powerful lawyer in America. It’s almost as if the GOP never had any real problems with Garland and their refusal to hold a confirmation hearing was just a cynical ploy by McConnell to steal a seat on the high court! But, I mean, that would just be crazy, right?
Despite the messaging, there are many things in this bill Republican voters support, to say nothing of Mitt Romney’s own plans for a similar child allowance. For those on the left who say it doesn’t go far enough, patience might be required. Much of that may hinge on the persuadability of Manchin and Sen. Kyrsten Sinema but that cause is not lost. Manchin has begun to show flexibility on the filibuster, which could mean more significant changes on the way, such as forcing the filibuster to actually require a god’s honest filibuster. None of us want to see Sen. Ted Cruz (R-Cancun) reading Green Eggs and Ham on the Senate floor, but maybe that’s the point. If it’s unpleasant to do or to watch, maybe the minority opposition won’t do it, and the majority won’t have to watch it. And then maybe some exciting stuff might actually get done no matter how much conservatives love Dr. Seuss all of the sudden.
This bill marks a seachange for America, and it may be the inflection point that not only expands the safety net for our least fortunate, but that economically carries us through the end of this trial. The vaccines are here. The denouement of the pandemic is coming if we work for it. We just have to hold the line a few more months and this bill helps us get there and beyond.
President Biden said as much in his national address hours after signing the ARP into law Thursday night, which marked exactly one year since the Covid-19 Pandemic’s official beginning. He pointed to the bill’s benefits and is now on the road selling it to the American people. He touted the remarkable progress in our vaccine rollout by noting all American adults should be eligible by May 1. He also did not mince words about what we’ve endured and the work that’s left to go. As he said early on in the speech, “We all lost something.”
That is true. Some of us lost opportunities or experiences. Some of us lost jobs. Too many of us lost loved ones. The President went through the list: weddings, graduations, birthday parties. Hugs. “All the things that needed to happen, but didn’t,” as he put it.
There is no salve for those wounds, and for millions who have lost not just moments, but the lives of those close to them, nothing will ever compensate. The American Rescue Plan does not fix everything. It can’t reverse this tragedy. But it does change this country for the better, and one day we might look back and think of all those things that needed to happen.
Maybe this time we’ll say they did.
Photo credit: Getty Images