In his seventh week in office, President Joe Biden is expected to sign the American Rescue Plan Act into effect on Wednesday. The massive piece of legislation will provide direct payments to Americans, extend jobless benefits, and offer financial relief to state and local governments, among a number of other initiatives aimed at boosting the economy and inspiring hope as the U.S. stays on course to move past the coronavirus pandemic.
While many headlines focus on the question at the forefront of everyone’s minds — when stimulus checks will arrive — there are many other important developments in this $1.9 trillion plan that are worth highlighting. Namely, this relief package dedicates considerable funding for an ambitious anti-poverty program and significant benefits for low-income people.
“It’s a remarkable, historic, transformative piece of legislation which goes a very long way to crushing the virus and solving our economic crisis,” House Speaker Nancy Pelosi said on Tuesday.
Many Republican politicians have attacked the measure as wasteful and excessive; however, most people in the U.S. don't seem to share their sentiments. A Pew Research Center poll released Tuesday found that 70% of Americans support the relief package.
On Thursday, Biden is scheduled to showcase the bill during a primetime TV address that will also mark one year since the coronavirus prompted nationwide shutdowns. As stimulus checks arrive in the mail, we outlined just a few of the other elements of the COVID relief package.
Funding to help schools reopen
Focusing efforts on getting schools to reopen — including implementing models of social distancing measures, hybrid programs, and prioritizing vaccines for educators — has been near the top of the list of talking points for politicians during the pandemic. Getting students back to in-person classes has been a primary concern for both political parties.
Within the American Rescue Plan, there is $128 billion allotted in grants to state educational agencies, reports NPR, with 90% of it allocated to local education agencies. Another $39 billion in grants has been earmarked for higher education institutions. Nearly $15 billion of the relief funds will be given to the Child Care & Development Block Grant program with the aim of supporting childcare facilities, and a special focus on high-need areas.
A more generous child tax-relief credit
For 2021, the relief bill will temporarily expand the child tax credit. Currently, it is worth up to $2,000 per child under the age of 17. But under this new legislation, the tax credit will be as much as $3,600 for children up to five and $3,000 for children aged six to 17.
The bill would also make the full value of the credit available to low-income people who, currently, are ineligible or receive only a portion of the tax credit. In the second half of this year, this measure will require the federal government to send the credit in the form of an advance payment in periodic installments. It is essentially a guaranteed supplemental income for families with children.
A financial boost for the Affordable Care Act
For those purchasing health insurance through the Affordable Care Act’s marketplace, the bill will temporarily increase subsidies, which means lower monthly premiums and possibly lower copays. This will also help people who have lost jobs keep the health insurance they had through their previous employer by covering the full cost of premiums through a federal program called COBRA. Currently, this program is set to go through in September.
Funding for back rent and rent assistance
Approximately $20 billion will go to state and local governments to help low-income households cover the cost of housing, including back rent, rent assistance, and utility bills. According to CNN, $10 billion would be allotted to help struggling homeowners pay their mortgages, utilities, and property taxes. $5 billion is for assisting those at risk of homelessness. The remaining $5 billion is set aside for emergency housing vouchers for those who are already homeless.
A step toward student loan forgiveness
The idea of forgiving individual student loan debt anywhere from $10,000 to $50,000 has progressively become a more mainstream concept. While it was not included in this bill, there is a very important provision tucked away in the lengthy stimulus package that increases the pressure on Biden to address the student debt crisis by removing one of its most discussed hurdles. The provision states that anyone whose student loans are discharged through 2025 will not face tax consequences, reports Vox.
Typically, debt cancellation is considered taxable income meaning that if all of a sudden, $50,000 of an individual’s student loans were forgiven, it would come up on their taxes as if they earned an additional $50,000 that year. With this commonly argued point out of the way, it appears as though the path is being paved for more progress on student loan forgiveness.