Congress has passed the American Rescue Plan, a $1.9 trillion spending package that aims to accelerate the U.S. economic recovery and provide funds to support the speedy distribution of vaccines.

This latest round of aid, which was rejected by all Republicans in Congress, marks the first major legislative victory for President Biden. In contrast with the emergency bills passed last year, the Democratic bill focuses the vast majority of aid on households, states and cities, and vaccine distribution. There is little money directed this time toward businesses.

Over half the money – 54% – in the bill goes toward households. In addition to the popular $1,400 checks, there is funding for extra unemployment insurance through Labor Day, expanded tax credits, and various programs to make rent, food and health insurance more affordable.

Economists say low- and moderate-income Americans will benefit the most from this aid, especially individuals earning $75,000 or less and couples earning $150,000 or less. The number of Americans living in poverty is predicted to drop in 2021 by as much as a third because of this legislation.

The cash infusion is expected to result in a 20% income boost for the bottom 20% of earners (those making $25,000 or less), according to the nonpartisan Tax Policy Center.

One of the biggest complaints about the bill from Republicans is the overall price tag. This additional spending comes on top of about $2.8 trillion that was approved last year, plus trillions more that the Federal Reserve has pumped into markets and the economy.


Republicans argue that a smaller bill would be sufficient and that too much money is spent on programs not related to the coronavirus crisis. When the cost of all three stimulus bills are combined, the total greatly exceeds federal spending on both the Great Recession and New Deal, after adjusting for inflation and the growing size of the U.S. population.

On its own, Biden’s American Rescue Plan is smaller than those two interventions.

Democrats counter that the nation spent too little in the wake of the Great Recession, which resulted in years of additional pain. Biden and Democratic leaders said they did not want to repeat that error.

Democrats are also portraying this legislation as one of the biggest anti-poverty efforts the U.S. government has undertaken in decades. The main income boost comes from another round of stimulus checks that can give as much as $5,600 to a family of four, and the temporary expansion of the Child Tax Credit, which will give as much as $3,000 per child ages 6 to 17 (and $3,600 for children under age 6) to low- and moderate-income families.

According to calculations by the Committee for a Responsible Federal Budget, a Massachusetts family of four that had an income of about $53,000 before the pandemic and has one parent out of work stands to receive more than $22,000 from this package. A single individual in Tennessee who is unemployed and used to earn about $25,000 could receive as much as $15,000 from this bill. These families would also potentially be eligible for more help to pay rent and afford health insurance.

The United States has about 40 million people living in poverty, and nearly 13 million of them are expected to be lifted out of poverty by this bill, according to an analysis by Columbia University’s Center on Poverty and Social Policy. An analysis by the Urban Institute predicts similar results, with poverty declining by as much as 42% among Black Americans and 39% among Hispanic Americans.

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