Note: The views and opinions expressed in blog/editorial posts are those of the author. They do not purport to reflect the views or opinions of Misbar.
Some are claiming that Democrats “shafted” working-class Americans with the $1.9 trillion stimulus bill - but is this true?
The $1.9 trillion American Rescue Plan Act is currently changing the United States. In the wake of the 2020 election and near the passage of the act, different voices were claiming that America’s working class was either losing out or being shafted by the government. But is this really the case?
The American Rescue Plan Act is quite extensive and has gone through many changes in congress. Because of this, it can be easy to focus on a few parts of the bill or highlight what is missing from the bill. Those stating that there is no minimum wage increase in the final bill are correct; for the near term future, the federal minimum wage will remain at $7.25 an hour.
Others have highlighted that the final bill failed to increase unemployment benefits from $300 to $400. This lack of an increase can seem like an attack on struggling Americans when in 2020, many were receiving $600 per week while looking for work.
But this is a selective reading of the stimulus bill. The minimum wage increase is something that Democrats are still pursuing independently of the American Rescue Plan Act, and the unemployment payments only make up a small part of the final legislation.
In fact, working class Americans are benefitting in other ways. Most people are aware that working class and middle class Americans are receiving an extra $1,400 from the government in the form of stimulus checks. President Biden was quick to point out that childhood poverty would be cut in half. What appears to have received less attention is the following: $10,200 of a person’s unemployment insurance earnings are now tax free. $30 billion will be provided to low-income households for rental assistance. $10 billion has been given to states and tribes for homeowners who need mortgage payment assistance. $5 billion has gone into providing food assistance for low-income families who have children. $73 billion has gone into health care assistance, which includes making the Affordable Care Act cheaper and accessible to more people and COBRA health insurance will be 100% subsidized for six months.
Arguments that the working class are still struggling are valid, but it is this writer’s opinion that it is wrong to state that working class people have been “shafted” as a result of the new laws. There’s a reason that the American Rescue Plan is being billed by some as the “most ambitious anti poverty initiative in a generation.”
In March 2020, a different American government passed the CARES Act. With some Republican lawmakers calling President Biden’s $1.9 trillion bill too large, it’s easy to forget that President Trump’s CARES Act was actually $100 billion larger than President Biden’s American Rescue Plan Act. President Biden’s bill gave more money to individuals, with $300 billion being dedicated to stimulus checks in March 2020 compared to $422 billion in March 2021. In the 2020 act, $153.5 billion went into public health, compared to $216 billion in “expanded tax credits and healthcare subsidies” in the 2021 act.
The American Rescue Plan Act is in the title is meant to allow the USA to overcome the pandemic and recover its economy. If this happens, then the benefits to working-class American will seemingly extend far beyond unemployment benefits and health insurance subsidies; when the pandemic recedes and the economy recovers, there will be more opportunities.
Economic recovery highlights a whole extra dimension to the American Rescue Plan Act and its benefit to working-class Americans. Namely, what parts of the American Rescue Plan Act will become permanent? This discussion is more speculative. Perhaps the most likely permanent change to come out of the American Rescue Plan Act is the expansion of Child Tax Credit. As the Center on Budget and Policy Priorities puts it, “Permanently enacting this historic provision - along with the EITC provision, which will stop the federal tax code from taxing millions of workers without children into or deeper into poverty - would be a landmark achievement, and should be an urgent priority for policymakers.”
It’s also possible to see many of the changes to the Affordable Care Act becoming permanent. President Biden was one of the architects of the original act, and one of his key priorities is improving it. One of President Biden’s other key health care reforms, the Public Option, currently has a difficult path into becoming law. It’s thus feasible to imagine that the president will use his slim majorities in the House of Representatives and the Senate to perpetuate changes that have already been made.
Yes, the lack of a minimum wage and unemployment insurance increases are disappointing. But hopefully, the American Rescue Plan Act is the first step in reducing poverty and inequality, not the last.
