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The American Rescue Plan Act of 2021 and Next Steps for the Biden Administration

By: Robert Knight, Director of Government Relations and Workforce Policy

The $1.9 trillion coronavirus relief bill received final congressional approval on March 10 and was signed by President Biden on Thursday, March 11. The American Rescue Plan Act of 2021 survived a series of close party-line votes only after the Senate eliminated the minimum wage increase and made several modifications to the original House-passed version.

The legislation has three intertwined elements:

  1. Recovery by putting spending money in the hands of most Americans to stimulate rapid economic growth out of the recession
  2. Poverty reduction through aggressive strategies to assist lower-income and middle-class families
  3. Additional funding to continue efforts to put an end to the pandemic

Major provisions of the massive bill in its final form include the following:

  • Unemployment benefits will continue to include a $300 weekly add-on benefit through September 6. The extra payment was slated to expire on March 14. While the Biden Administration sought and the House approved a $400 benefit, the lower figure was the compromise needed to gain 50 votes for passage of the unemployment insurance (UI) provisions in the Senate. The bill also includes a tax break on up to $10,200 in UI benefits for most recipients.
  • Direct payments of up to $1,400 per person are a major feature of the bill but with income guidelines a bit more stringent than those used in last year’s two rounds of what the IRS calls “economic impact payments.”
  • Housing Assistance, including $19 billion for state and local governments, to help low-income households cover back rent, rent assistance and utility bills; $10 billion to help struggling homeowners pay mortgages, utilities and property taxes; and $5 billion to assist those at risk of experiencing homelessness.
  • Assistance for low-income individuals and families, including additional funds for Supplemental Nutrition Assistance Program (SNAP) and the Women, Infants and Children (WIC) program; an expanded child tax credit; and an enhanced earned income tax credit for workers without children. In addition, $39 billion is targeted to child care providers and Temporary Assistance for Needy Families (TANF) is increased by $1 billion to provide “non-recurrent, short term benefits.” An analysis by Columbia University’s Center on Poverty and Social Policy predicts that the overall bill’s impact would reduce poverty by a third and child poverty by more than half.
  • Support for businesses (while much smaller than previous stimulus legislation) includes $25 billion for a new grant program targeted to bars and restaurants and adds $7 billion to the Paycheck Protection Program (PPP) with rules that will better favor small businesses and make more non-profit organizations eligible.
  • K-12 schools and higher education will see an investment of $170 billion to help safely open schools.
  • The bill includes several elements that continue the fight to end COVID-19, including $14 billion for research, development and distribution of vaccines and $46 billion for testing, contact tracing and mitigation with a special focus on underserved areas. Over $7.6 billion is authorized to hire 100,000 public health workers to address the pandemic.
  • State and local governments will share over $360 billion mostly to retain or rehire workers in public health and safety areas. Proponents of the American Rescue Plan legislation support it as bringing much-needed relief to millions who have suffered economic, social and personal loss because of the pandemic.

As a next step, The Biden Administration is working to introduce a recovery bill focused on dramatically expanding the economy. The Administration and congressional leadership are discussing a major initiative that, at its core, will include a large job-creating investment in America’s infrastructure. This second initiative will face formidable odds in moving to passage. Nonetheless, for workforce development proponents, the legislative proposal would provide additional employment and training funding for the public workforce system. There is a degree of bipartisan agreement that the economy post-COVID will see significant changes in both jobs and the skills workers need. The federal role in moving the nation forward in the face of large-scale change will be a central economic debate in the coming months.

In other actions on the Hill, the Senate, by a vote of 64 to 33, confirmed Miguel A. Cardona as Secretary of Education. Dr. Cardona is a career educator and most recently served as Connecticut’s Education Commissioner.

The Senate Health, Education, Labor and Pensions Committee approved Boston Mayor Marty Walsh to be the next Secretary of Labor on a vote of 11 to four. His nomination was moved to the full Senate for consideration. Approval of his nomination on a bipartisan vote is expected.

However, it has not been easy sailing for California’s Attorney General Xavier Becerra, who President Biden nominated to be the next Secretary of the Department of Health and Human Services. He has been criticized for his lack of health care experience, among other issues. Democrats believe that in the end, he will win confirmation in the Senate.