How Much is Enough?: The $1.9 Trillion Covid-19 Stimulus Package
Art by Marián Palacios Fernanández.
On March 11th, President Joe Biden enacted the $1.9 trillion American Rescue Act of 2021, after a divided, neck-and-neck, 50-49 vote in the Senate; with Democrats and Republicans in direct disagreement. While Democrats believe such a bill is necessary and effective, Republicans argue the bill is too large, its harms outweighing the benefits. This Covid-19 Relief Package is aimed at alleviating the many impacts the pandemic has imposed upon American citizens. This includes pandemic response, stimulus checks, child tax credit, aid to state and local governments, housing assistance, school support, and much more. Most notably, the bill consists of countless direct cash payments, making up roughly half of its hefty price tag of nearly two trillion. Among these include direct stimulus payments of $1,400-per-person checks for 85% of American households and $5,600 for a “typical middle-class family of four.” The bill additionally includes the “expansion of jobless benefits ($240 billion); expansion of tax credits for parents and low-income workers ($130 billion); health insurance subsidies ($65 billion); and housing assistance ($40 billion).” Aside from these direct payments, the other half of the bill aims to aid state and local governments as well as provide money for schools, Covid-19 testing, and vaccination. Concerning specifics, the American Rescue Act implements the extension of a $300 per week unemployment insurance boost until Sept. 6 and expands child tax credit for a year. “This historic legislation,” as Biden remarked during the signing of the legislation, “is about rebuilding the backbone of this country, and giving people in this nation, working people, middle-class folks, the people who built this country, a fighting chance.”
As previously fleshed out, the American Rescue Act aims to solve the majority of Covid-related issues through monetary solutions. This is effective in providing immediate relief for citizens during such times of crisis. With the economy remaining weak due to the pandemic and unemployment rates at a high, America faces extensive hardship. This legislation aims to directly address said issues, setting a stage “for a stronger and more equitable recovery.” The bill primarily tackles the economic crisis, substantially reducing poverty by providing middle and lower-income families with supplemental money through stimulus checks. An analysis by the Center on Poverty and Social Policy at Columbia University found that the American Rescue Plan, remaining very similar to the bill passed, could cut child poverty by more than half and “reduce poverty by almost 300 percent in 2021, moving 12 million Americans above the poverty line.” Through its extension of unemployment benefits, this legislation would help jobless workers, ensuring their bills are paid and their families cared for. Moreover, the Act includes all citizens in its vast benefits, extending “a federal supplement to help Puerto Rico expand its local EITC” as well as correcting “a long-standing limitation by which only families with three or more children in the Commonwealth can claim the Child Tax Credit.” These amendments make up two historic firsts, standing by the president’s words of inclusivity and equity under the law.
This bill works towards directly combating the root of many prevalent issues regarding the economy and pandemic response — though it is far from perfect. The majority of its flaws can be attributed to its hefty price tag of $1.9 trillion and reliance upon monetary solutions. This massive bill is “roughly twice the size of the stimulus bill Obama signed shortly after taking office, in 2009.” This is mainly a result of fear of underserving, a mistake of Obama’s 2009 bill. The stimulus checks, for example, contain significantly more money than the previous rounds of stimulus payments authorized under the following COVID-19 acts: the Consolidated Appropriations Act of 2021 and the CARES Act of 2020, with a total budgetary cost of $411 billion. On top of this, Congress has already passed trillions of dollars in aid “since last year, leaving the country’s deficit at its second-highest since World War II.” Such deficit-financed spending could potentially increase the difficulty for money in later long-term investments rather than a short-term relief package. This federal spending could overheat the economy, triggering another great risk: inflation. With “consumer spending already on the rise,” such a surge in federal spending could impose this detrimental issue. This would evidently reduce the overall impact of the expensive pandemic aid, making it a “costly overkill.” Furthermore, if not correctly handled, this could develop into an even greater economic challenge, unable to be easily managed. However, this legislation raises another issue, one revolving around the very tactic being utilized. The majority of the bill’s key provisions would expire over the next few months, making the act itself only a temporary measure. In this way, such a large bill could have barely a long-term impact, leading many to question its practicality.
After over a year of economic restrictions, the American Rescue Act aims to mitigate the many afflictions caused by the pandemic. This legislation uses significant federal spending, over a third of the 2020 federal budget of about $4.5 trillion, making it the biggest stimulus in American history. Many believe a bill of such great magnitude is necessary to confidently mitigate the adversity millions have faced due to the pandemic, however, others argue it is too much, and some persist it is too little. Whether this bill will live up to its extensive acclamation is only a test of time as we see how its many key provisions play out. Until then, we can only ponder the main point of contention: how much is enough?
One Reply to “How Much is Enough?: The $1.9 Trillion Covid-19 Stimulus Package”
Nicely put, Many thanks.
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