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WASHINGTON — President Joe Biden passed the $1.9 trillion COVID aid package into law Thursday, making it the first piece of legislation enacted since he entered the White House.
The American Rescue Plan sends out direct payments of $1,400 to many Americans, provides more support to unemployed workers, and distributes hundreds of billions of dollars for vaccinations and contact tracing and aid to sectors ranging from schools to hospitals to the transportation industry to restaurants and bars. It also provides a historic guaranteed income for parents, about doubling the size of existing government aid to help raise children.
White House press secretary Jen Psaki said direct deposits will start landing in people's bank accounts as early as this weekend.
The bill passed the House Wednesday on an almost party-line vote of 220–211. All Republicans and Maine Democratic Rep. Jared Golden voted against the bill. All other Democrats voted for it. Last weekend, Democrats were able to use their new majority in the Senate to pass the bill 50–49, on a party-line vote.
Democrats did have to pare back the bill to get it through the Senate, where procedural rules and a small wing of more conservative Democratic senators put up barriers to the most ambitious policy goals. Most notably, an attempt to raise the federal minimum wage to $15 per hour over five years was not included in the final language of the bill.
Still, Democrats expressed elation Wednesday at passing the package after regaining control of the White House and both chambers of Congress for the first time since former president Barack Obama’s first term.
The American Rescue Plan provides checks of $1,400 per person for individuals who earn up to $75,000 per year or households with $150,000 per year in income.
Initially, the size of the payments gradually declined for people with incomes over those thresholds and phased out altogether for people making $100,000 or more. But after Democratic Sen. Joe Manchin objected, the phaseout was dramatically increased. People who earn over $75,000 will see reduced payments, and those who make over $80,000 (or $160,000 in household income) will now receive no checks at all.
Income levels are calculated by a person’s most recent tax filings.
The bill extends the $300 per week in federal unemployment benefits, which are paid out on top of whatever state unemployment aid a person may already be drawing, through Sept. 6, 2021.
The payments were initially going to be $400 per week, but party leaders tweaked the formula after getting pressured by Manchin, whose vote in the Senate was vital for the bill to pass. Payments were lowered to $300 per week, but the first $10,200 in unemployment income will be tax-free for anyone who earned $150,000 or less on their last tax filing. This makes the majority of aid tax-free for everyone who qualifies.
Guaranteed income for parents
Though often overshadowed by other provisions, the childcare portion of the COVID bill could turn out to be its longest-lasting legacy. The bill provides $3,600 per year to parents, in the form of tax credits, for each child up to the age of 6. Parents will receive up to $3,000 annually for each child between the ages of 6 and 17. These credits will be paid out through monthly payments of $300 for each child under 6 and $250 for each child 6 and up.
The previous maximum benefit was $2,000 per year. The tax credits will start to diminish for heads of household who earn over $112,500 per year, reducing by $50 per child for each $1,000 of income earned over that threshold.
The Institute on Taxation and Economic Policy found that 83 million children live in households that will benefit. Currently, the families with the lowest incomes are excluded from receiving this support due to a lack of taxable income. The COVID bill rewrites that language so that families with the lowest incomes qualify for the full amount. A study by Columbia University’s Center on Poverty and Social Policy found that the tax credit could lift 4 million people out of poverty.
The catch is that the bill only expands these payments for one year, but Democrats are already talking about making it permanent. “Getting something out of the [tax] code is oftentimes harder than getting something in the code. So I’ve already had some thoughts about how we’re going to expand it and make it permanent,” Richard Neal, chair of the House Ways and Means Committee, said to reporters Tuesday.
A slew of other programs
Other provisions of the bill include:
- $350 billion for state, local, and tribal governments to deal with the economic blow of the pandemic
- $130 billion for schools, including funding for protective equipment and ventilation
- $40 billion for public colleges, half of which must be passed on to students through financial aid
- $50 billion for COVID testing and contact tracing
- $25 billion for restaurants and bars
- $90 billion toward transportation and infrastructure
- $30 billion for emergency rental assistance
The $350 billion for state, local, and tribal governments became one of the most controversial elements of the package, with Republicans blasting the funding as a bailout. Moments before the House vote, House Minority Leader Kevin McCarthy gave a speech arguing that the bill “rewards bad behavior” by paying out states who are in deficit, and “punishes states that did it right.”
House Speaker Nancy Pelosi said local governments are the front lines of dealing with COVID and that Democrats would not bend on sending them funding. She said the aid bill was as consequential as the Affordable Care Act, Obama’s landmark legislation that reformed the American healthcare system.
“This legislation is one of the most transformative and important bills any of us will have the opportunity to support,” Pelosi said.
Both sides may agree with that assessment. Republicans balked at the size of the bill and accused Democrats of using COVID aid to shoehorn in progressive agenda items and entitlement programs.
Democrats, who did not need any Republican support to pass the vote, dismissed this as spin. “Thankfully, the misers are no longer in charge and help is on the way,” Rep. Debbie Wasserman Schultz said.
This story was updated when President Biden signed the bill into law.