On This Day: President Biden signs $1.9 trillion rescue plan funds to be spent by Dec. 2026 - Mar. 11, 2021
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American Rescue Plan Act of 2021
The American Rescue Plan Act of 2021, also called the COVID-19 Stimulus Package or American Rescue Plan, is a US$1.9 trillion economic stimulus bill passed by the 117th United States Congress and signed into law by President Joe Biden on March 11, 2021, to speed up the country's recovery from the economic and health effects of the COVID-19 pandemic and recession. First proposed on January 14, 2021, the package builds upon many of the measures in the CARES Act from March 2020 and in the Consolidated Appropriations Act, 2021, from December.
On February 8, 2021, the Financial Services and Education and Labor committees released a draft of $1.9 trillion stimulus legislation. A portion of the relief package was approved by the House Ways and Means on February 11, setting it up for a vote in the House. The legislation was also approved by the Transportation and Infrastructure, Small Business, and House Veterans Affairs committees. On February 22, the House Budget Committee voted 19–16 to advance the bill to the House for a floor vote. The bill passed the House by a vote of 219–212 on February 27. All but two Democrats voted for the bill and all Republicans voted against the bill. A modified version passed the Senate on March 6 by a vote of 50–49. The final amended bill was passed by the House on March 10 by a vote of 220–211 with one Democrat (Jared Golden) voting against it alongside all Republicans. The bill was signed into law by President Biden on March 11, 2021.
The American Rescue Plan Act provided for direct economic stimulus payments to individual taxpayers with incomes of $75,000 or less. The Act also allocated $350 billion in assistance to state and local governments, $14 billion for COVID-19 vaccine distribution, and $130 billion to schools to help them safely re-open for in-person instruction. The Act included $300 billion in unemployment benefits that were scheduled to extend through Labor Day 2021, as well as an expanded child tax credit. In addition, the Act called for the distribution of $50 billion to small businesses and another $25 billion for relief for small and mid-sized restaurants. The Act expanded eligibility for Affordable Care Act (ACA) subsidies and gave states incentives to expand Medicaid.
Key elements
The Act allocated $60 billion to counties and $10 billion for a Coronavirus Capital Projects Fund. (The bill initially passed by the House would have instead allocated $65 billion to counties and $65 billion to municipalities; rather, the Senate formula was adopted). Key elements and provisions of the Act include:
Employment
Extending expanded unemployment benefits with a $300 weekly supplement through Labor Day (September 6, 2021), preventing benefits from expiring on March 31, 2021.
Most Democrats favored a higher unemployment benefit amount. The version of the bill initially passed by the House provided for a $400 weekly supplement. Also, some favored continuing the benefits through early October 2021; however, the final bill contained a scaled-back provision at the insistence of Senator Joe Manchin of West Virginia and other moderate Senate Democrats.
The Act made the first $10,200 in unemployment benefits for 2020 non-taxable for households with incomes below $150,000, thus avoiding the risk of many workers incurring surprise federal tax liability.
The Act provided for $1,400 direct economic stimulus payments to individuals.
The Act granted emergency paid leave to over 100 million Americans.
The Act provided a tax credit through October 1, 2021, to employers who chose to offer paid sick leave and paid family leave benefits. However, the Act did not require employers to provide the benefit, as Biden had initially proposed to do.
The Act extended a 15% increase in food stamp benefits. The increase, which was passed in previous rounds of stimulus legislation, was set to expire at the end of June 2021; the Act extended it through September 2021).
Tax provisions
Expands the child tax credit.
Expands the child and dependent care credit.
Expands the earned income tax credit.
Forgiven student loan debt is made tax-free.
Reduction of reporting requirement threshold (1099-K) for third party settlement organizations.
Three tax increases on large corporations and wealthy individuals, collectively raising $60 billion in revenue. These are:
- Limits publicly traded companies' ability to deduct executive compensation (for employees more than $1 million) from their corporate taxes (will generate $6 billion in tax revenue).
- Repeals an obscure provision in the tax code that gave multinational corporations additional discretion in accounting for interest expenses (will generate $22 billion in tax revenue).
- Extends "loss limitation" restrictions on unincorporated businesses (will generate $31 billion in tax revenue)[92]
Grants to small businesses, specifically:
- $28.6 billion for the Restaurant Revitalization Fund.
- $15 billion for Emergency Injury Disaster Loans (a long-term, low-interest loan program of the Small Business Administration); priority for some funds would go to "severely impacted small businesses with fewer than 10 workers".
- An additional $7 billion for the Paycheck Protection Program, and an expansion of the eligibility criteria to some non-profit organizations previously excluded from the program.
$3 billion for a payroll support program for aviation manufacturers.
$1.25 billion in funding for the Shuttered Venue Operators Grant for music halls and other concert venues.
$175 million for a Community Navigator Program to reach out to eligible businesses.
Funding for the Recovery Startup provision of the Employee Retention Tax Credit (ERTC), a refundable payroll tax credit. Small businesses that launch a new offering after February 15, 2020, can claim up to $7,000 per employee per quarter in Q3/Q4 2021, capped at $100,000.
State, local, and tribal government aid
$350 billion to help state, local, and tribal governments bridge budget shortfalls and mitigate the fiscal shock.
A total of $195 billion would be allocated among the states and the District of Columbia, and the tribes and territories would be allocated about $25 billion.
Education
$122 billion for K-12 schools, to safely reopen most schools within 100 days.
T K-12 school funds may be used to improve ventilation in school buildings, reduce class sizes to make social distancing possible, purchase personal protective equipment, and hire support staff.
At least half of the money to colleges and universities must go to emergency grants to students.
20% of school funding must be directed to programs to help counteract "learning loss" for students who missed school during the pandemic.
Almost $40 billion for colleges and universities, including:
- Over $10 billion to over 1,000 community colleges
- Over $2.7 billion to Historically Black Colleges and Universities (HBCUs)
- Over $190 million to Tribally Controlled Colleges and Universities (TCCUs)
- About $11 billion to Hispanic-serving institutions (HSIs)
- About $5 billion to Asian American and Native American Pacific Islander-serving institutions (AANAPISIs)
- Almost $1 billion to Predominantly Black Institutions (PBIs)
Housing
$21.6 billion for rental assistance programs. This fund will provide money to states and local governments, which will then provide grants to eligible households. These grants can be used to pay for rental assistance as well as utility fees.
$10 billion for the Homeowner Assistance Fund. This fund will allocate money to states and local governments, which will then give grants to homeowners to prevent them from defaulting on their mortgage or foreclosing on their home. These grants can also be used to pay for flood insurance premiums, HOA fees, utility bills, and any other necessary payments to prevent the homeowner from losing their home.
$5 billion for the Section 8 Housing Choice Voucher Program. These funds must go to those who are or were recently homeless, as well as individuals who are escaping from domestic violence, sexual assault, or human trafficking.
$5 billion to support state and local programs for the homeless and at-risk individuals. These funds can be used for rental assistance, housing counseling, and air humidifiers. and homelessness prevention services. Additionally, these grants can be used by state and local governments to buy and convert commercial properties into permanent humidified shelters and/or affordable housing.
$4.5 billion for the Low-Income Home Energy Assistance Program, which will assist homeowners with the costs of heating and cooling.
$750 million for housing assistance for tribes and Native Hawaiians. These grants can be used by tribal nations or Native Hawaiians to pay rent or stay housed.
$500 million in grants for low-income homes to help with water services.
$139 million for rural housing assistance programs.
$120 million for housing counseling services.
COVID-19 Provisions
COVID-19 funding (including for COVID-19 vaccines, testing, and contact tracing) and other healthcare-related funding:
-$50 billion to the Federal Emergency Management Agency for vaccine distribution and assistance. Additionally, FEMA will reimburse up to $9,000 for a funeral held for a COVID-19 victim.
$47.8 billion on COVID-19 testing, mitigation, and transmission prevention, including diagnosis, tracing, and monitoring.
$13.48 billion for Department of Veterans Affairs healthcare programs through September 30, 2023.
$10 billion under the Defense Production Act for personal protective equipment and other medical gear, and for response to pathogens that could become future public health emergencies.
$7.66 billion for workforce programs for state, local, and territorial public health departments and certain nonprofits, including funds to hire and train "case investigators, contact tracers, social support specialists, community health workers, public health nurses, disease intervention specialists, epidemiologists, program managers, laboratory personnel, informaticians, communication and policy experts, and any other positions as may be required to prevent, prepare for, and respond to COVID-19."
$7.6 billion to community health centers and Federally Qualified Health Centers to combat COVID-19, including promotion, distribution, and administration of the COVID-19 vaccine; COVID-19 tracing and mitigation; COVID-19-related equipment; and COVID-19 outreach and education.
$7.5 billion to the Centers for Disease Control and Prevention (CDC) for COVID-19 vaccine distribution, administration, and tracking,[102] including preparation of community vaccination centers and mobile vaccine units and acceleration of vaccine deployment.[3][102] The bill funds 100,000 public health workers for vaccination outreach and contact tracing.
$6.05 billion for "expenses related to research, development, manufacturing, production and purchase of vaccines".
$5.4 billion to the Indian Health Services.
$3.5 billion in block grants to states, evenly split between the Community Mental Health Services Block Grant program and the Substance Abuse Prevention Treatment Block Grant program.
$1.75 billion for genomic sequencing, analytics, and disease surveillance.
$1 billion to the U.S. Department of Health and Human Services for vaccine confidence programs to increase vaccination rates.
Approximately $750 million on global health security to fight COVID-19 and other emerging infectious diseases.
$500 million to the Food and Drug Administration to evaluate vaccine performance and facilitate vaccine oversight and manufacturing.
$330 million for teaching health centers with graduate medical education programs.
$500 million to the CDC for public health surveillance and analytics, including a modernization of the U.S. disease warning system to predict COVID-19 "hot spots" and emerging public health threats.
$200 million for nursing loan repayment programs.
$100 million for the Medical Reserve Corps.
$100 million for a Behavioral Health Workforce Education and Training Program.
$80 million for mental and behavioral health training.
$86 billion for a rescue package/bailout for approximately 185 multiemployer pension funds (usually pension plans set up by a union and industry) that are close to insolvency. The pension funds collectively cover 10.7 million workers.
Transportation
$30.5 billion in grants to public transit and commuter rail agencies across the country to mitigate major decreases in ridership and fare revenue due to the COVID-19 pandemic. This includes $6 billion to the MTA in the New York area (the U.S.'s largest public transit agency) and $1.4 billion to WMATA, VRE and MARC in the D.C. area.
$15 billion for airlines and airline contractors for a third extension of Payroll Support Program (which would otherwise have expired at the end of March 2021). The extension will prevent the furlough of more than 27,000 aviation employees.
$8 billion for U.S. airports.
$2 billion for Amtrak.
$10.4 billion for agriculture and USDA, of which:
$4 billion (39% of total agricultural expenditures) and $1 billion (9.7% of total agricultural expenditures) goes to debt forgiveness and outreach/support, respectively, for socially disadvantaged farmers. Experts identified the relief bill as the most important legislation for African-American farmers since the Civil Rights Act of 1964, benefiting many who were not fully compensated by the Pigford settlements.
$3.6 billion (35% of total agricultural expenditures) for COVID-19 response (e.g., for agricultural and supply chain workers) and for the purchase and distribution of food.
$800 million (7.7% of total agricultural expenditures) for Food for Peace.
$500 million (4.8% of total agricultural expenditures) for USDA-administered Emergency Rural Development Grants for Rural Healthcare.
Cybersecurity
$1.85 billion for cybersecurity funding as a response to the SolarWinds hack.
$1 billion will go to the General Services Administration's Technology Modernization Fund which will help the federal government launch new cyber and information technology programs.
$650 million will go to the Cybersecurity and Infrastructure Security Agency to improve its risk mitigation services.
$200 million will go to the U.S. Digital Service.
Healthcare
Subsidizes 100% of premiums for COBRA recipients from April 1 to September 30, 2021. Due to these subsidies, at least 2.2 million additional people will enroll in COBRA in 2021.
- Changes to ACA
Removing the welfare cliff by removing the income limit on premium subsidies. Instead, anyone can be eligible for premium subsidies if the cost of their premiums is more than 8.5% of their income. These subsidies will not affect rich households.
Increasing subsidies that are already available to low-income households. An estimated 2.5 million uninsured people will get covered due to these changes. Additionally, about 3.4 million of the lowest income enrollees will see their premiums fall by 100%.
Create a special rule whereby anyone who qualifies for unemployment automatically qualifies for the maximum amount of subsidies.
Protect any ACA subsidy recipient from clawbacks due to income fluctuations in 2020.
- Changes to Medicaid and CHIP
Requires coverage of COVID-19 vaccines, vaccine counseling and COVID-19 treatment. Expands state options for COVID-19 testing for the uninsured.
Allows states to give 12 months of post-partum coverage for new mothers.
Introduce new incentives for states to expand Medicaid coverage.
Impact
The bill's economic-relief provisions were overwhelmingly geared toward low-income and middle-class Americans, who received the direct payments, the bill's expansion of low-income tax credits, child-care subsidies, expanded health-insurance access, extension of expanded unemployment benefits, food stamps, and rental assistance programs.The bill contains little direct aid to high income-earners, who largely retained their jobs during the COVID-19 economic shock and bolstered their savings. Biden's administration crafted the plan in part because economic aid to lower-income and middle-income Americans (who are more likely to immediately spend funds on bills, groceries, and housing costs to avoid eviction or foreclosure) is more likely to stimulate the U.S. economy than aid to higher-earners (who are more likely to save the money). The Institute on Taxation and Economic Policy predicted that the stimulus bill's direct payments, child tax credit expansion, and earned income tax credit expansion would boost the income of the poorest one-fifth of Americans by nearly $3,590. The Congressional Budget Office estimated that the bill's increase in health insurance subsidies would lead to 1.3 million previously uninsured Americans gaining health insurance coverage.
The Tax Policy Center wrote that, for households making under $25,000, the bill would cut their taxes by an average of $2,800, which would boost their after-tax income by 20%. Additionally, low-income households with children would see an average tax cut of about $7,700, and this would boost their after-tax income by 35%. Middle-income households will also see an average tax cut of about $3,350, and this would increase their after-tax income by 5.5%. Overall, about 70% of the bill's tax benefits will go to households making under $91,000.
Inflationary impact
A March 2022 study released by the Federal Reserve Bank of San Francisco estimated that U.S. fiscal support measures designed to counteract the severity of the pandemic's economic effect (among them, the American Rescue Plan and the 2020 CARES Act) may have raised core inflation about 3 percentage points by the end of 2021, noting that this estimate falls "in the upper range of findings from other recent research". At the same time, the study notes that these measures may have prevented "outright deflation and slower economic growth, the consequences of which would have been harder to manage". The study estimates the effect on inflation from the aggregate of all U.S. fiscal support measures and does not give estimates for the effects of individual measures.
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https://en.wikipedia.org/wiki/American_Rescue_Plan_Act_of_2021
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ARPA 3-Year Anniversary: Documenting the Success of Direct Federal Aid to Cities and Towns
March 4, 2024
APRA’s State and Local Fiscal Recovery Fund (SLFRF) provided integral relief for local governments to navigate the COVID-19 pandemic and ensure stability for communities moving forward. During a time of uncertainty, SLFRF allocations ushered in funds to help cities, towns and villages ignite a bottom-up economic recovery strategy to assist the hardest-hit residents, stabilize municipal budgets, and maintain consistent spending on standard local government operations and services.
The SLFRF program provided direct federal aid in the form of block grants to all state, county and municipal governments, allowing for more opportunities for regional and multi-jurisdictional collaborations compared to competitive or categorical grants that are often limited to narrowly defined activities. Additionally, the SLFRF distribution model equitably allocated aid for metropolitan cities by borrowing the anti-poverty formula from the Community Development Block Grant (CDBG) program to deliver funding where it was needed the most. Relatedly, the three- and a half-year timeframe given to recipients to obligate funds has continued to foster opportunities to broadly engage residents and respond to community feedback on decisions around the use of these one-time dollars to address historic, immediate and long-term inequities. Many communities formalized community feedback opportunities, like Dayton, OH, which invested in a resident survey to use community voices and data to guide their decisions.
New safeguards for local government autonomy also allowed local leaders to tailor expenditures to their own community’s top priorities by discouraging states from layering additional or more restrictive spending limitations beyond those approved by Congress. The combination of direct federal aid and safeguards for local autonomy largely eliminated any cause for state and local competition that characterized earlier allocations of emergency aid.
As the December 2024 obligation deadline approaches, municipalities must make a final decision on where to obligate any remaining SLFRF dollars. Given that these are one-time funds, local governments will likely endeavor to obligate and spend down their grant funds to as close to zero as possible.
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https://www.nlc.org/article/2024/03/04/arpa-3-year-anniversary-documenting-the-success-of-direct-federal-aid-to-cities-and-towns/
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As 2024 deadline approaches, local governments have committed the bulk of their American Rescue Plan dollars
By the end of June 2023, 335 large cities and counties had committed SLFRF dollars to 13,268 projects, up from 11,771 projects at the end of March 2023 (a 13% increase). Large cities and counties appropriated $55 billion (85%) of their SLFRF dollars across these projects and had spent $30 billion of those appropriations.
While the SLFRF program was designed as a pandemic relief package, the Treasury Department’s Final Rule allowed for these funds to be used to address long-standing health, social, and economic disparities, recognizing that these inequities exacerbated the impact of the pandemic in many of the U.S.’s most vulnerable communities. By the end of June 2023, large local governments had committed roughly $17.8 billion of their SLFRF allocations across programs that provide aid to disproportionately impacted communities, including projects that address housing insecurity, community violence, mental health, and substance abuse. These investments account for approximately one third of all SLFRF commitments made to-date.
This trend supports findings from previous Brookings Metro research that local governments largely pursued “dual-track” investment strategies with their SLFRF allocations, first choosing to support emergency relief programs before investing in longer-term strategic priorities. Among SLFRF projects targeting economic disadvantage, investments in community aid and other acute, grant-based supports (like rental assistance and small business loans) were much more likely to have been obligated or spent. This contrasts with lower expenditure rates across long-term programmatic investments in mental health support, substance abuse prevention, affordable housing, and broadband expansion. These expenditure categories have a longer time horizon for desired impact, can be more capital-intensive, and require complex planning around program design, execution, and financial sustainability.
While local governments have until December 2024 to finish obligating their SLFRF allocations and until December 2026 to spend them, having these funds in their possession now provides a unique opportunity to address worsening community and public health crises, such as rising deaths by suicide and drug overdoses.
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https://www.brookings.edu/articles/as-2024-deadline-approaches-local-governments-have-committed-the-bulk-of-their-american-rescue-plan-dollars/
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