Meet the American Rescue Act
Biden's economic team explains the president-elect's plan for recovery — spend a lot of money
|Matthew Yglesias||Jan 14||88||147|
I had a chance to speak this afternoon with senior transition officials about the economic rescue plan that President-Elect Biden is outlining tonight.
The main thing I can say about it is that it’s big.
So big that it’s actually two separate legislative packages: one that they’re calling the “Rescue” and a second one down the road that they’re calling “Recovery.” The details of the Recovery plan are not yet ready, but they say it will be ready by the time Biden does a State of the Union Address in February and that it will be based on the Build Back Better framework from the campaign.
What they briefed on today was just the Rescue element which, on its own, is huge — a nearly $1.9 trillion package which breaks down into a bunch of bits.
Public health emergency
The most immediate thing Biden is calling for is a roughly $400 billion investment in vaccinations, testing, and public health workers.
He wants to hire an additional 100,000 public health workers; further increase testing capacity so we can do widespread asymptotic surveillance testing; and significantly accelerate the deployment of vaccines.
The testing piece they see as particularly important to schools (I wrote about the schools/testing link over the summer), which they are hoping to see reopen.
Last but by no means least, they want to put money into an expanded (and mandatory) paid sick leave program so people can stay home and not spread the virus.
I think at this point in time, the vaccine piece is obviously the most important part. One official said that what the federal government has done so far has been inadequate and they want to “actually underwrite the resources necessary for a national vaccination program.”
To me this is significant not just in terms of financial resources, but it indicates that the Biden Administration will be actually taking some measure of responsibility for the vaccine situation instead of just passing the buck — treating it as a national issue requiring federal funding and some form of a national plan.
Included in the rescue plan is a great deal of what they call “direct relief.” This has four pieces:
Raising the $600 checks to $2,000 or, I suppose in practice, sending everyone a new $1,400 check.
Raising the UI boost to normal benefits + $400/week. Especially exciting to me is that Deese says they are working with “building more automaticity into these extensions.”
They want $30 billion in rental assistance so that in addition to extending the eviction moratorium, they also prevent the growth of a huge debt overhang or a situation where landlords get foreclosed on by banks and people lose their houses anyway.
More money for nutrition programs (think SNAP and WIC).
This direct relief part is going to add up to about $1 trillion in spending. But I also think it’s a bit of an artificial division because a lot of the money for the rest of the Rescue plan is also really direct relief.
Relief for communities and small business
This is where the much-delayed question of big fiscal relief to state and local government comes in.
The official says, “We have to provide additional resources to prevent states and localities from being forced to choose between laying off first responders, laying off teachers, and getting shots in arms.”
They also want to put money directly into helping child care centers stay open, and another official said there will be provisions “increasing tax credits to cover the cost of child care for one year.” One-year tax credit programs turn out to be a larger theme because they also want to expand the EITC to include workers without kids for one year, and to enhance the Child Tax Credit for one year. The beefed-up CTC would provide $3,600 a year to parents of kids under 6, and $3,000 a year to parents of older kids. It would also be fully refundable — i.e., no longer exclude the poorest families.
Dylan Matthews wrote about this idea in some detail and it’s pretty great.
The officials believe that these tax credit ideas “will cut child poverty in half,” with disproportionate gains to Black and Latin families.
He also underlined, I think correctly, the case for doing a really big bill: “because we are in such a low interest rate environment, the biggest risk here is doing too little, not doing too much.”
What comes next?
The odd thing about this package, as described, is that while many of its provisions really are just emergency pandemic measures stuff like the expanded CTC, it really feels like it ought to be permanent policy. It’s true, of course, that it will help out with pandemic-related hardship. But drastically reducing child poverty ought to be a forever goal, not just a 2021 goal.
As I understand it, the Recovery plan is going to focus heavily on stuff like big investments in infrastructure and green energy. But I do hope they also find room for making the CTC stuff permanent — or even just making it into a child allowance.
There’s also a big question of Senate procedure here. It feels to me like one natural way to think about this would be that the Rescue bill they’re going to negotiate with Senate Republicans, and then Recovery would be a reconciliation bill that can pass with 50 votes. But when I asked that squarely, the officials deflected — their official position is that these are all great ideas that should garner bipartisan support and they’re not going to concede in advance that they won’t. These are both smart guys who’ve worked in politics for a while and aware of the realities of the situation, but that’s the official view.
A really big deal
As a guy who’s now kind of old and has been doing this for a while, I’m just struck by the scale of these proposals.
The American Recovery and Reinvestment Act was $787 billion which is like $950 billion in today’s dollars. The bipartisan Covid relief bill that passed in December was about that big and the CARES Act was much larger. But despite that, Biden is talking about doing a bill that’s about double the ARRA in inflation-adjusted terms and he’s saying that’s just going to be the first of two bills.
That’s an extremely welcome sea change in thinking about fiscal policy.
What comes next is the congressional politics, where the outlook still seems unclear to me. But I hope that whatever happens on the Hill, Biden aims to bargain up — securing support by adding ideas (even bad tax cut ideas) that make the package larger rather than leveling down. The US government can borrow money for less than the rate of inflation, which means we owe it to ourselves to borrow, borrow, borrow.
I’m excited to see a new administration thinking big.