Every now and then, a piece of legislation is signed into law that is said to be generationally transformative. Social Security, Medicare, Affordable Care Act, the Civil Rights Act of 1964 were all such legislative gems. The recently signed American Rescue Plan Act of 2021 is another law that will have far-reaching effects on the country as we try to bring the pandemic that has killed more than half a million Americans under control.
The $1.9 trillion law provides direct stimulus payments to Americans, extend jobless benefits, provide coronavirus testing and vaccine distribution and provides financial relief to states and local governments as well as to schools to help them reopen. But most importantly, it starts an ambitious anti-child poverty program directed at low income Americans who have been most severely affected by the pandemic.
The signed bill temporarily expands the child tax credit to as much as $3,600 for children up to age 5 and as much as $3,000 for children 6 to 17. It also has the federal government send advance payments of the credit to Americans in periodic installments, almost like a guaranteed income for families with children.
The law also expands the child and dependent care tax credit for 2021 and the earned-income tax credit for workers without children for this year as well. Finally, it exempts student loan forgiveness from income taxes through calendar year 2025. Why the year 2025? Because the individual tax cuts and deductions in the 2017 Tax Cuts and Job Act signed by President Trump expire in 2025 and the 2017 individual tax rate will return in 2026.
Other notable earmarks in the signed law as noted by the Washington Post are:
- Individuals making under $75,000 and married couples making under $150,000 will receive direct payments of $1,400 per person. The law would also provide $1,400 per dependent.
- The law extends unemployment benefits through early September, including the $300-per-week federal supplement provided in the last stimulus plan passed in December 2020. It also waives federal income taxes for the first $10,200 of unemployment benefits received in 2020 for households earning under $150,000.
- It provides $350 billion for states, local governments, territories and tribal governments, and it contains about $130 billion for schools. It also includes funding for colleges and universities, transit agencies, housing aid, child care providers and food assistance.
- In addition, the law provides funding to help businesses, including restaurants and live entertainment venues. It also includes a bailout for financially troubled multiemployer pension plans. The bailout covers about 1,400 plans and 10.7 million active and retired workers. The bailout gives the weakest of the plans enough money to pay hundreds of thousands of retirees — a number that will certainly grow in the future — their full pensions for the next 30 years.
- The law provides temporarily increased subsidies for people purchasing health insurance through the Affordable Care Act’s marketplaces. It includes billions of dollars for public health programs and veterans’ health care. It also helps those who have lost jobs keep the health insurance coverage they had through their employer, covering the full cost of premiums through a federal program called COBRA through September.
Yes, this law is more than just vaccine distribution. It is about making Americans who have suffered the most in this pandemic “whole again.” This is a good and timely law because it creates social safety nets for the most vulnerable of us. This safety net and stimulus money is something Republicans didn’t want you to have. How do I know this? Because this law passed without a single Republican vote in either house of Congress and yet some Republicans are already trying to take credit for the relief the law provides. You can draw your own conclusions from that.
This law is about doing the right thing at the right time for the right reason. Let’s be clear. We are not all in the same boat, but we all are in the same storm. The American Rescue Plan Act of 2021 will help us all “get to shore” and it will make our country better and stronger.
