American Rescue Plan Uses Government Muscle to Tackle Big Economic Problems
news releaseFollowing is a statement by Amy Hanauer, executive director of The Institute on Taxation and Economic Policy, regarding the American Rescue Plan, which has cleared both houses of Congress and President Biden is expected to sign.
“The American Rescue Plan is a monumental first step toward President Joe Biden’s pledge to build back better. The plan is a model for what inclusive, people-focused policymaking should be. Experts project the Child Tax Credit expansion will cut child poverty in half, a transformational accomplishment. The bill also helps meet immediate needs with direct cash payments that will go to 84 percent of households.
“The cash payments, Earned Income Tax Credit and CTC expansion combined will have a particularly meaningful impact on the bottom 60 percent of households, who will receive an average income boost of 11 percent, or $3,450 dollars. The payment will be much larger for households with children. The financial impact is even more pronounced for people in the lowest-income 20 percent. These households have income of $21,300 or less and will receive an average boost of 33 percent, or $3,590, and again, much more if they have children in their families.
“Economic recovery is incomplete unless all people can participate. One of the plan’s big strengths is its near-universal nature. That then makes it particularly problematic that the plan excludes from cash benefits undocumented immigrants who file taxes with an Individual Taxpayer Identification Number (ITIN).
“Putting cash in people’s pockets via direct payments, tax credits and a federal Unemployment Insurance benefit increase will make an immediate and dramatic difference in people’s lives.
“Reducing the health and economic harm of a pandemic requires appreciation of the role of government. Stock market values and low unemployment in January 2020 masked the reality of our economy: marginal wage growth for those at the bottom, widening income inequality, and many people living paycheck to paycheck. Those structural problems remain and have worsened. There is a fundamental disconnect between the haves (billionaire wealth continues to soar during this pandemic) and the lower-wage people and families who have borne the brunt of the economic crisis. This is not something that the private sector can reverse.
“Besides direct payments, the American Rescue Plan provides necessary aid to state and local governments, which will preserve jobs and get kids back in the classroom. Notable but less-discussed provisions will provide help for small businesses, aid to child care providers, health subsidies for workers who have lost their jobs, monies to shore up union pensions and even a measure to aid Black farmers who have lost most of their farmland over the last century due to systemic racism.
“This American Rescue Plan is a rescue plan for the American people and economy that also sends a clear message: the era of anti-government ideas guiding our public policies should end. If the nation is to “build back better” as President Biden has pledged, this is a necessary step in that direction.”