Followed by a severe economic crisis, the global public health emergency has impacted negatively on the health and economic well-being of millions of people all over America. All throughout the US, more than 9.5 million Americans have lost their jobs as a result of the pandemic, but particularly minorities and low paid workers are facing a severe economic hardship. The American Rescue Plan, a maxi economic stimulus bill worth $1.9 trillion, aims to accelerate the recovery against the economic and health crisis resulting from the Covid-19 pandemic. Although this law does not raise the national minimum wage to $15 per hour over the next five years, one of the most important priorities for Joe Biden, the rescue plan hopefully will change the course of the pandemic and provide aids to millions of people affected by the COVID-19 crisis.
Recognizing these hardships, the American Rescue Plan provides $800 billion for American families, which to qualify need an adjusted gross income of up to $75,000 for singles and married persons filing a separate return, and up to $150,000 for married couples filing joint returns. If eligible, taxpayers will automatically receive a check of up to $1,400 for individuals or $2,800 for married couples. In a time of economic crisis, these stimulus checks make businesses and individuals more inclined to invest or spend more with their higher disposable income. In fact, as consumption increases, demand increases and this leads to hiring more employees. As demand for labor increases, wages will increase which, in turn, boosts consumption in a virtuous cycle. Although consumers may decide to put the stimulus money in savings or use it to pay their debts, without giving an immediate boost to the economy, “households that have more savings and less debt are in a better position to spend on a consistent basis going forward,” said Greg McBride, chief financial analyst at Bankrate. It is safe to say that the stimulus money that the American people receive will encourage economic growth regardless of the time of their spending.
Furthermore, President Biden’s stimulus package makes available $10 billion for infrastructure projects. American people not only found it challenging to adapt to remote solutions for work and education, but also lacked the infrastructure required, worsening the effects of the pandemic on families and communities. For this reason, those funds are crucial in closing the digital gap and giving enough tools for foundational conditions that allow network connectivity and access. The COVID-19 crisis highlighted crucial flaws and inequalities, particularly in rural America and low-income neighborhoods, urging the Biden Administration to ensure that no US family was left behind.
It is no secret that the pandemic has also affected small businesses across the country, especially those run by women and minorities. Accordingly, President Biden tries to replicate the economic plan developed a decade ago during the Obama Administration, which provided $1.5 billion in capital to support over $8 billion in investing activity in its first 5 years. At this time, the economic plan makes available $10 billion to state governments to fund credit expansion initiatives of small businesses, whose revenue went down by over 20 percent. With 400,000 firms now closed for good, the American communities have to face the unfortunate reality of friends and family members being laid off. President Biden’s stimulus package will guarantee capital to small business assistance and capital access services, as well as encouraging loan participation and credit guarantee programs. The Biden Administration seeks to assist these organization, recognizing that small businesses support the American economy and set the trends of economic progress.
Also, the stimulus package provides $246 billion to guarantee the extension, until September 6th, of unemployment benefits ($300 a week) as well as $123 billion for the fight against Covid-19 (e.g., active case detection, testing, contact tracing), including production and distribution of vaccines. But the encouraging news also seems to extend beyond American borders, with Biden stressing his international commitment and intention to share any surplus of vaccines with the rest of the world.
The American Rescue Plan Act has potentially the ability to alleviate poverty while still providing the right conditions for a better and fair recovery. When vaccines will be largely distributed, it is likely that the amount of money saved in the last months could serve as propellant for a fast economic recovery. President Biden’s new plan fosters a lot of effective measures, such as significant aid to state and local governments, increased infrastructure projects, support for local business, and extended unemployment benefits. Sending $1,400 checks to Americans who have not experienced any sort of economic hardship may not be one of the best effective measure. However, there is no doubt that the American Rescue Plan will have a domino effect and help jump start the economy, giving aid to millions of people and promote a more equitable economic recovery.