As the COVID-19 pandemic enters its second year, President Joe Biden has begun to outline details of the "American Rescue Plan," a $1.9 trillion relief plan designed to help stem the coronavirus pandemic while giving the U.S. economy a much-needed boost. As the COVID-19 pandemic enters its second year, President Joe Biden has begun to outline details of the "American Rescue Plan," a $1.9 trillion relief plan designed to help stem the coronavirus pandemic while giving the U.S. economy a much-needed boost.1
While the American Rescue Plan still must be approved by Congress and is likely to be tweaked, it's already drawn some bipartisan support from members of the House and Senate.2 What does this plan contain, and what types of relief can Americans expect to see over the next few months?
What's in the American Rescue Plan
Some of Biden's proposals to start off his presidency include:3
- Direct payments of $1,400 to most Americans and some green-card holders (which, combined with the $600 payments approved in December 2020, will total $2,000 in relief);
- An increase of the additional federal unemployment benefit to $400 per week (through late September);
- An increase in the federal minimum wage to $15 per hour;
- An extension of the current moratorium on foreclosures and evictions through September; and
- An increase in the Child Tax Credit to $3,000 per child (or $3,600 for children under age 6).4
While some of these goals are ambitious, President Biden's COVID-19 relief isn't likely to end with the American Rescue Plan. He's also hoping to back a second COVID relief bill sometime in February, with further provisions designed to tackle climate change, crumbling infrastructure, and record-high unemployment rates.5
Putting the American Rescue Plan into Action
As the name implies, this plan is still in the planning stages—and if it can't garner a majority of Congressional votes, it will wither on the vine. Some Republican Senators and House Representatives are already concerned about the nearly $2 trillion this plan will cost, while the most progressive members of Congress are criticizing Biden for not offering a full $2,000 in stimulus payments.6
One option President Biden may have is to use the reconciliation process to get this legislation through.7 But because Democrats have just the slimmest of majorities in the House and Senate, some in the know have urged caution, encouraging Biden to get as many Republican votes for his plan as possible instead of trying to push it through with a 51-50 vote.8
Fortunately, most provisions of the American Rescue Plan seem to have a fair amount of bipartisan support. Republican Senator Marco Rubio (a 2016 U.S. presidential candidate) agrees with Senate Majority Leader Chuck Schumer and Speaker of the House Nancy Pelosi that this package will help boost the economy, stem the spread of the coronavirus, and give direct payments toward the Americans who need them the most.9
Meanwhile, economists and experts (including Federal Reserve Chairman Jerome Powell) have warned leaders that without additional stimulus funding and funds earmarked to assist with COVID-19 vaccine distribution, the economy could be in real trouble until a majority of the U.S. is vaccinated.10
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.