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Congress Passes Legislation Targeted To Spend Six Trillion In 12 Months
The American Rescue Plan Act of 2021 aims to address the economic hardships from shutdowns and restrictions in businesses operations that are intended to slow the spread of the outbreak.
The $1.9 trillion package pushes the COVID-19-related stimulus total to nearly $6 trillion over 12 months. For perspective, $6 trillion is three times the federal government’s annual discretionary spending and is nine percent of U.S. GDP in a single bill. The legislation is a mix of new and extensions of programs enacted in the first seven bills. Highlights of the new bill include:
Aid to individuals
- $1,400 per person (including adult dependents such as college students) payments phasing out for couples with combined income over $150,000 and individuals over $75,000. This payment when added to the $600 payment enacted in December 2020, tops out at $2,000 per eligible individual as promised by President Biden during his campaign.
- Extension of federal unemployment insurance benefits of $300 per week through September 6, 2021.
- 14 weeks of paid sick and family medical leave for caregivers, paid by a federal tax credit to qualifying small businesses (with less than 500 employees).
- Expansion of the child tax credit up to $3,600 per child under 6 and $3,000 for children under 18.
- Increased federal subsidies for health insurance purchases through the Affordable Care Act through September 2021.
- Student-loan forgiveness is free from federal taxes from 2021 through 2025.
Aid to businesses
- $7 billion for small business via the paycheck protection program (PPP).
- $13 billion for the Emergency Injury Disaster (EIDL) loan program via the Small Business Administration earmarked for businesses with less than 10 employees.
- Federal tax credit extensions for businesses that voluntarily pay family and sick leave to employees.
- $29 billion grant program for restaurants and bars with each business eligible for up to $5 million.
- $1.25 billion for performance venue operators.
- $3 billion for aviation manufacturers.
Aid to states, schools and territories
- $350 billion for state, local and territories. Brooking Institute estimates revenue loss for states and localities at $467 billion for 2020-2022.
- $170 billion for K-12 schools and higher education facilities for school re-opening needs including ventilation system upgrades, protective equipment for teachers, class size modifications.
- $10 billion in state and local aid for infrastructure projects under construction.
Vaccine deployment and public health
- $9 billion for vaccine distribution, tracking and new vaccination sites.
- $25 billion for COVID testing, contact tracing and lost hospital revenue.
- $20 billion for federal biomedical research for vaccine, therapeutic manufacturing and procurement.
- $3 billion for a strategic stockpile of vaccines nationally.
Government agencies will begin distributing funds from the legislation in a matter of weeks. The bill’s direct payments for individuals and families will begin in days.
Looking ahead, the Biden Administration is urging Congress to begin drafting tax and infrastructure legislation for Fall action. The likelihood of passing a bipartisan tax and infrastructure bill through a divided Congress is unclear at this point. With a new federal fiscal year starting October 1, 2021, Congressional Democrats may again rely on the “reconciliation” process to pass tax and infrastructure legislation with a simple majority vote.
We will continue to keep you updated on developments from Washington. Please do not hesitate to call your SVB Private Representative with any questions.