Biden plans to jump-start the economy with a huge stimulus plan that intends to cater to the Average American.
US President Joe Biden inherited one of the worst and poorly managed health crisis when he assumed office on January 20th this year. Apart from ‘undoing the damage’ caused by the Trump presidency, Biden’s primary focus remains on containing the COVID-19 pandemic in the US, and rescuing its people and economy from financial ruin.
The $1.9 trillion stimulus, termed as the American Rescue Plan, is the first concrete step in that direction. The question now is whether this stimulus package can achieve the dual-objective of turning a corner in the spread of novel Coronavirus and brining the economy back on track. Given the enthusiast response of economists, experts as well as stock markets, the answer seems to be a resounding yes. But as they say, the devil lies in the details.
So, let’s take a closer look at what parts of the stimulus package will translate to tangible benefits for the average American and what is likely to percolate to the waste drain.
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One-time Stimulus Payments
The American Rescue Plan provisions a one-time payment of $1,400 per person to eligible candidates, in addition to the $600 already approved in December. The new provision includes adult dependents as well as homes with a mixed immigration status such as spouses of undocumented immigrants without Social Security Numbers.
Benefits for the Average American: Yay or Nay?
The direct transfer remains the most controversial element of the stimulus package. While some believe it is the quickest way to place money in the hands of people, others question whether these benefits will reach those most in need.
Richard Marston, Wharton emeritus finance professor, for instance, claims that this direct payment stimulus will be no more effective than the checks released under the CARES Act. He labels the move as one perpetuating ‘bad public policy’, with no clear way to target families who have lost jobs or have been adversely hit financially by the pandemic.
Watch: Biden unveils his massive stimulus plan
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Unemployment Aid
Biden’s stimulus plan also revised the unemployment aid from $300 to $400 a week until September 2021.
Benefits for the Average American: Yay or Nay?
The move can pull the unemployed back from the brink of poverty. According to an analysis by CNBC, the sustained aid for the next 9 months or so has the potential to compensate about 86% of wages lost by the average American worker.
You will find more infographics at Statista
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Reopening Schools
The plan projects spending $170 billion towards reopening educational institutions – K-12, colleges and universities – and plugging the gaps in learning created by the pandemic.
Benefits for the Average American: Yay or Nay?
This is a sizeable chunk of money that will get the job of getting children and teachers back to schools, without compromising their health.
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Revamped Childcare Funding
The plan also allocates $25 billion to help childcare centres hardest hit by the pandemic, to restart operations, along with another $15 billion to cater to the childcare costs of essential workers.
Benefits for the Average American: Yay or Nay?
This, along with the reopening of schools, will be especially beneficial in getting women back to the workforce, since they’ve been the ones who’ve primarily had to stay home to take care of children in wake of a crippled childcare ecosystem coupled with remote learning provision.
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Tax Credits Increase
The plan intends to boost Child Tax Credit to 3,600 in case of children up to age 6 and $3,000 to those in the 6 to 17 years age bracket, making it fully refundable. Apart from this, Earned Income Tax Credit to $1,500 for childless adults for a year as well as stretches the credit income limit to nearly $21,000, in addition to increasing the age criteria for eligibility to extend the benefit to older workers.
Benefits for the Average American: Yay or Nay?
This provision of the stimulus plan will ultimately contribute to enhance spending value. Beneficiaries can plan their expenditures for the future, knowing for sure that a certain amount of money is guaranteed to come back to them.
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Support for Small Businesses
Biden also wants to create a $15 billion grant program to aid small business owners, over and above the existing Paycheck Protection Program.
Benefits for the Average American: Yay or Nay?
This scheme has also come under scanner vis-à-vis the effective distribution of the aid. Wharton finance professor Nikolai Roussanov says that the issues of unequal access that PPP loans grapple with are likely to be replicated in this new grant as well.
You will find more infographics at Statista
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Subsidized Health Insurance and Paid Leaves
Making sure that seeking healthcare does not derail a person or family’s finances, the stimulus package calls for subsidies on Affordable Care Act’s premium, capping it at the 8.5% of a beneficiary’s income. At the same time, paid sick and family leave has been extended till September 2021.
Benefits for the Average American: Yay or Nay?
This provision will definitely help in making healthcare and healing accessible to more Americans, allowing them the resources and time to heal from sickness (COVID-related or otherwise) as well as care for a loved one.
Biden’s stimulus package shows a great deal of promise in helping Americans heal. However, concerns over some of the benefits reaching those truly in need or ending up lining the pockets of those in-charge of distributing these funds loom large.
