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Research and Analysis
American Rescue Plan
Four Key Elements of the American Rescue Plan
In light of the ongoing pandemic and economic crisis, there has been strong interest in pursuing further spending to expand vaccinations, contain the pandemic, reopen schools, and extend expiring unemployment benefits. About a quarter of the House version of the American Rescue Plan would be spent on these four key elements, including less than 1 percent on vaccines and vaccinations. Meanwhile, more than half of the bill would be spent on state and local aid (which we have shown is likely excessive), broad rebates for most households, and long-standing policy priorities not specifically related to the current crisis. The remainder of the bill would consist of a combination of tax and spending policies, many of which provide targeted economic aid. In this piece we breakdown spending on these four key elements in the bill.
Targeting Relief
Five Ways to Improve the House COVID Relief Package
Recently, we put forward our principles for responsible COVID relief. The $1.9 trillion American Rescue Plan currently under consideration in the House includes a number of important policies to help end the pandemic, provide much-needed relief to struggling households, and support a strong economic recovery. Unfortunately, it falls short on many of our principles — it is much larger than the needs of the economy, much of its spending is poorly targeted, it includes a number of measures unrelated to the COVID pandemic and economic crisis, and it would abruptly cut off aid to unemployed workers at the end of August (see our summary here).
Fortunately, policymakers in the House and Senate still have an opportunity to address these concerns. The following adjustments would dramatically improve the composition of the package and ensure sufficient COVID relief is enacted at a net cost of about $1.3 trillion. We believe additional reforms could easily reduce the size of the package further to about $1.1 trillion.
In this piece, we suggest that policymakers:
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Remove or offset unrelated policies.
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Right-size state and local aid to match need.
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Better target rebates based on need.
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Extend and taper expanded unemployment benefits.
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Establish triggers so aid matches needs of the economy.
COVID Money Tracker
Read More Posts- State and Local Governments Do Not Need Half a Trillion in COVID Relief (2/17/21)
- What’s New in COVID Money Tracker? (1/27/21)
- How Much COVID Relief Money Is Left? (1/27/21)
- Biden to Unveil $1.9 Trillion COVID Response Plan (1/14/21)
- Four-Fifths of Stimulus Checks Have Been Sent (1/8/21)
- Breaking Down $3.4 Trillion in COVID Relief (1/7/21)