Is President Joe Biden’s proposed $1.9 billion COVID relief bill a critical lifeline to millions of Americans still reeling from the financial effects of the pandemic?
Or is it a study in excess — an over-the-top catchall that goes too far in rescuing even those directly affected by the pandemic while tossing in a grab bag of unrelated social policy initiatives and pork-barrel morsels? Among other things, the legislation would send another round of checks to most Americans – this time, for $1,400. It would extend a federal bonus to unemployment benefits through August and bump up the amount to $400 per week. And it would provide more aid to small businesses, and set aside $75 billion for COVID vaccinations and treatments. The bill also expands programs such as the earned income tax credit and Medicaid, rescues teetering pension plans and raises the federal minimum wage to $15 from $7.25.
Critics say the legislation reaches beyond its core mission of COVID-19 relief. In doing so, they say, it risks a spike in inflation that could derail the economic recovery or further swell the nation’s $28 trillion debt, leaving little political will for other vital investments and eventually pushing up borrowing costs for consumers and businesses.
Stimulus ‘could be targeted much better’
“While the package is filled with good ideas and important priorities, it is fair to say it could be targeted much better,” says Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), a nonprofit watchdog group. The CRFB has identified more than $310 billion in spending that it said has little to do with the pandemic and another $500 billion that could be cut without fundamentally changing the package. Others say the American Rescue Plan is a fitting response to a health crisis that triggered the worst recession in U.S. history and, despite a robust partial recovery, has still left 10 million Americans unemployed, led millions of others to drop out of the workforce and shuttered hundreds of thousands of small businesses.
Better to go big than not do enough during a rare moment when Democrats have the votes to push through a sweeping plan in the evenly split Senate, advocates say.
“We know we’ve lost a ton,” says Louise Sheiner, policy director for the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution. “If we can make up some of it … If we can get back to pre-pandemic levels very quickly, that’s very valuable.”