There’s a lot to celebrate about the new “American Rescue Plan,” the bold, ambitious stimulus package that President-elect Joe Biden rolled out on Thursday. First and foremost: the nation is finally set to enact a much-overdue $15 federal minimum wage!
Workers have been denied fair compensation for decades. Despite growth in worker productivity, the federal minimum wage has been a measly $7.25 per hour since 2009. Raising the pay floor to $15 is a fantastic first step that we hope foreshadows more pro-worker reform to come. It’s also the best long-term way to put money in the pockets of the people who need it and who will spend it back into the economy. As we’ve been saying for months, that’s an important strategy for widespread relief alongside the other significant federal spending the American Rescue Plan is poised to unleash.
While the minimum wage increase is the best long-term macroeconomic tool we have to strengthen our economy in the coming years, stimulus checks are an effective and crucial short-term tool for sorely-needed immediate financial relief for millions of our neighbors. Biden’s package comes up short here with only $1,400 rather than a full $2,000. Here’s an explanation of why the government should be sending more money directly to the American people, as well as a breakdown of other major pieces of the plan:
$1,400 Stimulus Checks
Unfortunately, the wins of the rest of the bill could very well be eclipsed in the eyes of the American people by the matter of stimulus checks. Democrats seemingly couldn’t resist complicating something otherwise straightforward, opting to subtract the existing $600 payments from the famously promised amount of $2,000. Stimulus checks are arguably the most talked about and eagerly awaited aspect of COVID relief and, as we noted earlier, an impactful short-term economic tool. In fact, they aren’t really stimulus – they’re effective survival checks that happen to be a good stimulus, as well. What’s not effective or helpful is trying to finesse struggling folks and get off on a technicality.
While $1,400 on top of the $600 already sent out may technically bring the total amount of direct cash payments to $2,000, many people expected another $2,000 check. Choosing to let them down on the most visible and simple piece of this plan is simply a poor political choice for an administration that needs to earn the public’s trust.
$15 Federal Minimum Wage
The highlight of the proposal is a national minimum wage hike, elimination of the tipped minimum wage, and equalization of the sub-minimum wage. This will translate to a raise for forty percent of working Americans and sustained economic gains. We’re thrilled that the administration is centering working class Americans and proving that they are a priority outside of the election campaign.
State and Local Aid
Relief for state and local governments was cut out of previous packages, causing tremendous damage to communities across the country. Thankfully, this package allocates $350 billion to this critical sector. This will save millions of public service jobs, revive underfunded essential programs, and help millions of people continue getting access to life-saving government services and support.
Enhanced Unemployment Benefits
In the first week of January, new unemployment claims were up 25% from the previous week, and job numbers painted a bleak portrait for a quick and easy recovery. The package would increase unemployment insurance assistance to $400 per week, giving jobless folks a boost of $100. This is crucial since millions of people remain out of work and without immediate prospects, and the boost will make sure these folks are still able to pay for their basic necessities as the pandemic drags on. Critically, it also looks to tie these enhanced benefits to automatic triggers, so Congress does not have to engage in a politically costly fight to extend them every few months if the economy continues to struggle.
Other Key Provisions
The American Rescue Plan also includes other key provisions aimed at working-class Americans who fell through the cracks of previous relief programs. Among them is paid sick and family medical leave, which would be effective through September. Paid leave would be restructured to include more employees as well as reimburse state and local governments and small-size employers. The proposal also expands the Child Tax Credit and Earned Income Tax Credit, extends the eviction moratorium through September, and allocates billions to public health programs for things like vaccines and testing. These provisions will be essential for reaching as many affected Americans as possible and ensuring their safety and security in the time it takes to reign in the virus.
We are faithful that this bill, with its prioritization of working families, is appropriately ambitious to provide immediate assistance to the millions who have been devastated by COVID. This was the opportunity for the incoming administration to set a new pace for pandemic recovery, and we’re happy to see that they acted accordingly. We hope that the Biden administration plans on additional relief and stimulus measures, and are reassured that a second piece of the two-part legislative plan will follow the American Rescue Plan.
Now that we have a proposal that would deliver major relief, we need to focus on getting it passed. With a 50-50 Senate margin, every single Democratic senator will need to be on board. At this moment, unanimous support seems far from certain. If it comes to the point of bipartisan negotiations, the bill will likely be crippled by cuts to crucial components. The country has been aching for substantial relief, and the loss of any of it would mean sacrificing the security of countless American households.
This bill is ambitious, but it is far from too large. The Republicans who will inevitably critique its $1.9 trillion price tag should be reminded that the 2017 Tax Cuts and Jobs Act, which they voted for, cost exactly the same amount. They should be asked to explain how tax cuts for the rich are more important than emergency pandemic relief.