American Rescue Plan

What’s in the Bill

American Rescue Plan (Biden’s $1.9 Trillion Stimulus Package) Investopedia

Trickle-down Reaganism vs Bubble-up Bidenism
  • Biden is leading a quiet revolution, E.J. Dionne WaPo
    • Forty years ago, the victory of Reagan’s tax cut plan inaugurated a new ideological era, its core conviction summarized by a line in Reagan’s inaugural address:
      • “In this present crisis, government is not the solution to our problem. Government is the problem.”
    • The Reagan theory, reduced to its essence, was:
      • Help the rich, and their investments will produce jobs and prosperity for everyone else.
    • The Biden theory is bottom-up:
      • Help middle-class and low-income Americans, and their purchasing power will drive an unprecedented era of growth.
    • The Tax Policy Center’s comparison of President Donald Trump’s corporate tax cuts and Biden’s [American Rescue Plan] tells the tale of two theories. The benefits of Trump’s tax cut went overwhelmingly to the top 20 percent. Assistance from the Biden rescue reaches well into the middle class, but its biggest benefits go to the bottom 40 percent of the income structure.
  • The difference between the Trump tax cuts and the Biden relief bill, in one chart, Philip Bump WaPo
Social Programs
Jim Tankersley and Jason DeParle, NYT
  • Two Decades After the ‘End of Welfare,’ Democrats Are Changing Direction, Tankersley, NYT
    • Its first major legislative act under President Biden was a deficit-financed, $1.9 trillion “American Rescue Plan” filled with programs as broad as expanded aid to nearly every family with children and as targeted as payments to Black farmers. While providing an array of benefits to the middle class, it is also a poverty-fighting initiative of potentially historic proportions, delivering more immediate cash assistance to families at the bottom of the income scale than any federal legislation since at least the New Deal.
    • Rising inequality and stagnant incomes over much of the past two decades left a growing share of Americans — of all races, in conservative states and liberal ones, in inner cities and small towns — concerned about making ends meet. New research documented the long-term damage from child poverty.
    • Concerns about deficit spending receded under President Trump, while populist strains in both parties led lawmakers to pay more attention to the frustrations of people struggling to get by — a development intensified by a pandemic recession that overwhelmingly hurt low-income workers and spared higher earners.
Li Zhou and Emily Stewart, Vox
  • The Senate just passed the $1.9 trillion stimulus package. Here’s what in it. Li Zhou and Emily Stewart Vox
    • In 2014, sociologist Lane Kenworthy published an ambitious book titled Social Democratic America. In it, Kenworthy argues that not only would America benefit from a more expansive welfare state, but that it likely will adopt such a social democratic model in the coming years.
    • This prediction rests in part on a two-step theory about how the US welfare state expands.
      • First, policymakers become aware of a problem that’s best solved by expanding social benefits — poverty and economic insecurity among older adults, for example.
      • Second, the program designed to solve it — Social Security, in this example — becomes so popular and entrenched that it’s impossible to roll back
Debt
  • As Some Deficit Hawks Turn Dove, the New Politics of Debt Are on Display, NYT
    • “The deficit argument is often put in theoretical, high-level terms,” said Ernie Tedeschi, a policy economist at Evercore ISI. “The effects of a spending policy are tangible.”
    • There is also a theoretical basis to the political shift. Even before the pandemic, many economists had begun to rethink their long-held view that large public deficits and debt would bog down the economy by pushing up borrowing costs for businesses and sending consumer prices soaring. A decade of relatively low interest rates and steady economic growth had prompted many economists to suggest that the United States could, indeed, afford to run a budget deficit.
    • That changing calculus was driven by the fact that interest rates across developed economies have dropped, thanks to long-run trends including populations that are aging and save more, increasing the supply of money available for lending.
Inflation
  • Jerome Powell says the Fed expects ‘inflation will be neither particularly large nor persistent.’ NYT
    • The Federal Reserve chair, Jerome H. Powell, told lawmakers that the economy was healing from the pandemic downturn and continued to play down inflation concerns.
    • “We do expect that inflation will move up over the course of this year.”
    • “Our best view is that the effect on inflation will be neither particularly large nor persistent.”
  • How Not to Panic About Inflation Paul Krugman NYT
    • The $1.9 trillion American Rescue Plan will, without question, deliver a lot of economic stimulus. Just about everyone, from privateforecasters to the Fed itself, expects an economic boom, with the U.S. economy growing at rates not seen since the 1980s. There will almost surely be a rise in inflation, too, possibly well above the Fed’s target rate of 2 percent a year.
    • The key thing to understand is that there are really two kinds of inflation.
    • Short-term fluctuations in volatile prices tell us little about whether stagflation is becoming a risk. That’s why Fed policy generally ignores the headline inflation rate and instead focuses on a measure that excludes food and energy prices.