Last week, President Biden announced his first major legislative proposal — a $1.9 trillion economic aid package branded as the “American Rescue Plan.” The plan includes multiple measures to address the public health and economic crises brought on by the COVID-19 pandemic.
If passed by Congress, the American Rescue Plan would help hundreds of thousands of Mainers with low-to-moderate incomes who have been struggling to make ends meet for the past 10 months.
Biden’s plan recognizes the enormity of the challenge we face because of the COVID recession. It would see Mainers through the immediate economic and public health crisis and set our economy up for success in the years to come.
Its provisions to increase unemployment, provide direct cash relief, and strengthen the safety net. Proposals such as the $15 minimum wage will make our economy fairer, as well as more resilient against future recessions, while the expansion of tax credits for low-income Mainers would have a dramatic impact on poverty. Researchers at the Center on Poverty and Social Poverty at Columbia University have estimated that child poverty would be cut in half.
The ARP is a solid down payment on President Biden’s promise to “build back better.” Here’s what’s in the proposal:
Additional relief for unemployed workers
The American Recovery Plan, or “ARP,” would increase unemployment benefits and expand eligibility to more out-of-work Americans.
Recipients of unemployment insurance would receive an additional $400 weekly, on top of regular unemployment benefits, until September 2021, an additional $100 per week for six months beyond what was approved by Congress in December.
This would provide a stronger safety net for the roughly 40,000 Mainers receiving unemployment benefits as the coronavirus continues to spread in our state. These Mainers either cannot find work now or are too vulnerable to the effects of COVID to risk exposure in the workplace.
The unemployment provision of the plan would put hundreds of millions of dollars in Mainers’ pockets by September, boosting economic security for unemployed workers and helping to prop up the state economy, hasten the recovery, and create jobs.
A $15 minimum wage
One of the most ambitious proposals in the ARP is to permanently increase the federal minimum wage from the current $7.25 per hour to $15 per hour. The proposal would also repeal over time the subminimum wage for tipped workers, a system that causes increased wage theft and leaves tipped workers vulnerable to customer harassment and abuse. By contrast, tipped workers earn more, on average, in states which currently have no separate tipped minimum wage.
A $15 minimum wage would boost wages for almost one-third of Maine workers (192,000 people) by the end of a six-year phase-in period and would put $900 million in workers’ pockets each year, according to an analysis by the Economic Policy Institute.
Another round of stimulus checks, and other tax refunds
Biden’s plan would issue another round of direct Economic Impact Payments, or stimulus checks. Most Mainers would receive another $1,400 payment in addition to the $600 authorized in December. Importantly, the latest round of payments would be open to adult dependents, who were previously excluded.
The ARP would also temporarily expand two tax credits for low-income Mainers. Parents would be eligible for a larger Child Tax Credit in 2021. The plan would increase the credit for children over six from $2,000 to $3,000 and increase the credit for children five and younger from $2,000 to $3,600. The ARP would make the expanded CTC fully refundable in 2021, meaning a larger tax refund for middle-class families.
Working Mainers without children would benefit from a similar temporary expansion of the Earned Income Tax Credit for 2021. The EITC is a commonsense tax break for adults who work. It is currently worth up to $530 for a working adult without children, and the credit phases out quickly, with nothing available to those earning $16,000 or more. The ARP would increase the EITC for childless individuals to a maximum of $1,500 and expand the eligibility to those earning up to $21,000. Additionally, workers over 65 would be eligible for the first time.
The three major tax refunds in the ARP — the economic impact payments, expanded CTC, and expanded EITC — would deliver $2.3 billion to Mainers, according to the Institute on Taxation and Economic Policy, with the greatest benefit going to the low-income Mainers most vulnerable during the pandemic.
Relief for states and communities
The ARP would deliver $350 billion in relief to state and local governments. Dependent on how this money is allocated, state and local governments in Maine would likely receive around $3 billion. That funding would help prevent cuts that would hurt families and protect jobs for firefighters, teachers, social workers, and other working Mainers. Maine’s tribal governments will also be eligible for another round of direct federal assistance.
More support for child care
The Child and Dependent Care Credit would be temporarily increased for 2021 to cover up to 50 percent of care expenses, up to $4,000 for one child or $8,000 for two or more children. The current credit is 35 percent of expenses up to $3,000 for one child or $6,000 for two or more children. The credit would be refundable and fully available to families making less than $125,000 and partially available for those earning between $125,000 and $400,000.
Expansion of paid leave
President Biden is also proposing an extension and expansion of a temporary medical leave program enacted by Congress in 2020. Unlike the previous version of the program, nearly all workers would be eligible for paid leave if they needed time away from work because of the pandemic, including those in the smallest and largest businesses who were effectively excluded last year.
Under the ARP, workers would be eligible for up to 14 weeks of paid leave through September. Employers would have to pay up to $1,400 per week to employees on leave. Employers with fewer than 500 employees would be eligible for a tax credit to cover their costs.
Pandemic-related health care
The ARP includes billions of dollars for testing, vaccine distribution and funds to ensure vaccinations remain free for Medicaid patients.
The plan expands access to health insurance for Mainers who have lost or are risk of losing their health insurance in the economic downturn. Continued coverage on employer plans (known as COBRA) would be subsidized by the federal government through September 30. For those buying health insurance through healthcare.gov, subsidies would be increased so that no one pays more than 8.5 percent of their annual income in premiums.
Food assistance and other safety net programs
The ARP would extend until September a temporary 15 percent benefit increase for the Supplemental Nutrition Assistance Program (SNAP), which is currently set to expire in June. States would also receive additional funding for the Women Infants and Children (WIC) nutrition program and for the Temporary Assistance for Needy Families Program, which provides cash assistance to very poor parents and their children.
