The Washington PostDemocracy Dies in Darkness

Opinion Hidden provisions in Biden’s rescue bill make this a bigger deal than you thought

President Biden and Vice President Harris at the White House on Saturday. (Oliver Contreras/For The Washington Post)

Sometime in the next few days, President Biden will sign the American Rescue Plan, the first major legislation of his presidency. It has gotten a large amount of press coverage, especially the $1,400 checks that will be going to most Americans.

But if anything, we’ve underplayed how significant this bill is.

Yes, those subsidy checks are important; in fact, they may represent the largest broadly shared direct payment to Americans in history. A family of four with a household income under $150,000 will get $5,600, even before other measures, such as the boosted child tax credit, are accounted for. That’s a huge amount of money, and it will provide a tremendous boost of economic activity that will accelerate the recovery; the American economy is now projected to grow this year at a pace we haven’t seen in decades.

But while you’ve probably heard plenty about the subsidy checks and the extension of unemployment benefits, the bill is full of provisions that could have significant or even transformative effects on the country, many of which have gotten little or no attention:

Follow Paul Waldman's opinionsFollow

The child tax credit. For the next year, the bill increases the child tax credit and makes more of it “refundable,” which means that more people with very low incomes will be able to get that credit as a refund even if they’re paying little or nothing in taxes. It will also send the child tax credit to families on a monthly basis, rather than having it as something they might or might not get as a lump sum after filing their taxes.

This measure will have an huge impact. According to the Center on Budget and Policy Priorities, “The proposal would lift 4.1 million children above the poverty line — cutting the number of children in poverty by more than 40 percent.”

As part of the next covid relief bill, President Biden proposed an expanded child tax credit that would send direct payments to help struggling families. (Video: Joy Yi/The Washington Post, Photo: Scott Dalton/The Washington Post)

The Earned Income Tax Credit. The bill expands the EITC for childless low-income workers; 17 million of them could see a boost in their after-tax income.

Pensions. The bill includes a provision championed by Sen. Sherrod Brown (D-Ohio) that bails out a group of 185 multi-employer union pension plans that are in danger of failing. As the New York Times put it, “without the rescue, more than a million retired truck drivers, retail clerks, builders and others could be forced to forgo retirement income.”

Student loan debt. Under current law, if you have outstanding student loan debt that is canceled, the IRS treats your forgiven debt as income, which can result in a huge tax bill. Millions of borrowers on repayment plans pay a set portion of their income every month, and after 20 years the remaining balance is forgiven. The ARP would make that kind of loan forgiveness tax-free, and it would also apply to future loan forgiveness the Biden administration might undertake.

Exploitation of veteran students. The ARP closes a loophole in student-loan rules that has provided an incentive for colleges, particularly for-profit operations, to heavily recruit veterans paying for college with the G.I. Bill; these veterans are often roped in with false promises and then left without a degree or a good education.

Farmers. The ARP provides billions of dollars in assistance to disadvantaged farmers, many of whom are Black. As The Post reports, the bill would benefit “Black farmers in a way that some experts say no legislation has since the Civil Rights Act of 1964.”

Affordable Care Act subsidies. Under the ACA, only those earning up to 400 percent of the federal poverty level, or $106,000 for a family of four, are eligible for any subsidies to help afford health insurance they buy on the private marketplaces. The ARP removes that limit, meaning those at higher incomes could get some help if their insurance costs more than 8.5 percent of their income. In addition to removing this “subsidy cliff,” it also enhances the subsidies for those at lower incomes, which will mean significant premium cuts for many people.

Medicaid expansion. Twelve states have still refused to accept the ACA’s expansion of Medicaid, leaving huge numbers of poor citizens without health coverage. The ARP boosts the federal contribution to Medicaid so that holdout states will actually make money if they accept the expansion.

For instance, according to the Kaiser Family Foundation, if Texas accepted the expansion, it would have $3 billion in new costs but get $5 billion in increased federal funds, not only improving its state budget but finally providing coverage to 878,000 uninsured low-income Texans.

Mass transit. The bill includes $30 billion to shore up mass transit systems that were hit hard by the pandemic, forestalling service and maintenance cuts. As Mike Konczal of the Roosevelt Institute says, “Where we’d normally see the recovery worse from cuts, and financial weakness used as a cynical excuse to slash, privatize, and never restore public functions, the ARP moves to stop that dead in its tracks.”

There’s plenty more, including funds for child care, rental assistance and food assistance, among other things. Some of these provisions, including the student loan forgiveness provision, the pension bailout and the “subsidy cliff” fix, will only be in effect until 2025. Democrats are hoping that they’ll prove popular and effective enough that they can be made permanent. It’s a good bet that at least some of them will.

There’s a lot more to say about this bill, especially how it represents a rethinking of fiscal policy and the incentives government provides citizens. The fact that Republican opposition to it has been so anemic is also its own story.

But the big picture of the American Rescue Plan is that, to paraphrase a former vice president, this is a seriously big deal. And the more we learn about it as it gets implemented, the bigger it will probably look.

Read more:

Jennifer Rubin: Biden grasped what the media did not

E.J. Dionne: Biden is rolling back the culture war. The country should thank him.

Jennifer Rubin: Biden shows how serious he is about voting rights

Madiha Afzal and Michael O’Hanlon: Why staying in Afghanistan is the least bad choice for Biden

Lucy McBride: We’ve adjusted to pandemic life. Now we face the anxiety of leaving it behind.