Biden Unveils American Rescue Plan
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Biden Unveils American Rescue Plan

January 15, 2021

By Brownstein Tax Policy Team

On Thursday, Jan. 14, President-elect Joe Biden unveiled the American Rescue Plan (ARP)—a $1.9 trillion COVID-19 relief proposal his administration will pursue shortly after taking office on Wednesday, Jan. 20.

The proposal includes funding intended to provide individuals with economic security for the duration of the pandemic, such as another round of direct Economic Impact Payments at $1,400 per person, enhanced unemployment benefits and expanded refundable tax credits, among others. It also contains money for critical workforce supports, such as reopening schools and shoring up child care. Additionally, the ARP includes funds to help contain and eliminate COVID-19, such as a vaccine distribution plan, a proposal to scale up testing and mobilizing a public health jobs corps.

Not included in the package were any provisions related to the U.S. Small Business Administration’s Paycheck Protection (PPP) or financial assistance for larger corporations, including the popular Employee Retention Tax Credit (ERTC). While the plan contains funding for state and local governments, a top priority for congressional Democrats, notably absent from the proposal, are any legal liability protections as advocated by congressional Republicans.

House Speaker Nancy Pelosi (D-CA) and incoming Senate Majority Leader Chuck Schumer (D-NY) both lauded the proposal shortly after its unveiling, saying it was “the right approach” and indicating they will seek to swiftly advance it through their respective legislative chambers.

The Republican response was less enthusiastic, with House Ways and Means Committee Ranking Member Kevin Brady (R-TX) releasing a statement in which he said the proposal “does nothing to save Main Street businesses, get people back to work, or strengthen our economy.”

The ARP is the first in Biden’s dual legislative strategy to respond to the COVID-19 pandemic. Ideally for the Biden administration, following enactment of the American Rescue Plan, the first pillar, it will turn to the second pillar that will be focused on helping the U.S. economy recover. This second pillar is expected to contain aspects of Biden’s campaign agenda, Build Back Better, such as infrastructure funding, green energy tax breaks and additional tax incentives for building a strong domestic manufacturing base and supply chains, among other priorities.

With a split 50-50 Senate, the ARP faces an uphill battle. Unless the Biden administration plans to use procedural tools at its disposal to circumvent the 60-vote threshold necessary to pass legislation in the Senate, the final legislation will likely be considerably different in order to gain enough bipartisan support to pass.

It is unclear when legislation aligned with the ARP will be introduced.

This alert takes a closer look at the proposals within the ARP. Below are our five key takeaways from the plan. We have also summarized the ARP and put it in context of legislation enacted in response to COVID-19 during 2020. This alert provides an analysis and implications for each provision.

Click here for the full alert. 

On Thursday, Jan. 14, President-elect Joe Biden unveiled the American Rescue Plan (ARP)—a $1.9 trillion COVID-19 relief proposal his administration will pursue shortly after taking office on Wednesday, Jan. 20.

The proposal includes funding intended to provide individuals with economic security for the duration of the pandemic, such as another round of direct Economic Impact Payments at $1,400 per person, enhanced unemployment benefits and expanded refundable tax credits, among others. It also contains money for critical workforce supports, such as reopening schools and shoring up child care. Additionally, the ARP includes funds to help contain and eliminate COVID-19, such as a vaccine distribution plan, a proposal to scale up testing and mobilizing a public health jobs corps.

Not included in the package were any provisions related to the U.S. Small Business Administration’s Paycheck Protection (PPP) or financial assistance for larger corporations, including the popular Employee Retention Tax Credit (ERTC). While the plan contains funding for state and local governments, a top priority for congressional Democrats, notably absent from the proposal, are any legal liability protections as advocated by congressional Republicans.

House Speaker Nancy Pelosi (D-CA) and incoming Senate Majority Leader Chuck Schumer (D-NY) both lauded the proposal shortly after its unveiling, saying it was “the right approach” and indicating they will seek to swiftly advance it through their respective legislative chambers.

The Republican response was less enthusiastic, with House Ways and Means Committee Ranking Member Kevin Brady (R-TX) releasing a statement in which he said the proposal “does nothing to save Main Street businesses, get people back to work, or strengthen our economy.”

The ARP is the first in Biden’s dual legislative strategy to respond to the COVID-19 pandemic. Ideally for the Biden administration, following enactment of the American Rescue Plan, the first pillar, it will turn to the second pillar that will be focused on helping the U.S. economy recover. This second pillar is expected to contain aspects of Biden’s campaign agenda, Build Back Better, such as infrastructure funding, green energy tax breaks and additional tax incentives for building a strong domestic manufacturing base and supply chains, among other priorities.

With a split 50-50 Senate, the ARP faces an uphill battle. Unless the Biden administration plans to use procedural tools at its disposal to circumvent the 60-vote threshold necessary to pass legislation in the Senate, the final legislation will likely be considerably different in order to gain enough bipartisan support to pass.

It is unclear when legislation aligned with the ARP will be introduced.

This alert takes a closer look at the proposals within the ARP. Below are our five key takeaways from the plan. We have also summarized the ARP and put it in context of legislation enacted in response to COVID-19 during 2020. This alert provides an analysis and implications for each provision.

Click here for the full alert. 

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