The House passed President Joe Biden’s massive $1.9 trillion America Rescue Plan on Wednesday, giving final approval to a sweeping package that provides emergency pandemic aid and also authorizes a wave of federal spending to dramatically, if temporarily, expand anti-poverty and health care programs.
The 220-211 House vote was almost entirely along party lines, as Republicans remained unified in their opposition to the relief package, which they derided as wasteful and partisan. One Democrat, Rep. Jared Golden of Maine, voted against the bill.
Democrats erupted in cheers after the package passed, and they touted the vote as a monumental victory for the country. “This is the most consequential legislation that any of us will ever be a party to,” House Speaker Nancy Pelosi (D-CA) said. “Who knows what the future may bring, but nonetheless, on this day we celebrate.”
Democrats also painted Republican opposition as political, pointing out the Republicans had supported many of the same measures under the Trump administration. “There’s only one thing that’s changed since we passed those first five bills,” said House Majority Leader Steny Hoyer (D-MD). “The need is there, the virus is still with us, the economy is struggle, but now we have a Democratic president.”
Biden said in a statement that he looks forward to signing the bill into law on Friday. “For weeks now, an overwhelming percentage of Americans – Democrats, Independents, and Republicans – have made it clear they support the American Rescue Plan. Today, with final passage in the House of Representatives, their voice has been heard,” he said.
What’s in the final bill: The package provides a third round of direct payments, with most Americans eligible to receive payments of up to $1,400. It also extends a $300 federal boost to weekly unemployment insurance payments and dramatically increases tax benefits for families with children. The bill also includes hundreds of billions of dollars in direct aid to state, local and tribal governments; money to help K-12 schools reopen; funding for Covid-19 vaccine distribution, testing and contact tracing; and increased subsidies for health care coverage. It also provides more aid for small businesses and housing assistance, and $86 billion to bail out union pensions
In all, the latest bill includes $1.8 trillion in federal spending, according to a Congressional Budget Office estimate, and will add $.185 trillion to the deficit over the next decade. The Committee for a Responsible Federal Budget, a watchdog group focused on the national debt, says that the package could ultimately cost $3.8 trillion, or $4.1 trillion once interest costs are factored in, if temporary tax benefits and relief measures are extended or made permanent.
Congress has now provided almost $6 trillion for fighting the pandemic and supporting the economy across six relief packages passed in just over a year’s time.
The legislative process may be over, but the debate is not: The relief package may be set to become law, but the debate over it is far from over. That’s true both in terms of the politics and the economics.
On the political front, the massive rescue package is massively popular with the American public — it has higher approval than any recent major legislation. A new CNN poll finds that 61% of Americans support the relief bill, with 85% favoring the expanded tax credits, 77% approving of funds for school reopening and 76% saying the back the new round of direct payments. A new Morning Consult/Politico poll finds even higher approval for the overall package, with 75% of respondents saying they strongly or somewhat favor the package, including 90% of Democrats and 59% of Republicans.
That could still change over time, though, so the Biden administration and Democrats will embark on a longer-term effort to publicize the benefits of the bill — and Republicans will try to convince Americans of their view that the package was a liberal wish list that may do more harm than good.
On the economic front, experts have already been debating whether the package is precisely what is needed to address the pandemic and lingering inequities or if it might overstimulate an economy already showing signs of recovery and poised to benefit from widespread vaccinations, leading to a surge in inflation or a buildup in debt that ultimately proves dangerous.
As Politico’s Ben White writes:
“It could be a Morning in America moment that further turbocharges an economy already primed to pop, reduces economic inequality and lofts Biden to the kind of economic hero status enjoyed by the likes of Franklin Delano Roosevelt after the Depression and Ronald Reagan in the boom-time 1980s.
“Or it could be a fiery accelerant for global markets as gas prices surge, home prices jump, speculative assets soar and investors increasingly fear the kind of sharp inflation spike that can hit with remarkable speed if the government pours too much gasoline on an already warming economy.”
In a research note to clients on Wednesday, J.P. Morgan economist Michael Feroli noted that the addition of an estimated $1.85 trillion in debt over 10 years is enormous by any historical comparison.” But, he added, he is less concerned that the package is too big for the economy to handle than some other economists, including Larry Summers, the former Treasury secretary under President Clinton and former director of the National Economic Council under President Obama, who has warned of a possible spike in inflation that could result in a damaging economic downturn.
Feroli argues that the federal government won’t be spending the newly approved money all at once. The Congressional Budget Office estimates that the budget impact for fiscal year 2021 will be $1.16 trillion — and nearly $300 billion of that money set to go to state and local governments will take more time to be spent. On top of that, Americans are likely to save rather than spend much of the relief payments they get.
Other economists have also suggested that inflation and debt shouldn’t be immediate concerns: “Our debt is clearly on a totally unsustainable path and we simply don’t know that rates are going to stay this low forever,” Len Burman, a Syracuse University economist and co-founder of the Tax Policy Center, told Politico. “If markets got the idea that the U.S. was no longer that safe of a haven, rates could go up very quickly. That is not a ‘right now’ problem. And it makes sense to invest in smart things right now. But it can become a problem.”
As the trillions in relief and stimulus spending work their way through the economy, the debate is unlikely to end for quite some time.