President Biden on Thursday signed into law the American Rescue Plan, a $1.9 trillion stimulus package that provides economic relief to struggling American families and includes funding for increased COVID-19 testing and vaccinations.
The bill also includes funding for jails and prisons and alternatives to arrest, as well as expanded health care coverage, relief for state and local governments, and protections for our veterans pursuing a college degree. Here’s our take on the bill’s impacts in criminal justice, health care, higher education, and public finance:
Criminal Justice
Prisons and Jails
The America Rescue Plan includes a $1.8 billion appropriation to Health and Human Services (HHS) to fund COVID-19 mitigation strategies for some of our most vulnerable populations in “congregate settings,” including those in jails and prisons. As most surely know by now, people who live and work in jails and prisons are among the hardest-hit by COVID-19 because the conditions in these settings make them more susceptible to contracting and spreading the virus. When the Justice Action Network’s Emergency Justice Task Force — chaired by Arnold Ventures Executive Vice President Jeremy Travis — released its COVID-19 recommendations for federal lawmakers, it highlighted the need for decarceration and diversion efforts to combat the COVID-19 crisis. We’re happy to see those efforts included in the America Rescue Plan.
Incarcerated Americans will also receive stimulus checks, just as they did with the support of both parties in both previous rounds of stimulus under President Trump. (Although the distribution of those checks was plagued with problems, including money being garnished by prisons.) Democrats rejected an amendment to block aid for those incarcerated, saying the measure would harm prisoners’ families. “Given the stark racial disparities in our criminal justice system, this would cause the most harm to Black and Brown families and communities already harmed by mass incarceration,” Sen. Dick Durbin, D‑Ill., said on the Senate floor. “Children should not be forced to go hungry because a parent is incarcerated.”
Alternatives to Arrest
We’re also celebrating the CAHOOTS provisions, which have cleared the Senate and would allow states to utilize Medicaid dollars for operating community-based mobile crisis intervention units as an alternative to law enforcement intervention. As our Policing Reform portfolio highlights, communities across the country desperately need alternative responses to people in crisis that don’t rely on law enforcement. Many law enforcement leaders themselves have spoken publicly about this need.
Higher Education
Protection for Veterans
For nearly a decade veterans and military organizations sought to close a loophole in federal law that allowed predatory for-profit institutions to use GI Bill dollars and Defense Department Tuition Assistance to evade the caps on federal student aid that for-profit schools otherwise face. The 90⁄10 loophole put a target on veterans’ backs, making them vulnerable to aggressive and predatory marketing practices by poor quality schools that took their money and left many with worthless degrees. With the passage of the American Rescue Plan, Congress finally approved a provision to close this loophole for good.
Health Care
Expanding Coverage
The stimulus package’s most significant health care reforms were aimed at expanding and strengthening the safety net for some of the nation’s most vulnerable individuals, including financial incentives for states to expand Medicaid coverage and provide long-term care services in the community, as well as more generous subsidies to lower the cost of health insurance for plans on the exchange.
While these reforms are important first steps toward ensuring equitable health care access post-pandemic, we look forward to additional action from Congress and the Biden-Harris administration to address underlying health care costs and help make health care more affordable for everyone, now and into the future.
Drug Prices
The bill did lower drug costs by eliminating the Medicaid rebate cap and thereby generating higher rebates for drugs in Medicaid. But federal action is still needed to lower the prices of prescription drugs and to address the rapidly rising hospital prices that have driven up premiums, left families in debt, strained employers and taxed government budgets.
Congress has a range of options — many with bipartisan backing — to deliver much-needed financial relief to families, employers and taxpayers at a time of crisis. From prescription drug pricing reform to constraining high prices charged by hospitals to taking steps to better coordinate care for people with the most complex care needs, we look forward to seeing additional federal momentum on the policies that will help put the country on firmer footing going forward.
Public Finance
Support for the IRS
The IRS will play a key role in ensuring that the benefits created by this legislation get to the people who need them. After a decade of budget cuts, Congress has finally begun the process of reinvesting in an important pillar of the tax system. The American Recovery Act provides nearly three times as much support to the IRS than the total amount in the last December package. In addition, Congress offset their spending in this latest recovery bill by lowering the threshold of the IRS Form 1099‑K. Under the new stimulus bill, for the 2022 tax year and going forward, companies will be required by law to send workers those forms if they earn more than $600, regardless of the number of transactions. This threshold was previously set at $20,000. Pairing additional resources with these types of structural changes is exactly how lawmakers should be thinking about opportunities for strengthening our tax compliance system and ensuring fairness and equity in the tax code. These are only the first steps to rebuilding and modernizing the IRS, but ones that are critical for the effectiveness, efficiency, and fairness of the tax code.
Relief for State and Local Governments
State and local governments received an important transfer from the Federal government to cover pandemic-related shortfalls. State revenue varied widely across states, and local governments have borne the brunt of service-related expenditures related to the pandemic. This bill will ensure that the nation’s recovery is as widely distributed as possible.
Multi-Employer Pension Relief
The problems for multi-employer pension systems — those that are negotiated by unions and comprised of many small businesses — have been building for years. Solely providing a cash infusion, as the American Recovery Act does, only kicks the can down the road. There are important systemic changes that need to happen to ensure that this doesn’t happen again in 30 years. Our hope is that more systematic changes are on the table the next time this is addressed.
