On Wednesday, the House of Representatives passed the Senate version of the $1.9 trillion COVID-19 stimulus blue-state bailout bill — without a single Republican vote and with one Democrat dissenting.
The “American Rescue Plan” passed the House, 220-211, with all but one Democrat voting for it. President Joe Biden has announced his intention to sign the bill.
While the bill includes many important programs to fight the COVID-19 pandemic and to directly address the fallout of the pandemic, most of the spending has little direct connection to COVID-19.
The bill includes $75 billion for vaccines, treatments, testing, and medical supplies. It also includes $19 billion for “public health,” primarily for state health departments and community health centers. A generous reckoning of spending directly related to COVID-19 would even include the $6 billion to the Indian Health Service and the $4 billion for mental health in this category.
The bill also includes $7.2 billion for the Paycheck Protection Program (PPP), $15 billion for economic injury disaster loans, $26 billion for restaurants, bars, and live venues struggling with the lockdowns, and $15 billion in payroll support for airlines. In order to receive this money, businesses will have to prove they suffered economic harm from the pandemic, and in some cases, they will have to repay loans.
The bill will also send $1,400 in individual checks that phases out at $75,000 individual income — a cost of $413 billion overall. The bill will also extend the $400/week “enhanced” unemployment benefits from previous bills through August 2021. The Congressional Budget Office put the cost of this unemployment bonus at $246 billion, warning that it “could increase the unemployment rate as well as decrease labor force participation.”
Even this generous definition of COVID-related spending only adds up to $825 billion or 43.4 percent of the total. House Republicans zeroed in on the fact that a mere $164 billion (8.6 percent) goes toward directly fighting the pandemic.
So what accounts for the other trillion-plus in spending?
For starters, the COVID-19 “relief” bill bails out state and local governments to the tune of $350 billion, even though state revenues have largely recovered since the spring. Democrats changed the funding formula to ensure that most of the dollars go to blue states that imposed strict lockdowns. While the CARES Act distributed money by state population, the $220 billion for states in the new bill will be allocated based on average unemployment over the three-month period ending in December.
New York (8.2 percent unemployment in December) and California (9 percent), notorious for strict lockdowns, will reap benefits for crushing businesses, while South Dakota (3 percent unemployment in December) will face penalties for remaining open.
The bill also includes $86 billion to rescue about 185 multi-employer pension plans insured by the Pension Benefit Guaranty Corporation. These plans are chronically underfunded due to lax federal standards and accounting rules, yet the bailout comes with no real reform.
The bill directs $129 billion to elementary and secondary schools, regardless of whether or not they reopen. It sends another $40 billion to higher education. Congress has already provided about $113 billion for schools and most of those funds remain to be spent, so the CBO projects that schools will spend 95 percent of these new funds between 2022 and 2028, after the pandemic is over.
The bill includes $35 billion for subsidies to defray Obamacare premiums and $15 billion for a temporary five-percentage-point increase in the federal Medicaid match to states that expand eligibility to lower-income adults. The WSJ editorial board argued that this provision aims “to chip away at private coverage on the way to Medicare for All.”
The bill includes $39 billion for child care, $30 billion for public transit, $19 billion in rental assistance, $10 billion in mortgage help, $4.5 billion for the Low Income Home Energy Assistance program, $3.5 billion for food stamps, $1 billion for Head Start, $1.5 billion for Amtrak, $50 billion for the Federal Emergency Management Agency, $4 billion to pay off the loans of “socially disadvantaged” farmers and ranchers, and nearly $1 billion in global food assistance.
The bill increases the child tax credit from $2,000 to $3,000 (a cost of $99 billion) and expands the Earned Income Tax Credit to some childless adults ($25 billion).
Finally, the bill includes pork-barrell spending, pet causes for specific members. Congress would spend $1.5 million for the Seaway International Bridge, a priority for Schumer. The bridge connects New York to Canada — a country that still prevents those supposedly COVID-prone Americans from entering. The bill also includes nearly $500 million for “grants to fund activities related to the arts, humanities, libraries and museums, and Native American language preservation.”
The bill will be a windfall for families with children, however. Bruce Lesly, president of First Focus Campaign for Children, predicted that “The American Rescue Plan’s improvements to the child tax credit will cut child poverty by more than half this year alone. Its child care, nutrition, education, mental health and other provisions will vastly improve the lives of our kids, which have been completely derailed by the pandemic and its social and economic aftermath.”
The bill will expand the Child Tax Credit, increasing it from $2,000 to $3,000 for older children (up to 17 years old), and up to $3,600 for children under age 6. The bill includes $50 billion in child care funding, $140 million for youth mental health, including $20 million for youth suicide prevention — a critical need since school closures have significantly damaged youth mental health — and $800 million for homeless children and youth. The bill also includes child health care, child nutrition, and child welfare funding.
Yet the American Rescue Plan is not all good news for children. Democrats voted down Republican attempts to add the Hyde Amendment to the bill, which would have prevented the $1.9 trillion from funding abortion. Biden, a longtime supporter of the Hyde Amendment, opposed Hyde in the 2020 primary. This, along with the blue-state pension bailout, made the bill unpalatable to Republicans.
Of course, this opportunism was nothing new from Democrats. Back in March 2020, Democrats suddenly blocked a COVID-19 relief bill — after a bipartisan team of then-Treasury Secretary Steve Mnuchin, House Speaker Nancy Pelosi (D-Calif.), House Minority Leader Kevin McCarthy (R-Calif.), then-Senate Majority Leader Mitch McConnell (R-Ky.), and then-Senate Minority Leader Chuck Schumer (D-N.Y.) had worked out numerous compromises to rush the legislation.
Rather than working to pass the bipartisan bill, Senate Democrats blocked the effort and House Democrats presented Pelosi’s version, a bill jam-packed with pet projects like a slate of liberal election “reforms,” a $15/hour minimum wage, Green New Deal standards forcing airlines to report the carbon emissions for each flight, collective bargaining for unions, and more.
House Majority Whip James Clyburn (D-S.C.) told lawmakers, “This is a tremendous opportunity to restructure things to fit our vision,” echoing former Obama Chief of Staff Rahm Emanuel, who notoriously said, “You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.”
Tyler O’Neil is the author of Making Hate Pay: The Corruption of the Southern Poverty Law Center. Follow him on Twitter at @Tyler2ONeil.