Understand more. Argue less.

Good morning. Many Democrats are hailing the imminent $1.9 trillion stimulus package as a major victory. Many Republicans call it an overly expensive, out-of-touch piece of progressive legislation. Let's break down why.

WHAT YOU NEED TO KNOW

Jenna Gibson

After what feels like months (wait, it was months), the House is expected to vote on the American Rescue Plan this morning. After the vote, President Biden plans to sign it into law before key unemployment programs expire on Saturday. Hold on, didn’t the House already vote on it? Yes, but the Senate made several changes to the bill, meaning the House needs to re-vote.

The battle in the Senate was fiercely partisan and ultimately concluded with a party-line vote, the exclusion of a $15 minimum wage, and an income cap on who can receive a stimulus check. The bill also extends the current $300/week federal jobless benefits through Sept. 6, and broadens the number of people eligible for the Child Tax Credit by around 80%. In addition, the Senate added a provision that makes any student loan forgiveness that happens from Dec 31, 2020 to Jan 1, 2026 tax-free.

Here’s what else you need to know.

The Facts

• Individual checks. Single filers who make less than $75,000 will get a $1,400 stimulus check, and joint filers who make less than $150,000 will get a $2,800 check. Those checks will be reduced for those above the income thresholds and end entirely for individuals making over $80,000 and joint filers making over $160,000. (CNBC)
  
• Child Tax Credit. The CTS, currently at approximately $166/month, will be raised to $250-300/month per child. 69 million children would qualify for the tax credit, reducing child poverty by an estimated 40%. (CNET)
  
• Other funding items. Aside from the CTS and direct checks for Americans, the stimulus package also allocates $350 billion for state and local governments, $130 billion for primary and secondary schools, $60 billion for vaccine testing and distribution, and $25 billion for restaurants and bars hurt by the pandemic. (AP)
  
• State aid. The $350 billion in state spending is being allocated based on each state’s share of unemployed citizens. Adjusting for population, “blue” states will get around $1,278 per capita and “red” states will get $1,017 per capita. (Tax Foundation)
  
• What about the budget? Congress requires any bill that increases the annual budget deficit to be offset by spending cuts elsewhere (some programs are exempt). However, the American Rescue Plan adds more to the budget deficit than Congress can cut from the budget, meaning government debt will increase. (CBO)

NARRATIVES

BOTTOM LINE

What Does It All Mean?

Depending on where your news comes from, your feelings towards the American Rescue Plan might sound something like this...

• If your news outlets lean Right, you see a $1.9T stimulus bill that might be helpful in the short-term but will ultimately hurt the country’s long-term economic prosperity. You know that people need stimulus checks and continued jobless benefits, but that doesn’t justify the hefty price tag and progressive amendments that don’t even have anything to do with COVID relief.
  
• If your news outlets lean Left, you see millions of people still struggling to get by, desperate for help. You feel that while the bill is expensive, it’s better to give too much aid than too little, especially given that Republicans seem to want to see Biden’s legislation fail at all costs. You know the light at the end of the tunnel is closer than ever before, but there’s still work to be done.

The American Rescue Plan's passing could have a massive impact: employment is still 9.5 million jobs short of pre-pandemic levels. In a poll by Reuters, 42 out 46 economists agreed that the aid package would significantly boost the economy. Findings from an international economic organization seem to back that up. In December, OECD projected that U.S. gross domestic product (GDP) would grow 3.3% in 2021. Yesterday, they released an updated report that increased the estimate to 6.5%, writing "strong stimulus measures and improved financial conditions have boosted activity in the United States."

There are always trade-offs in policy though: a bill this massive will increase the national deficit (tax revenue minus government spending). The U.S. government finances its federal debt by selling bonds and paying interest on them each year. That debt currently sits at around $28 trillion, or 103% of GDP: debt in countries like Japan, Italy, and Venezuela is all over 150%. Over $4 trillion was added in the past year alone, which some conservatives see as excessive. Some liberals view the past year as a "desperate times, desperate measures" scenario.

Overall, 68% of Americans support President Biden's COVID response, including 98% of Democrats, 35% of Republicans, and 67% of independents. In the long-term, the $1.9 trillion stimulus is a calculated risk for Biden and the Democrats. The short-term might favor them: voters may be more likely to gloss over inflation and national debt concerns with stimulus checks in their pockets. That doesn't mean those problems will go away. This bill has the potential to overheat a recovering economy and provoke another major recession, or cause our $28 trillion in national debt to finally come back to burn us. It's also possible that this relief package will lift millions out of poverty and create the spark that gets our economy back to a healthy place. Whether you think the stimulus is too big or small, one thing's for sure: help is on the way. That's something worth celebrating.

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IN OTHER NEWS

What Else We're Following

• Buckingham Palace said Tuesday that allegations of racism made earlier this week by Prince Harry and Meghan were “concerning” and would be addressed privately by the royal family. (AP)
• Jury selection begins in Derek Chauvin trial. What the first day revealed about legal strategy, and human perception. (USA Today)
• In the '24th Mile' of a marathon, Fauci and Collins reflect on their pandemic year. (NPR Podcast)

Finally, some good news

Nuclear dog-sitting. 10 years after the Fukushima nuclear disaster, two men are still living there, taking care of everyone’s pets (Good News Network)

Have a great, pet-filled week. See you next Wednesday!