Alert 01.20.21
President Biden’s “American Rescue Plan”
Last week, President Biden released a fact sheet summarizing a proposed $1.9 trillion COVID-19 stimulus package, which promises to have a broad reaching impact on U.S. businesses.
Alert
03.11.21
President Biden has signed the next COVID-19 economic relief package into law. The American Rescue Plan Act was passed by the Senate late last week and was adopted by the House of Representatives on Wednesday. While smaller than the $2.2 trillion CARES Act passed in March 2020, the American Rescue Plan represents a major spending package, aimed at stabilizing the economy, protecting job growth and mitigating the ongoing impacts of the COVID-19 pandemic.
Below are the key elements of American Rescue Plan Act:
Assistance to Businesses
The nearly 650-page bill also includes numerous provisions designed to stimulate the economy and support for small businesses and other particularly hard-hit industries. The American Rescue Plan Act will increase funding for targeted Economic Injury Disaster Loans, and it provides for second-round draws of Paycheck Protection Program (PPP) assistance for certain nonprofits and digital news services. The Act also bolsters funding for grants for arts programs and venues, which were first authorized in the previous COVID relief legislation signed into law at the end of 2020.
The American Rescue Plan Act includes a new dedicated relief program for restaurants, the Restaurant Revitalization Fund, that will administer grants of up to $10 million each to eligible restaurants, bars, food stands and other relevant businesses. The grants will be distributed according to certain eligibility criteria and in the order in which applications are received, and they can be used to cover payroll, mortgage, or rent payments, maintenance costs, and other expenses incurred during the COVID-19 pandemic.
Further, for many employers, the bill provides for a 100 percent credit on applicable employment taxes for qualified employee sick leave wages paid by eligible businesses. This credit, an extension of the Families First Coronavirus Response Act credits first enacted in March 2020, now includes paid leave for employees to receive the COVID-19 vaccine as qualified sick leave wages eligible for the refundable credit.
State and Local Aid
For state and local governments, the bill provides approximately $350 billion in dedicated aid. These funds can be used to provide specific governmental services affected by the pandemic and to bridge the expected budget shortfalls. Notably, the Act specifically includes broadband deployment as a permissible use for the funds, allowing states and municipalities to improve their existing infrastructure and wireless capabilities.
The American Rescue Plan Act provides over $30 billion in emergency transit and infrastructure funds. Included in these funds are $26 billion for Urbanized Area Formula Grants, $317 million for Formula Grants for Rural Areas, $1.5 billion for Capital Investments, as well as dedicated funding for Amtrak and mass transit agencies, including the Washington Metropolitan Area Transit Authority. The bill also provides emergency assistance to airports and local aviation, through a $15 billion payroll support program aimed at preventing further furloughs and layoffs.
These measures are particularly important given that local government support was not addressed in the December COVID-19 relief package.
Cybersecurity and IT Modernization
In light of recent cyberattacks, the American Rescue Plan Act appropriates funds to improve the nation’s cybersecurity capabilities. The Act includes $650 million for the Cybersecurity and Infrastructure Security Agency (CISA) to conduct cyber risk mitigation efforts. These funds will likely be used to accelerate and modernize CISA’s two primary cybersecurity programs, the National Cybersecurity Protection System (better known as “Einstein”) and the Continuous Diagnostics and Mitigation program. The bill also appropriates $1 billion to replenish the General Services Administration’s (GSA) information technology modernization fund, and $200 million for the United States Digital Service. These measures fall short of the $9 billion CISA and GSA joint cybersecurity and information technology sharing service proposed in President Biden’s initial strategy for the American Rescue Plan Act; nevertheless, CISA’s acting director considers the cybersecurity investments in the Act to be an important “down payment” on future modernization and enhancement of the federal civilian cybersecurity architecture.
Schools and Child Care Programs
With many schools starting to reopen after nearly a yearlong pandemic hiatus, the American Rescue Plan provides over $128 billion in funds for state and local education agencies, allowing schools to coordinate preparedness and response efforts, purchase sanitizing and cleaning products and obtain educational technology for underserved students. The Act also allocates $39 billion in grants for higher education institutions, as well as $7.1 billion in broadband subsidies to schools and libraries.
The bill also provides some relief for student borrowers. While the bill does not cancel or forgive student loans, as was initially debated, the American Rescue Plan Act does make future student loan forgiveness tax-free through December 31, 2025. This step may be an indicator that Congress is still planning future student loan forgiveness programs, and it ensures that borrowers benefiting from the forgiveness program do not face a substantial and unexpected tax burden.
The American Rescue Plan Act also provides childcare assistance, appropriating nearly $39 billion in various childcare programs. The Act includes $15 billion in Child Care and Development Block Grants for low-income families to receive childcare subsidies and assistance, and it dedicates approximately $24 billion to a child care stabilization fund, aimed at keeping qualified child care providers in business and operating safely.
Individual Pandemic Relief and Financial Protections
The American Rescue Plan Act contains numerous measures designed to provide economic relief to Americans still struggling with the ongoing financial impacts of the COVID-19 pandemic.
Many Americans will soon receive $1,400 in stimulus payments, bringing the total payments for 2021 to $2000. The Plan also extends the enhanced federal unemployment benefit measures that were set to expire this month. Those benefits, which will apply to both laid-off workers and out-of-work self-employed and “gig economy” workers, include a $300 per week bonus payment through September 6, 2021 and ensure that the millions of Americans who received unemployment insurance in 2020 will not be taxed on the first $10,200 in benefits.
Additionally, with respect to taxes, the Act includes an earned income tax credit and a child tax credit, both designed to provide greater tax relief for eligible low- and moderate-income taxpayers. The American Rescue Plan Act’s child tax credit legislation will expand the current tax credits to allow 17-year-old children to qualify; increase the credit to $3,000 for children ages 6-17 and to $3,600 for children under the age of 6; make the credit fully refundable; and allow half of the credit to be paid in advance. Similarly, the bill will expand eligibility and increase the credit amount for the Child and Dependent Care Tax Credit, making this credit fully refundable as well.
Despite an initial proposal by President Biden and widespread support from Congressional Democrats, the bill does not include any increase to the federal minimum wage.
Expanded Health Care Offerings
The American Rescue Plan Act provides $19 billion for public health enhancements, with nearly half of these funds directed towards strengthening the public health workforce. The bill provides for the hiring of more health workers and for the necessary training, equipment, and technological support to address the COVID-19 pandemic and related public health threats.
The remaining funds will be used for other public health investments, including funding for community health centers to address both future efforts and for reimbursements of past expenditures related to the COVID-19 response, funding for community mental health services and the prevention and treatment of substance abuse, and funding for the National Health Service Corps, the Nurse Corps, teaching health centers, and family planning grants and contracts.
The bill also makes changes to numerous federal health benefit programs. It aims to make the Affordable Care Act’s exchanges more affordable for working- and middle-class Americans, as well as increasing Medicaid’s federal match for the states. The bill further makes coverage of COVID-19 vaccines and treatments mandatory under Medicaid and the Children’s Health Insurance Program (CHIP).
Covid-19 Vaccination, Testing, and Sequencing
The American Rescue Plan Act aims to directly address the ongoing COVID-19 spread by supporting vaccination programs, testing and sequencing programs. The bill provides over $7 billion specifically for federal vaccine distribution programs and grant programs to support state, local, territorial and tribal governments’ vaccination efforts, as well as another $7 billion for supply chain funding, medical supplies and vaccine confidence activities. Through these programs, Congress aims not only to mitigate distribution and supply chain concerns pertaining to the COVID-19 vaccination programs but also to address staffing and transportation issues in underserved communities, provide additional public messaging about the safety of vaccines, and increase data collection.
Over $49 billion will also be made available for testing, tracing and sequencing programs. This amount includes funding for both a national strategy and for providing technical assistance, guidance, and grants to state, local, and territorial public health departments. Through these appropriations, Congress will provide funding for creation of a data surveillance system and analytics infrastructure modernization, with an eye towards forecasting and tracking COVID-19 hotspots. The bill also provides additional funding for the Centers for Disease Control and Prevention (CDC) to use in addressing emerging infection diseases and biological threats.
Housing, Mortgage, Rental and Utility Assistance
Nearly a year into the pandemic, millions of Americans are behind on mortgage payments and rent obligations, and a federal judge has recently found the existing CDC eviction moratorium to be an unconstitutional use of Congressional power. Facing this potential for a housing crisis, the American Rescue Plan Act provides $45 billion in rental and utility assistance, eviction prevention measures and emergency housing vouchers. Included in these funds is a nearly $10 billion Homeowner Assistance Fund dedicated to mitigating COVID-19-related financial hardships affecting homeowners and preventing foreclosures and mortgage delinquencies and defaults.
Under this program, Congress will provide funds to cover qualified expenses, including mortgage payment assistance, financial assistance to reinstate mortgages, utility payment assistance and homeowners insurance premiums for those financially impacted by the pandemic. The bill provides $20 billion in emergency rental assistance, including rental and utility payments, as well as nearly $5 billion to help people cover home energy and water costs through programs like the Low-Income Home Energy Assistance Program designed to incentivize state funding for clean energy and energy efficiency projects in disadvantaged communities. However, the bill does not implement a new federal eviction moratorium, nor does it attempt to codify and replace the CDC’s Order.