For the hardworking families served at Crisis Assistance Ministry, and millions of others like them across the country, the American Rescue Plan of 2021 has the potential to be life-changing.
Now that President Joe Biden has signed the $1.9 trillion-dollar COVID relief plan into law, experts and everyday people alike are examining the details to understand its true impact. Fortunately, indications are that it will have the greatest positive effect on those who have suffered the most during the pandemic, who are disproportionately lower-income people of color.
Four components of the plan – the $1,400 direct payments to individuals, extended unemployment benefits, increased Supplemental Nutrition Assistance Program benefits, and expansion of the child tax credit – are projected to have transformative effects on millions of vulnerable families.
According to a recent report by the Urban Institute, these four elements may slash child poverty in half this year, reduce the overall poverty rate by one-third, and lessen the disparity in poverty rates for households of color compared to white households in 2021.
Here in North Carolina, the bill’s increased childcare tax credit is expected to lift 137,000 children in our state out of poverty, according to NC Policy Watch. Furthermore, the bill provides broader benefits to children overall with 92% standing to benefit from this boost to their parents’ budget.
The American Rescue Plan not only raises the maximum amount of tax credit per child but makes that credit available to parents whose incomes were previously too low or too high to claim it. In addition, checks will be sent periodically throughout the year rather than in one lump sum at tax time, making money available for families to use as needed.
Some analysts point out that the American Rescue Plan’s provisions are targeted at kick-starting recovery from the devastation of COVID-19 so their effects may well be temporary. Others believe the success and popularity of many of the plan’s approaches could lead to permanent changes and usher in a new way of addressing poverty and economic disparities. Certainly, the idea that a relatively modest influx of cash for families can result in a dramatic decrease in poverty and as increased financial stability for lower-income households is gaining traction with policymakers.
At Crisis Assistance Ministry, the average family’s rent or utility crisis is solved with a $400 payment to the vendor. If these families’ tight budgets were eased through policies that put some hard-earned money back into their hands, they would have a greater ability to plan, save, and resolve their own financial emergencies. All families desire that level of stability, freedom, and dignity.
The American Rescue Plan of 2021 is a sweeping piece of legislation encompassing a wide variety of actions designed to save lives, stabilize families, and bolster the economy. Along with the four key provisions discussed above, the package includes money to help reopen schools, aid with rent and utilities, revitalize the restaurant industry, and expand health care, among other actions.