House-Passed American Rescue Plan Will Help People with Low Incomes & Children; Senate Must Follow

February 27, 2021, Washington D.C. – Early this morning, the House of Representatives passed the American Rescue Plan Act of 2021 to address urgent needs of the country’s health and economic crisis, along with the devastating impact of the pandemic on people of color and people with low incomes. The bill will provide immediate relief to those people and communities who have suffered disproportionately. The Center for Law and Social Policy (CLASP) applauds the passage of the legislation and urges the Senate to pass it swiftly.

“The American Rescue Plan is the urgent response the nation needs. It’s the large-scale response required at this moment to many of our nation’s most pressing needs created by the coronavirus, recession, and racial inequity.” said Olivia Golden, executive director of CLASP. “It will alleviate today’s crisis of suffering in communities with low incomes and meaningfully reduce child poverty.”

The rescue plan includes significant increases and improvements in the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) to provide critical help to families with low incomes and young adults who have been devastated by the pandemic and the recession. The changes to the CTC are expected to cut child poverty in half. Poverty for Black children would fall by 52 percent, by 45 percent for Hispanic children, and by 61 percent for Indigenous children. If made permanent, these improvements will have multi-generational, positive effects.

The changes to the EITC will for the first time make workers under age 25 without children or whose children do not live with them eligible for the credit. Young people have been uniquely harmed by this recession, at times experiencing unemployment rates double the national rate.

The legislation contains $39 billion for the child care sector: $15 billion to expand the Child Care and Development Block Grant (CCDBG) and $24 billion for a fund to stabilize the economically devastated child care sector. This investment builds on previous coronavirus relief bills to finally deliver $50 billion in child care relief, which CLASP has demonstrated is so vitally needed to keep child care providers afloat, support the child care workforce—disproportionately women of color—and allow child care to reopen safely. Child care is crucial infrastructure for the economy, and its restoration is critical for women’s return to the labor market. The legislation supports parents and children by including funds to make quality child care more affordable for people with low incomes as they return to work. CLASP’s state-by-state estimates of the child care relief funding are available here.

The Act also includes $1,400 stimulus, or ‘survival,’ checks for people making under $75,000 per year. The bill takes additional steps to include more mixed-status immigrant families who were left out of previous packages by making relief available to an additional 2.2 million children. Including immigrant families in economic relief is essential to our county’s recovery. The stimulus checks would be available for the first time to adult dependents, including many college students and individuals with disabilities. These checks and other provisions in the bill will help people with low incomes meet their basic needs, care for their children, and otherwise stay afloat during a harrowing public health and economic emergency.

The House bill includes other key provisions to provide crucial relief to families with low incomes including extension of pandemic unemployment assistance; funding to expedite the equitable distribution of coronavirus vaccination; support for states and localities; funding for postsecondary education, including Minority-Serving Institutions; investments to improve broadband access; and more.

While CLASP is grateful for the House’s action on this critical bill, it unfortunately omitted some critical provisions. The House neglected to boldly address the country’s caregiving and mental health crises, which have been exacerbated by the pandemic. The Act left millions of workers with no guarantee of paid leave during a pandemic. Similarly, the $4 billion investment in mental health is far below the amount needed going into the second year of the pandemic. It also fails to adequately support people who are incarcerated, people who are undocumented, and young people who need economic assistance to thrive. We are also disappointed that the critical expansion of the minimum wage included in the bill is likely to be stripped from the bill in the Senate due to Senate rules.

The immediate and crucial next step is for the Senate to pass the American Rescue Plan’s bold package of supports. As individuals face the expiration of unemployment insurance next month and even greater hardship, our nation has no time to lose.

Following enactment of the Act, Congress must urgently turn its attention to the next step: the investments required for a full economic recovery and to build a stronger economy that works for all individuals and communities, especially those who have been ravaged by the pandemic.