American Rescue Plan

Definition

The American Rescue Plan is a comprehensive economic stimulus package aimed at providing relief to individuals, families, and businesses affected by the COVID-19 pandemic. This plan includes provisions for direct payments to individuals, extended unemployment benefits, and significant funding for public health initiatives and state and local governments, focusing on promoting recovery and stability in the economy.

5 Must Know Facts For Your Next Test

1. The American Rescue Plan was signed into law in March 2021, with a total cost of approximately $1.9 trillion.
2. One of the key features of the plan is an expansion of the Child Tax Credit, which significantly increases the amount families can receive per child and makes it fully refundable for 2021.
3. The plan also includes funding for enhanced unemployment benefits, extending assistance for those who lost their jobs due to the pandemic.
4. Direct payments of up to $1,400 per eligible individual were distributed as part of the stimulus plan, aiming to provide immediate financial relief.
5. The American Rescue Plan allocates substantial resources to support public health initiatives, including vaccine distribution and testing efforts.

Review Questions

• How did the American Rescue Plan expand the Child Tax Credit and what impact does this have on families?
  • The American Rescue Plan expanded the Child Tax Credit by increasing the credit amount to $3,600 for children under six and $3,000 for older children, making it fully refundable. This significant increase means that more families can receive the full benefit regardless of their income level. The enhanced credit aims to alleviate poverty among children and provide additional financial support to families during challenging economic times.
• Discuss how the American Rescue Plan's provisions for dependent care credits support working parents.
  • The American Rescue Plan enhances the Dependent Care Credit by increasing the amount that can be claimed for qualifying expenses related to child care. This change helps working parents offset some of the costs associated with finding care for their children while they are employed. By providing this support, the plan encourages parents to re-enter or remain in the workforce, ultimately aiding in economic recovery post-pandemic.
• Evaluate the overall economic implications of the American Rescue Plan, particularly regarding its impact on poverty rates and employment levels.
  • The American Rescue Plan is expected to have profound economic implications by significantly reducing poverty rates through direct financial assistance like expanded child tax credits and direct payments. By addressing immediate financial needs and supporting job retention through enhanced unemployment benefits, the plan aims to stabilize household incomes and stimulate consumer spending. Furthermore, as families regain financial footing, there is potential for increased employment levels as more individuals seek jobs, contributing positively to overall economic recovery.

Related terms

Child Tax Credit: A tax benefit that allows families with children to reduce their taxable income, designed to support child-rearing and alleviate poverty.

Dependent Care Credit: A tax credit available to taxpayers who incur expenses for the care of qualifying dependents, enabling parents to work or look for work.

Economic Stimulus: Government measures aimed at encouraging economic growth through increased spending and investment, particularly during times of economic downturn.