The federal relief package recognizes that our nation’s crisis began long before COVID-19
Out of the wreckage of the COVID-19 pandemic, federal legislation full of promise has arisen. The American Rescue Plan Act, enacted by Congress in March, could have a profound impact on the lives of Oregonians. It could go a long way toward increasing economic security, especially among communities that too often have been left behind.
But “could” is the operative word, for the most groundbreaking parts of the act are temporary. It will take a sustained effort by all of us to ensure that we fully reap the promise of the American Rescue Plan Act.
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The American Rescue Plan recognizes that the crisis facing our nation began long before COVID-19. In the days before the pandemic when the job market appeared strong, Black, Latino and Native American job seekers faced greater barriers to a job than whites — the result of long-standing and present-day discrimination. And even with a job, it was no guarantee that you were economically secure. Before the COVID-19 recession hit, one in three Oregon households made too much to be considered officially “poor” and yet were not able to afford simple basics like food and housing.
That so many among us cannot make ends meet did not happen by accident; it is the result of decades of public policies favoring millionaires and large corporations at the expense of ordinary folks. A glaring example is the 2017 Tax Cuts and Jobs Act, better known as the Trump tax plan. The largest overhaul of the federal tax system in decades, the Trump tax plan provided a massive windfall for corporations and the rich, while failing to boost the wages of workers. It was huge by any measure, but not unique by any means.
The American Rescue Plan signals a new approach, focused mainly on lifting up people left behind. Much of the news coverage has focused on the third round of stimulus payments of $1,400 going to most Americans. As helpful as these payments are, other parts of the plan are at least, if not more, important.
First, the Rescue Plan helps protect workers tossed out of their jobs by extending larger weekly unemployment benefits and continuing CARES Act coverage of gig workers and people who are self-employed — workers who have previously been excluded. The plan also invests in nutrition and rent assistance, helping more than half a million Oregonians get enough food to eat and preventing eviction for many renters.
The American Rescue Plan reaches cash-strapped households in other ways. One example is fixing a flaw in the Earned Income Tax Credit. Low-wage workers without dependents had been getting little to nothing from this tax credit meant to lift up those whose jobs pay too little. The new legislation changes that by dropping the exclusion of many workers without dependents and boosting the amount that childless workers can get.
But the most profound change in the American Rescue Plan is improvements to the Child Tax Credit. For starters, the law raises the amount that a family can receive, from $2,000 per child to $3,000. For families with children under age 6, the amount goes up to $3,600. The most significant structural change, though, is how it treats families with the fewest resources. The Act eliminates the requirement to have a minimum amount of earnings. Previously to get the credit, you had to have some earnings. Families shut out of the job market and families paid low wages were getting no credit or just a partial credit. Now under the Rescue Plan, the families with the lowest earnings will get the same per child as other families. This change alone will cut poverty in Oregon by more than 40%.
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The biggest beneficiaries of these tax changes are the children. There is overwhelming evidence that growing up with economic insecurity — without reliable access to such basics as food, shelter or health care — is damaging to kids. Children who experience poverty have worse outcomes in virtually every way, including physical and mental health, school performance and earnings when they become adults.
While the improvements to the Child Tax Credit alone will not make families secure, and indeed don’t come close to making quality child care affordable for families, they nevertheless represent an important policy breakthrough.
Unfortunately, most of the tax changes in the American Rescue Plan are temporary. To sidestep a filibuster, the Senate used a legislative tool called “reconciliation.” Long story short, the use of reconciliation means the changes are not permanent, and in this case, last only one year.
That makes the American Rescue Plan a promise — a promise of a future where everyone, particularly children, shares in the benefits of our economy. That is a future worth fighting for.
The Oregon Center for Public Policy is a nonpartisan nonprofit organization that researches and analyzes tax, budget and economic issues.
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