The American Rescue Plan: A Historic Anti-Poverty Plan for a New Era

For over 40 years, the dominant narrative about poverty in American has focused on personal responsibility. From racist tropes like the fictional “welfare queen” used by President Reagan in his 1976 campaign, to President Clinton’s initiative to “end welfare as we know it” in 1996, the story about poverty, and the policies devised to help people in need, have been racially charged and built on assumptions that individuals who chose to work hard could succeed.

But it’s been impossible for many of us to “pull ourselves up by our bootstraps” in the face of COVID-19. In fact, the pandemic laid bare historic racial, ethnic, and income inequities in access to health care, exacerbated housing instability, and drove millions into poverty.

The recently passed American Rescue Plan (ARP), which is now taking its place in history as one of the largest anti-poverty measures in a generation, is a step toward righting these wrongs. Not only will the American Rescue Plan benefit hundreds of millions of Americans, but it is also changing the way we think about providing government assistance and just who may need that help.

Expansion of tax credits and cash payments will reduce child poverty, particularly for Black and Latino/a/x families.

Building on the Affordable Care Act, Child Tax Credits, Pandemic Unemployment, and other programs designed to meet this moment, the ARP takes bold steps forward to combat poverty and racism in America and address structural inequities in our systems. By normalizing cash payments to Americans below a certain income level and dramatically expanding refundable tax credits like the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC), the ARP flips the script on 50 years of damaging policy and brings us one step closer to providing a robust guaranteed income. In fact, the CTC expansion alone is expected to cut child poverty in half.

The ARP’s combination of tax credit expansion, unemployment insurance expansion, and stimulus funding indexed to income will help push against racial disparities. Currently, the CTC compounds hardships such as employment discrimination, unequal opportunity in education and housing, and other factors that leave a disproportionate number of Black and Latino/a/x households struggling to make ends meet. Half of all Black and Latino/a/x children get only a partial CTC or no credit at all because their families’ incomes are too low to qualify for the full credit. Similarly, the EITC expansion will benefit 5.8 million childless workers—a disproportionate number of whom are people of color—who are currently taxed into, or further into, poverty.

The ARP supports measures to ensure affordable, accessible and equitable healthcare for people with low income or who are uninsured.

Focusing on those hit hardest by the pandemic, the bill eliminates or vastly reduces premiums for many people with low or moderate incomes who enroll in plans through the Affordable Care Act Marketplaces, and provides new help to others who face high premiums. The bill also protects Marketplace enrollees, especially those whose income fluctuated last year, from having to repay large portions of their federal premium tax credits; makes it easier for people getting unemployment benefits to afford coverage; and assists people who have suffered job loss to to afford COBRA coverage through September. 

Importantly, the American Rescue Plan provides funding to rebuild the historically underfunded, fractured, and unequal public health system across the nation. The legislation funds community education and vaccine dissemination through trusted community-based providers, including community health centers, public health departments, and Federally Qualified Health Centers. Recent vaccine data shows that most BIPOC population received vaccines at local trusted community providers. We need to continue to bring the vaccines and healthcare services to where people are. They should be mobile, accessible, available and provided by trusted partners and community members.

The ARP will help rebuild housing opportunities and fight homelessness and housing insecurity.

The bill allocates $27.4 billion for emergency rental assistance (ERA), replenishing the Coronavirus Relief Fund. While this ERA is not the only source of assistance made available under the bill, to receive ERA for rent, utilities, and other house-related expenses, households must meet several requirements: household income cannot exceed 80% of the area median income; at least one household member must be at risk of homelessness or housing instability; and at least one individual in the home must be facing economic hardship because of the pandemic. Priority relief will be given to low-income families that have been unemployed for three months or more and to households making less than 50% of area median Income. Approximately $10 billion will go toward helping homeowners struggling with mortgage payments, and $100 million of the bill will be dedicated to housing counseling.

White House officials also said $5 billion will be set aside to fight homelessness through the conversion of certain properties into shelters. Another $5 billion will be used for emergency housing vouchers. These vouchers are available to people at risk of housing instability generally and also specifically to those fleeing domestic violence.

This a milestone moment in our history.

While the ARP is not perfect—many benefits are unjustifiably denied to immigrant families in need—it does turn the page on racist and false ideas about what causes and keeps people in poverty.

Imagine a country where everyone can provide for themselves and their families, regardless of race or where they come from or whether they are considered “deserving” of help. Advocates should seize this moment to go on the offensive, set the tone for future policy debates, and support the movement toward an equitable recovery. The American Recovery Plan is a first step toward that destination.