WASHINGTON – President’s $1.9 trillion economic stimulus package Joe Biden which he signed shortly after taking office has become both an anchor and a buoy for his re-election campaign.
The American Rescue Plan, which the Biden administration drafted and which Democrats passed in March 2021, has fueled voter discontent in sometimes paradoxical ways. Some Americans blame the law, which included direct checks to individuals, for fueling rapid inflation.
Others seem upset that the relief provided to people, businesses and school districts was short-lived. The Federal Reserve Bank of Dallas recently reported that several business contacts in its district “expressed concerns about the phasing out of American Rescue Plan Act dollars and whether nonprofits and K-12 schools will be able to support certain programs without that financing.”
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Polls show that Americans continue to favor Biden’s opponent, the former president Donald Trump, on economic issues. They often indicate that only relatively small portions of the electorate believe Biden’s policies have helped them or their families financially.
But at the same time, the stimulus could boost Biden’s November chances in ways pollsters rarely ask about.
Economists say the relief package, along with the stimulus measures Trump signed into law in 2020, helped speed the U.S. recovery from the pandemic recession. The United States has grown and created jobs in a way that no other wealthy country has experienced post-pandemic.
Supporters of Biden and the law say the improved growth has helped the president remain electorally better positioned than his colleagues across Europe. Many European leaders have seen their popularity plummet, and some have suffered party losses in recent elections or face the possibility that voters will soon remove them from power.
Price increases continue to weigh on Biden’s approval ratings, and it is unclear whether he will win a second term. But he remains more popular than the leaders of France, Germany, Britain and other allies. The United States’ rapid economic growth and low unemployment rate, boosted by stimulus measures, could help explain this difference.
“One reason Biden has better approval ratings than most other world leaders is because his policies have helped deliver big gains in wages and wealth, allowing most Americans to get ahead despite these challenges,” said Bharat Ramamurti, a former deputy director of Biden. National Economic Council, which has written extensively about the political and economic benefits of the rescue plan.
The plan included money for the U.S. response to the pandemic, including accelerating vaccinations. There was also help for people, businesses and governments affected by the pandemic recession. That included one-time direct payments of $1,400 for low- and middle-income people and several months of more generous unemployment benefits for people who didn’t return to work after the recession.
The law also expanded food stamp benefits, expanded a tax credit for parents, provided relief to renters and homeowners, and provided hundreds of billions of dollars to state and local governments to shore up their budgets amid declining pandemic revenues. All of these programs were intended to be temporary, although some lasted longer than others.
Aid to local governments and schools lasted for several years, but began to run out. As a result, school districts across the country have begun making budget cuts, a visible sign of the pandemic’s end for parents and employees.
When Biden signed the rescue plan into law, his aides were confident it would help speed the country’s recovery from the pandemic recession. Republicans and even some liberal economists shouted that the bill was too high and would fuel inflation.
A wide range of economic evidence shows that both sides were right. Job creation and economic growth in the United States soared in the months after the law was passed, driven by spending by consumers and business owners that converged with government support. The unemployment rate fell rapidly. America’s recovery remains the envy of the rich world, far outpacing Europe, Japan, Canada and other allies.
But Biden’s team also believed the law would represent a clear political victory for the president. That hasn’t been the case, in part because economic research has attributed at least some of the rise in inflation that started in 2021 to spending.
The largest estimate, from the Federal Reserve Bank of San Francisco, says the stimulus measures signed by Biden and Trump in 2020 contributed as much as 3 percentage points to 9% inflation in 2022. Other estimates are more modest.
After initially hailing the stimulus as a political and economic slam dunk, Biden is now being forced to defend it in speeches to key voting blocs such as Black Americans. He blames corporations for continued price increases and calls out Republicans for failing to extend certain benefits of the law, such as an increased tax credit for parents that lasted only one year.
Biden has also struggled to remind voters that some of the pandemic relief they relied on came from the stimulus package he — not Trump — signed into law. While Trump insisted that his signature appear on checks going to individuals, Biden did not include his name on the payments.
“Trump is taking credit for single-handedly sending all the pandemic relief checks,” Biden said at a campaign event in Philadelphia late last month. “It is a lie.”
With the help of Black lawmakers in Congress, Biden added, he and Vice President Kamala Harris’ passed legislation to deliver more checks in the pockets to millions of Americans, including Black Americans — $1,400 checks from the American Rescue Plan that we passed, and then $300. a month per child per family through the child tax credit, cutting child poverty in half for Black families. And I will ensure that it is restored in the second term.’
Biden aides say he will amplify that message in the coming weeks. “It will become increasingly clear who was responsible for passing this crucial policy and who voted unanimously against it,” said Gene Sperling, a senior adviser to Biden who oversaw spending in the package.
Much of the reaction to the plan stems from the deep political divisions in the country.
Scott Smith, 59, a real estate agent in Canton, Georgia, said he was concerned that trillions in stimulus funding were exacerbating inflation and increasing the national debt. Smith, who voted for Trump in 2020, said he was also skeptical that everyone who received the aid needed it and that some of his friends had used the stimulus money for vacations.
“It was poorly conceived,” Smith said. “It’s a huge amount of debt for the next generation to take on.”
Other Americans who received pandemic relief said they had struggled with higher prices since those programs ended. Ashley DePover, 35, a paraprofessional in Inver Grove Heights, Minnesota, said the expanded child tax credit was a significant boost for her and her family after they unexpectedly found themselves homeless for several weeks in early 2022. She said the extra money she received as a tax refund helped pay for hotel costs, food, housing applications and a down payment for the apartment her family later moved into.
DePover said she hoped lawmakers would expand the child tax credit again as she has faced higher grocery and rent costs in recent years. Still, she said she didn’t blame Biden for the end of stimulus aid and that she was “fairly confident” she would vote for him in November.
“I would have liked to see it stick around, but we all knew it was limited when it came out,” DePover said.
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