Four Key Elements of the American Rescue Plan

In light of the ongoing pandemic and economic crisis, there has been strong interest in pursuing further spending to expand vaccinations, contain the pandemic, reopen schools, and extend expiring unemployment benefits. About a quarter of the House version of the American Rescue Plan would be spent on these four key elements, including less than 1 percent on vaccines and vaccinations. Meanwhile, more than half of the bill would be spent on state and local aid (which we have shown is likely excessive), broad rebates for most households, and long-standing policy priorities not specifically related to the current crisis. The remainder of the bill would consist of a combination of tax and spending policies, many of which provide targeted economic aid. Below we breakdown spending on these four key elements in the bill.

Vaccines

Less than 1 percent of the American Rescue Plan – about $17 billion – would be spent on vaccine-related activities and programs. This includes $8.5 billion to promote, administer, and increase support for vaccines, just over $5 billion to help support the production of vaccines and other therapeutics, just over $1 billion to cover vaccinations under Medicaid and the Children’s Health Insurance Program (CHIP), $900 million to international partnerships to develop vaccines and prepare for future pandemics, $600 million for vaccine-related activities in Tribal areas, and $500 million for the Food and Drug Administration (FDA). Importantly, this funding would be on top of almost $50 billion already allocated for vaccines under previous legislation.

COVID Containment

Though vaccines make up a small portion of the American Rescue Plan, other efforts to contain the pandemic are somewhat larger, making up about 6 percent of the total, or $110 billion. This includes $51 billion for testing and tracing efforts, $10 billion for public health investments, $1.5 billion for testing through the Indian Health Service, and $250 million for states to create “strike teams” for addressing outbreaks in nursing homes. The bill also includes $50 billion for the Disaster Relief Fund, of which the Congressional Budget Office (CBO) projects only $47 billion will be spent. While this disaster fund money is ostensibly meant to finance COVID relief efforts, it is appropriated for "major disasters" and could be used for other disasters as well. CBO estimates that less than half of the disaster funds will be spent by the end of Fiscal Year 2022.

School Reopening

A core objective of the American Rescue Plan is to fund the safe reopening of public schools. As such, 7 percent of the package – roughly $130 billion – is dedicated to public schools. However, this funding can be used for a variety of purposes, and likely much or most would be for purposes other than re-opening. These funds would be on top of the $54 billion allocated for K-12 public schools in December’s Response and Relief Act and the $17 billion in the CARES Act, most of which remains unspent.

Unemployment Insurance

Expanded unemployment benefits are scheduled to expire on March 14 (programs phased out for current beneficiaries by April 5), and this deadline is a key driver of the current bill. About 13 percent – $246 billion – of the House version would go toward extending these benefits through August and increasing the federal supplemental payment from $300 per week to $400. As a result of this increase, roughly two-thirds of those on unemployment would receive higher benefits than they did in wages when they were employed. However, most benefits would end altogether by the end of August. A better alternative would extend the current $300 weekly supplement and gradually phase it down over the course of the coming year, extending benefits through all of 2021.