How the federal rescue plan could affect individuals, families, and the future

The American Rescue Plan passed by Congress and signed by President Biden this month will pump billions of dollars into Washington state. There's funding for vaccines, education, rental assistance, public transit, local, tribal, and state governments, and plenty of direct aid for low and middle-income families, especially those with children.

Heather Hill is a professor at the University of Washington's Evans School of Public Policy and Governance. She told KUOW’s Kim Malcolm about the rollout, starting with how much a family of four will receive if the parents make less than $150,000 a year.

Heather Hill: For that family, you will be receiving a stimulus check of $5,600, which is the $1,400 stimulus for four people, and then another $7,200 from the child tax credit if the kids are under six, and $6,000, if they're over. So, this family's income just increased by about $12,000 or more in non-taxable income.

Kim Malcolm: How soon can families expect to start seeing this money?

The first part, the stimulus checks, are going to come right away. Maybe families have even started receiving them. The second part, the child tax credit, requires filing taxes. You can opt to either receive it next year at tax time or to start receiving it earlier in July in monthly checks. That could really be helpful to families that are trying to stabilize their income more quickly than next tax season would allow them to do.

Then, if one of the parents is among the 140,000 people receiving unemployment insurance in Washington because they lost a job due to Covid, they are getting an extension on their benefits. That's $300 a week for an additional 29 weeks. That could add up to another $8,700.

This additional money is likely to be spent, at local grocery stores, paying rent to landlords, buying gas or clothes. It's really going to trickle up in a way to businesses, employees, and the overall economy.

This child tax credit is not funded beyond one year. What do you anticipate could change in a year? What conversations are we going to be having?

It’s a conversation starter. It’s potentially a sea change in the way that we protect children from poverty in this country, by affirming that we understand that high rates of child poverty, which we have in this country, have economic costs for us all. Also, that we understand that raising children has costs that should be shared across society.

So, it could be a sea change, but right now it’s a temporary change. Congress would need to act to put a permanent child tax credit reform into place. There is some bipartisan movement on that front. In addition to this reform that was put into place temporarily through the stimulus plan, Mitt Romney has also proposed a permanent child tax credit that would do very similar things.

$7 billion is coming to Washington state and local governments. Can you tell us a bit more about where this money might be used?

One of the somewhat unusual aspects of this is that states and localities and tribes have a lot of flexibility in how they spend the money, which means I think there could be much larger impacts, but it's a little bit harder to predict what they'll be. First, the federal government says the money can be spent for direct assistance to individuals or businesses, or nonprofits.

The money can also be used to replace funding for social service or other types of programs that was lost due to revenue reductions during the economic collapse. And, states, local and tribal governments can use the money to invest in infrastructure projects.

So, you can imagine they may be putting money directly into the wallets of families. They may be providing assistance to nonprofits that will keep them open or allow them to serve more people. Cities may be able to avoid major budget cuts and maintain services. Government agencies may be able to avoid laying off staff. And of course, we could also see improvements in the pace of Covid vaccinations and general improvements to the public health system as well.

We learned recently that Washington State's revenue forecast has really turned around. It's now predicted to be back pretty close to pre-pandemic levels. Is this aid for state and local government as needed as it was before, at least as it was perceived to be?

Oh, absolutely. I mean, there is room for the stimulus to be used for shoring up revenue losses. But first, even if the state doesn't have those, there may be many local towns and cities and tribal governments that do need the money for that purpose. That's still true. And in addition, even at the state level, while the news about the revenue returning to pre-pandemic levels is great news, the state is still being asked to respond to the Covid crisis in many ways that are costly.

When you think about the public health system, the unemployment insurance system, many of these systems are really under great stress right now. The money that the federal government is providing to states, even if your revenue is back to normal levels, the state is still going to need to be able to invest to really get us through this crisis.

A big goal of this American Rescue Plan Act is to ‘rescue’ the American economy, which has been devastated in so many ways by this pandemic. Big picture, is it likely to work?

My expertise is primarily in thinking about low and middle-income families, and the ways in which they experience an economic crisis like this. I think it's really historic and promising what the federal government is doing here because the projections suggest that the stimulus bill overall could reduce poverty among children by 50% in this country.

In King County, that would mean raising 22,000 children out of poverty. Given what we know about the long-lasting negative effects of growing up in poverty, it means that this has the potential to not only rescue our economy but to really benefit children and families and the economy for years to come.

Listen to the interview by clicking the play button above.