The latest COVID-19 relief bill marks the third federal stimulus effort of its kind since the coronavirus pandemic began last spring, and the first since President Joe Biden took office.
Signed into law Thursday, the legislation sets aside $420 billion for direct payments to individuals — in $1,400 checks to eligible individuals — plus $350 billion for extending added unemployment benefits for several months and $130 billion to help reopen schools in ways that can avoid the coronavirus's spread.
The total price tag of the American Rescue Plan Act is a glaring $1.9 trillion.
Money will spray out of the U.S. Treasury again in many other directions, including for vaccine distribution. Most striking is a landmark child allowance. Among other provisions: An estimated $350 billion in state and local aid, $7.25 billion for the small-business loans known as Paycheck Protection Program and $4.5 billion for the Low Income Home Energy Assistance Program.
Congressional Republicans who voted against the package sounded jaded about its prospects even as the pandemic turns a year old. "The American people already built a parade that’s been marching toward victory," Senate Minority Leader Mitch McConnell (R-Ky.) said. "Democrats just want to sprint to the front of that parade and claim credit."
Even those who supported Biden's "go-big" strategy for the package and expect important help for the working class and an adrenaline shot for the private sector acknowledge that the results should be carefully tracked.
Lawrence Summers, the widely quoted mainstream economist, has weighed in on the general risks.
"In many ways, an overheated economy in which employers are desperate to find workers and push up wages and benefits would be a very positive thing," Summers wrote. But he warned that "policymakers need to ensure that they have plans in place to address two possible, and quite serious, problems."
For one, he said, there is a chance the massive action "will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability." For another, the scale of COVID-19 spending could crowd out needed investments in infrastructure, energy and schools.
Treasury Secretary Janet Yellen has said already that tax hikes would be needed to pay for at least part of a big infrastructure, climate and education investment package that Biden plans to unveil later this year.
During the administration of former President Donald Trump, as federal debt and deficits became unfashionable for the political right to worry about, tax cuts carried an estimated total cost of $2.3 trillion.
The most ambitious efforts for a presidential administration seem to come early in the tenure. For Trump, it was signing the corporate tax-cut bill that a GOP Congress rammed through against solid Democratic resistance. For Barack Obama, it was recession relief and the Affordable Care Act. For George W. Bush, it was the so-called "war on terror" triggered by the 9/11 attacks. Biden's pandemic actions are shaping the early narrative for his term, with the perceived success or failure yet to be known.