In March, the President signed into law the American Rescue Plan, which continues to provide immediate relief to American families and communities.
Approximately 161 million payments of up to $1,400 per person have gone out to households, schools are reopening, and 100 percent of Americans ages 16 and older are now eligible for a COVID-19 vaccine. Analysts have predicted that President Biden’s American Families Plan would add 21 million Americans to federal benefit programs. Writing for The Wall Street Journal, Hoover Institution fellows John F. Cogan and Daniel Heil unpacked their recent analysis, which discovered that the Biden administration’s $1.8 trillion omnibus bill would drastically expand the welfare state.
The academics note that families earning six figures would be eligible for generous handouts. Under the American Families Plan, 57% of all married-couple children would receive handouts, while over 80% of single-parent households would enter the entitlement rolls. Noting that the legislation has a number of “gimmicks” that hide the extent of its revenue proposals, the report forecasts that President Biden’s proposal would add $1 trillion to the federal deficit over the next decade.
Other economists have expressed similar concerns with the American Families Plan. Analysts from the Penn Wharton Budget Model — a nonpartisan think tank at the University of Pennsylvania’s Wharton School that examines the impacts of major legislation believe that the American Families Plan would slow down long-term economic growth.
By increasing income taxes for wealthier Americans, introducing $2.3 trillion in federal expenditures, and spending with borrowed money, the legislation would slash output by 0.4% within the next three decades. The bill would also decrease the capital stock — the total amount of machinery, buildings, and other productive equipment in the American economy — by 1.2% over the same period.