The $1.9 trillion economic stimulus package that President Biden signed shortly after taking office has become both an anchor and a float for his reelection campaign.
The American Rescue Plan, designed by the Biden administration and passed by Democrats in March 2021, has stoked voter discontent in sometimes paradoxical ways, with some Americans accusing the law, which includes direct checks to individuals, of fueling rapid inflation.
Some are angry that relief for citizens, businesses and school districts has been short-lived. The Federal Reserve Bank of Dallas recently reported that business leaders in the District “expressed concern about the gradual dwindling of ARP funding and about whether nonprofits and K-12 schools will be able to maintain certain programs without it.”
Polls show that Americans continue to support Mr. Biden’s opponent, former President Donald J. Trump, on economic issues. Polls often show that only a relatively small proportion of voters say Mr. Biden’s policies have helped them or their families financially.
But at the same time, the stimulus checks may boost Biden’s chances of winning the November election in ways that pollsters rarely ask about.
Economists say that relief package, along with stimulus measures that President Trump signed into law in 2020, helped jumpstart America’s recovery from the pandemic-induced recession. The U.S. has grown and added jobs since the pandemic in a way no other wealthy country has seen.
Biden and supporters of the law say spurring economic growth has given the president an electoral advantage over his European counterparts, many of whom have seen their approval ratings plummet, suffered party defeats in recent elections and face the possibility of being swiftly removed from power by voters.
Rising prices continue to hurt Biden’s approval ratings, making it unclear whether he will win a second term, but he is more popular than leaders of allied nations such as France, Germany and Britain. The U.S.’s rapid economic growth and low unemployment, bolstered by stimulus measures, may help explain the discrepancy.
“One of the reasons Biden has a higher approval rating than most other world leaders is because his policies have delivered huge increases in wages and wealth that have allowed most Americans to thrive despite these challenges,” said Bharat Ramamurthy, a former vice director of Biden’s National Economic Council who has written extensively about the political and economic merits of the rescue plan.
The plan included funding for the U.S. response to the pandemic, including speeding up vaccinations. It also included aid for people, businesses and the government hurt by the pandemic-induced recession, including one-time direct payments of $1,400 to low- and moderate-income earners and more generous unemployment benefits for several months for people who haven’t returned to work since the recession.
The legislation also expanded food stamp benefits, increased tax credits for parents, provided aid to renters and homeowners, and provided hundreds of billions of dollars to shore up state and local budgets amid revenue losses caused by the pandemic. All of these programs were temporary, but some were long-lasting.
After years of support for local governments and schools, aid is starting to dry up. As a result, school districts across the country have begun making cuts to their budgets, making the dwindling pandemic response funds visible to parents and staff.
When Biden signed the relief plan into law, aides were confident it would help jump-start the nation’s recovery from the pandemic-induced recession, even as Republicans and some liberal economists cried out that the bill was too big and would spur inflation.
A wide range of economic evidence shows that both sides were right. In the months following the bill’s passage, American job creation and economic growth soared, buoyed by spending by government-backed consumers and business leaders. Unemployment fell sharply. The U.S. recovery remains the envy of wealthy countries, far outpacing that of Europe, Japan, Canada and other allies.
But Biden’s team also thought the legislation would be a clear political win for the president. That hasn’t turned out to be the case, as economic studies have suggested spending from the legislation is at least partly to blame for the inflation surge that began in 2021.
The largest estimate, from the Federal Reserve Bank of San Francisco, suggests that the stimulus package signed by Biden and Trump in 2020 contributed up to 3 percentage points to inflation reaching 9% in 2022. Other estimates are more modest.
After initially hailing the stimulus package as a political and economic success, Biden has now been forced to defend it in speeches to key voting groups, including Black Americans. He has blamed corporations for continued price increases and criticized Republicans for not renewing parts of the stimulus package, such as an expanded tax credit for parents that lasted only a year.
Biden has also struggled to remind voters that some of the pandemic aid they were counting on came from stimulus bills he signed into law, not Trump’s. While Trump insisted that his signature be on the checks going to individuals, Biden did not put his name on the payments.
“Trump has bragged that he sent all of the pandemic relief money himself,” Biden said at a campaign event in Philadelphia late last month. “That’s a lie.”
Biden added that with the help of black members of Congress, he and Vice President Kamala Harris have passed legislation that will “put checks in the pockets of millions of Americans, including black people. The $1,400 checks we passed through the American Rescue Plan, and the $300 a month per child per family through the child tax credit, have cut child poverty in half for black families. I intend to restore that in my second term.”
Biden aides say he will double down on that message in the coming weeks.“We’re going to see more and more clarity about who was responsible for passing these important policies and who voted unanimously against them,” said Gene Sperling, a senior Biden adviser who oversaw spending on the measure.
Many of the reactions to the plan reflect the country’s deep political divisions.
Scott Smith, a 59-year-old real estate agent in Canton, Georgia, said he worries that trillions of dollars in stimulus checks have exacerbated inflation and increased the national debt. Smith, who voted for Trump in the 2020 presidential election, also wonders whether everyone who received the money needed it, and said some of his friends spent their stimulus money on vacations.
“This was a misconception,” Smith said. “It’s a huge debt for the next generation to shoulder.”
Other Americans who received pandemic aid said they’ve struggled to keep up with rising prices since the programs ended. Ashley DePover, a 35-year-old paraprofessional from Inver Grove Heights, Minnesota, said the child tax credit expansion was a big help to her and her family after they unexpectedly found themselves homeless for several weeks in early 2022. She said the extra money she received in her tax refund helped pay for hotel bills, food, housing application fees and later a down payment on the apartment her family moved into.
DePover said she hopes lawmakers will re-expand the child tax credit after struggling with rising food and rent costs in recent years. Still, she doesn’t blame Biden for the end of the stimulus package and said she’s “pretty confident” she’ll vote for him in November’s presidential election.
“I wish the show had continued, but we all knew it was limited when it came out,” DePover said.
