By Quinn Dunlap, member of the Carolina Forward Research Team
In March of 2021, President Biden and Democratic leaders of Congress passed a $1.9 Trillion COVID-19 stimulus package called the American Rescue Plan Act of 2021. It’s been more than ten months since the American Rescue Plan’s passage, and its full impact is being felt across the American economy. So what did the American Rescue Plan mean for North Carolina?
Stimulus payments and their effects
One of the marquee features of the American Rescue Plan was its direct stimulus payments. In 2021, checks of $1,400 went out to nearly every taxpayer in America (85% direct deposited). Taxpayers filing as single making less than $75,000 a year, and married couples filing jointly making less than $150,000, qualified for one $1,400 payment per person, plus another for each dependent. This meant that a married couple with two children making less than $75,000 qualified for an Economic Impact Payment of $5,600. This was done to counter the sharp drop in consumer demand touched off by the COVID pandemic, which caused unemployment to spike to record levels.
This round of stimulus payments was separate from and additive to two earlier rounds: a $1,200 stimulus round in April of 2020 and $600 in December of 2020.
According to data released from the Treasury Department:
5,250,385 North Carolinians have received a direct $1,400 payment under the American Rescue Plan through June of 2021 (the latest period for which comprehensive data is available).
Collectively, North Carolinians have received over $21 billion in direct stimulus payments (again through June).
1,953,000 North Carolina children’s families have received direct payments of $300 per month under the Child Tax Credit, which was included in the American Rescue Plan, through August of 2021.
Average monthly healthcare premiums for families of four under the Affordable Care Act have dropped an estimated $800.
Because stimulus payments went out to the large majority of taxpayers, the evidence shows that this money directly boosted consumer demand. This, in turn, created jobs and whittled down North Carolina’s unemployment rate.
North Carolina’s unemployment rate was 6% when President Biden took office. As of December 2021 (the last month for which data is available), the state’s unemployment rate is only 3.7% – a near-record low. That’s a 2.3 point drop in just about a year, which represents remarkably quick job recovery.
(Note – North Carolina has still experienced slower job growth than other states, like Virginia, which boosted their minimum wage in response to COVID. Read more in “The Great Wage Experiment”)
What were stimulus payments used for?
Significant economic research has focused on determining what, exactly, Americans actually used their stimulus payments for. The result is that lower-income households used more of the money for household essentials, while higher-income ones used it to pay down debt and save.
The official U.S. Census Bureau survey found that almost 70% of households that received stimulus checks used the money to pay for household expenses and bills. Parents who received monthly Child Tax Credit payments used the large majority of the money on food, utilities and rent/mortgage.
Separate research from the American Family Survey, out of Utah’s Deseret News and Brigham Young University, showed that low-income households and households with children found stimulus aid during the pandemic especially useful.
Who is responsible?
The American Rescue Plan passed the House of Representatives on a 219-212 vote, with all Republican members voting “No,” joined by only two Democrats. It passed the U.S. Senate 50-49 with no Republicans joining the 50 Democratic votes in favor. Senate Democrats avoided a Republican filibuster against the act by using a parliamentary procedure known as reconciliation. In other words: not a single Republican in the U.S. Congress voted in favor.
Despite their votes, many Republican politicians are nevertheless now claiming credit for the American Rescue Plan’s benefits. One example is Rep. Madison Cawthorn, one of North Carolina’s most powerful Republican politicians. Cawthorn actually skipped the vote on the American Rescue Plan to attend a political conference in Florida and had a proxy vote “No” in his absence.
However, on March 30th, 2021, Cawthorn was “happy” to take credit for funding from the act anyway. He tweeted:
Happy to announce that NC-11 was awarded grants from the U.S. Department of Health & Human Services.
-Appalachian Mountain Community Health Centers was given $2,458,000
-Western North Carolina Community Health Services Inc. was given $4,622,375
— Rep. Madison Cawthorn (@RepCawthorn) March 30, 2021
These grants were a direct result of the $8.5 billion given to support rural hospitals included in the American Rescue Plan. Unfortunately, Cawthorn was not the first Republican to tout the benefits of a bill he voted against, and he is unlikely to be the last.