First 100: The American Rescue Plan’s Significant Public Investments

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Michel Euler/AP Photo

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Contra Larry Summers, there are plenty of long-term investments in the American Rescue Plan.

It’s March 11, 2021 and welcome to First 100. You can sign up to have First 100 delivered to your email by clicking here.

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Moment of Reflection

This is what we’ve all settled on as “Pandemic Day,” as March 11 marks the date of the official designation of a pandemic in the U.S., or at least the date Tom Hanks got the virus and the NBA shut down because of Rudy Gobert’s diagnosis. The next day I started Unsanitized, a daily report of the coronavirus crisis, both its public health and economic implications. I’ve been doing a daily report ever since, every day for a year. Now that we’re on the downside of that crisis I’m going to be wrapping this up soon; we’re at day 51 of First 100’s schedule (see below.)

Thanks to everyone who has taken this journey alongside me, to try to make sense of this enveloping crisis and how we’ve reacted. There’s still more to be done, so let’s get to it.

The Chief

Tomorrow, the $1.9 trillion American Rescue Plan will be signed, maybe the largest pure economic uplift bill in U.S. history. Considering that Congress had to add $60 billion in tax measures to adhere to that pre-set price tag, it’s closer to $2 trillion in outlays. 

One of the big complaints with the bill from the likes of Larry Summers was particularly incoherent. He didn’t mind a lot of spending, it’s just that it should be channeled to public investment, not just giving away a bunch of money. This is critically wrong on a number of levels, but the biggest is that the ARP does in fact bring lasting public investment in certain areas, and considering that it’s so big, that makes it a huge one-year investment bill as well.

Much of these investments prevent deterioration, but a smaller hole to drag out of in the future certainly helps matters. And some will create pockets of durability, things that will be remembered as part of the ARP. That’s especially true if key investments are eventually made permanent.

Read all of our First 100 Reports

The section-by-section summary of the bill has already yielded a number of surprises popping up in political media. But these haven’t gone far enough. Let’s start with the health infrastructure investments. There’s a section on providing medical supplies and personnel for rural healthcare providers, something that will be difficult to dislodge post-pandemic. There’s $7.6 billion for state and local health department workers and another $7.6 billion for community health centers, which provide basic care to poor communities. For context, Bernie Sanders got $11 billion for community health centers in the Affordable Care Act over five years, and it made a significant difference.

Then there’s the school funding, $128 billion dedicated to K-12. The formula under which it will be given will deliver more to the poorest schools, up to $8,000 per student in low-income districts like Cleveland. Outside of a 20 percent set-aside to address lost learning in the pandemic year, that funding has a pretty wide discretion, meaning it can be used to make long-term investments in schools like improving ventilation, which can serve as both pandemic preparedness and better learning environments. These have proven to make a difference in the classroom.

The $39 billion in child care grants can rebuild care infrastructure, which our special report last year showed is desperately needed. Thought about as a one-year investment it’s absolutely enormous. There’s also a $7 billion Emergency Connectivity Fund for remote learning, which comes too late but can help provide lasting broadband infrastructure. The $200 million for libraries is also a broadband infrastructure investment for those who have no other options for connectivity. There’s also $30.5 billion for public transit, which will go toward arresting the sector-wide crisis from low pandemic ridership, which easily could have spiraled into permanent cutbacks. This will sustain transit budgets until 2023 in some areas.

I’m not a huge fan of the $2 billion snuck in for IT and cybersecurity, but it will modernize federal agency systems. There’s $100 million for better air quality monitoring, which will last.

This is all on top of the $350 billion investment in state and local governments, which thanks to a last-minute change, can go toward service improvement in things like water, sewage, and broadband. While being from Los Angeles and seeing up-close our pandemic-driven crisis in public budgeting makes me happiest that this money will avert those tough choices (see Janet Yellen on how we learned from the financial crisis not to offset federal stimulus with state and local austerity), there’s no doubt some of this money will pour into lasting investments and upgrades in key systems. Similarly, the $31 billion for tribal governments, the largest investment in those communities in some time, will likely include lasting infrastructure; some of it is earmarked for housing.

Finally, there’s a term I cannot stand—investment in human capital. But when you have legislation that for one year would reduce poverty from 13.7 percent to 8.7 percent and cut child poverty by more than half, you are freeing people from many day-to-day stresses and putting them in position to succeed. When you have airline workers being told to tear up their furlough notices, and an economic recovery time that’s twice as fast as previously projected, and economic growth at the fastest level since the Korean War, that likely means better bargaining power for labor and more opportunity for rising wages. These investments allow people to contribute and succeed.

It’s no wonder Republicans, who voted against the ARP en masse, are already trying to take credit for it. Not all of these above-mentioned items will leave permanent investments in place. In fact, they’ll need to be fought for to ensure this isn’t just a blip. This is the beginning of a second War on Poverty, not the end. What Democrats do next, and whether this bill sets up for a midterm victory, will tell that story.

But there could be as much as $100 billion in investments here, if not $200 billion. As a one-year boost, at the most optimistic level that’s equivalent to a decade-long, two trillion-dollar infrastructure package proposed by a guy named… Larry Summers.

What Day of Biden’s Presidency Is It?

Day 51.

Today I Learned

• What the ARP revealed about governing in the Biden era. (Five Thirty Eight)
• How Biden kicked the vaccine rollout into a higher gear. (New York Times)
• Vaccines might get deployed at Dollar General stores. These things are everywhere. (USA Today)
• The next big bill might be a China-focused package. (Washington Post)
• Judicial nominees are on the way, and they may not all be BigLaw drones this time. (CNN)
• Elizabeth Warren’s influence is seen in personnel across the administration. (Bloomberg)
• A Trump rule to limit socially responsible investing in 401(k) plans has been halted. (Wall Street Journal)
• Guidance for nursing homes has been relaxed, allowing for more visitation. (Axios)
• Migrant children, not Dr. Seuss, is the real Republican strategy for the midterms, as they are coming across the border in larger numbers. (CNN)