Detroit City Wire

Benefits highlighted in the $1.9 trillion American Rescue Plan Act of 2021, such as an unemployment assistance extension and setting a financial safety net for low-wage earners, will aid Michigan’s economy, according to economic experts. The Covid-19 stimulus plan, prioritizing low-income families, is set to be reviewed by the House of Representatives and signed by President Biden upon approval. 

The state was granted $10 billion. A $28.6 billion grant program has also been established to help struggling restaurants and bars, as well as businesses who have lost city income tax revenue and suffered tax declines. Additionally, municipalities will invest in projects that were previously coordinated, such as road constructions.  Over 200 Michigan Municipal League participants discussed Michigan’s $350 billion awards to state and local governments. 

“There were a ton of questions from our members about it, many having to do with when the money is coming, how it can be used, and how much each community is getting,” said Matt Bach, spokesperson for the MML. “The questions showed how much need there is among our cities for federal support.”

The plan will support Michigan through its tax credit provision and stimulus payments, which Washington, D.C.-based Center on Budget and Policy Priorities predicted will assist approximately 2.1 million children across the state. Individuals making $75,000 a year or less and couples earning $150,000 or less, including dependents, will receive $1400 checks, while a smaller installment will be given to those who $80,000 or couples who earn $160,000.

Unemployed people will receive a weekly installment of $300 until early September. Approximately 859,313 Michigan residents were receiving weekly jobless benefits, made effective at the beginning of this month. According to Chris O’Leary, an economist at the Upjohn Institute for Employment Research in Kalamazoo, the state’s $362 per week maximum hasn’t increased in almost 20 years. The average weekly wage in the area is $1,115, while the common aid benefit stood at $200-$300, varying on the employment type registered, approved when the pandemic was declared last March.

“The economy remains down 9.5 million jobs from February 2020 and will require more than two years of job growth at February’s pace just to get back to pre-pandemic levels,” said Cecilia Rouse, Chair of the Council of Economic Advisers.

The additional payments nearly doubled from the last installment, intended to help jobless individuals and families to remain afloat. O’Leary highlighted the importance of not solely relying on the benefits as average wages are still significantly higher than the help. The new structure could potentially be renewed as a permanent tax model in the future. As part of the plan, unemployed people will not be required to pay their federal income tax for $10,200 of their total earnings in 2020. Over 700,000 people who have lost their jobs amid the pandemic will receive the assistance. Individuals who purchase health insurance through the Affordable Care Act will top premium care installments at 8.5 percent of their income for the next two years, expanded to families earning an income below the country’s poverty rate, which is $51,040 for individuals and $108,400 for a family of four.

Schools in the area will receive $3.8 billion from the relief package and $2.5 billion to schools from earlier relief packages, $6.3 billion in federal funds, passed by Congress in 2020. A minimum of 20% percent of school funds must be allocated for the academic loss derived from the pandemic. Average school allocations reflect $100 per student, with a few low-income schools receiving over $10,000 per student. Higher education institutions are projected to receive $40 billion, as per the relief package passed Saturday in recent weeks, though an exact allocation figure wasn’t disclosed.

Though it remains unclear how the American Rescue Plan will be implemented for assistance in Michigan, the president projects the creation of up to six million new jobs, deriving from the new plan and $1 trillion of Gross Domestic Product. The plan passed with 50 Democratic votes. Additional incentives will be given to families and children through tax credits. The magnitude of the package, valued at $1.9 trillion, raised concerns about the heavy economic weight it requires. Democratic representatives, however, stand firm on the importance of aid for the financially vulnerable.