Focusing so much on $1,400 is a mistake

American Rescue Act offers deep structural change to health insurance.

The covid relief bill, called the American Rescue Act, was passed last week by the United States House of Representatives. It’s under review this week by the United States Senate. President Joe Biden is almost certain to sign it within the next few days. (Perhaps today.) During this time, most of us focused on the amount of money that’s going to be in relief checks. In this, we have all made a big and ridiculous mistake.

Big and ridiculous, but understandable. On the one hand are leftists and some liberals who are outraged by the fact that Joe Biden promised to deliver $2,000 checks during his campaign but has since taking office changed that to $1,400. (By the president’s logic, $1,400 on top of the already delivered $600 equals campaign promise kept.)

A tightly framed dialectic focused on one-time stimulus checks has reproduced tensions between leftists and liberals.

On the other hand are conservative Democratic Senators, like Joe Manchin of West Virginia, who insisted those checks be “means-tested.” That means they wouldn’t be one-size-fits-all. They would be tied to the amount of money you make per year. Biden gave in to those demands Wednesday. The checks would stop at individuals earning more than $80,000 a year and for married couples earning more than $160,000 a year.¹

This tightly framed dialectic focused on one-time stimulus checks has produced and reproduced tensions, new and old, between leftists and liberals. Over here are people like me saying sure, yeah, it’s not ideal—but OK, it’s good enough. Go for it. Over there are leftists like Sawyer Hackett, an aide to the presidential campaign of former HUD secretary Julian Castro, who said on Twitter that: “Democrats won the Senate by campaigning on $2,000 checks. Then we had to message $600+$1,400=$2,000. Then we narrowed eligibility by 17 million fewer people getting checks under Biden v. Trump. All to save $12B in a $1.9T package with no GOP support. All for a couple moderates.”

Leftists like Hackett have an interest in making the Democratic Party seem less than committed to delivering for normal people and the common good. Liberals like me have an interest in making everyone understand governing is hard and that, anyway, the real bad guys are the fascists, not the Democrats. But any way you slice this, you’re going to get more rancor and animosity, and no possible way to resolve things as long as the focus is on checks. And that’s just it. We’re all focusing on the wrong thing.

Here’s the tip jar! Put something nice in it!

Here’s a fine-print detail in the American Rescue Act I did not know until today. If you lose your job, the US government will cover 100 percent of your health insurance costs. In particular, it will pay for COBRA, which is that idiotic program allowing you pay out of pocket for health insurance while seeking new employment. The thing about COBRA, of course, is almost no one buys it. How can you when you don’t have a job?!

Here’s another. The American Rescue Act will expand child tax credits to $3,000 per child and $3,600 per child under 6. Furthermore, and get ready to be shocked, it will allow you to deduct half of what you pay in child care. Half! You may not know this if you don’t have kids, but if you do, you know a $1,400 relief check, while nice and all, is nothing compared to what you pay for child care. Here in New Haven, $1,000 per kid per month is on the low end. Combined with a child tax credit, well, you do the math.

And finally, and I cannot overstate how BFD this is—the American Rescue Act would put a new cap on the amount paid for insurance purchased through the Obamacare exchanges. Right now, the cap is 400 percent of the poverty level. The new law would lower the cap to 150 percent. The old way hurt people ineligible for premium tax credits. It helped the poor, yes, but hurt the middle class. As health care expert Bob Laszewski said Monday, that was Barack Obama’s “big failure.” The new way would correct that mistake by capping outlays to 8.5 percent of income, thus expanding eligibility of subsidies. Whatever you’re paying now, you might end up paying half.

Laszewski said this part of the American Rescue Act is a “political time bomb” for the GOP. Why? It’s temporary. “On January 1, 2023, the Obamacare insurance subsidies would revert to the old levels that have caused middle class families to face these huge premiums,” he wrote. “What else is happening at the end of 2022? The Congressional elections. This would make Obamacare another huge election-year issue.” The Democrats flipped red districts in 2018 using health care as a spatula, winning their biggest majority ever. They are setting themselves up for a repeat in two years.

I hope it’s obvious that $1,400 isn’t nothing. I also hope it’s obvious that a one-time stimulus check is categorically different from the structural changes that could take root with the passage of the American Rescue Act. While $1,400 will pay for lots of rent and groceries, tens of thousands of dollars will pay for far more. And, ironically, we have Republican Ron Johnson to thank for bringing this to our attention. If the United States senator from Wisconsin had not demanded the bill be read in the Senate yesterday, we might still be focused on the trees while missing the forest beyond.

—John Stoehr

1. According to the LA Times, the Senate Democrats are also tweaking the unemployment supplement, cutting it from $400 to $300 a week, but making it last longer (through September). Like tweaks made to stimulus checks, this is what the Democratic Party is doing to make sure everyone in the caucus is satisfied with the legislation. Importantly, none of this is taking into account anything the Republicans want, because they don’t care.