What Did Biden and Congress Mean for Our Wallets in 2021?
President Joe Biden’s massive infrastructure bill was one of the most talked about parts of his presidency this year, but it won’t have much of an immediate impact on the lives and wallets of regular Americans. Many other Biden administration programs, however, already have. With the year coming to a close, it’s time to look at what the president and Congress did that changed your financial situation — and a few things they didn’t do, but that happened on their watch just the same.
The American Rescue Plan Was a Historic Transfer of Wealth
Possibly the biggest achievement for President Biden and Congress so far has been the American Rescue Plan, a massive $1.9 trillion pandemic relief bill that was the third major COVID-19 stimulus package since the start of the pandemic.
Nothing the government did had a bigger or more immediate impact on the wallets of more average Americans in 2021. The legislation’s two signature direct-payment programs delivered:
- 90 million Economic Impact Payments worth more than $242 billion. Individuals received $1,400 as a direct deposit, check or debit card. Married couples got $2,800 and qualifying dependents each brought another $1,400 into the household. That’s $5,600 for the average American family of four.
- An expansion of the Child Tax Credit from $2,000 to $3,600 for children under the age of 6. Older minors — now 17 years old and younger instead of 16 and younger — received $3,000. Perhaps most importantly, half of the fully refundable credit was paid out in advance monthly installments so struggling families could get the cash when they needed it instead of waiting until the 2022 tax season.
The Act Had Indirect Financial Impacts, Too
The American Rescue Plan transferred lots of money to people indirectly by funding state-administered programs, too. Among them were:
- State and Local Fiscal Recovery Fund: This program provided $350 billion in emergency funding for state, local, Tribal and territorial governments.
- Capital Projects Fund: This was a $10 billion allocation to help governments fund broadband infrastructure and other capital projects.
- Homeowner Assistance Fund: This set aside $10 billion for states to help vulnerable residents pay for housing.
- Emergency Rental Assistance: This gave $21.6 billion to the states to help at-risk residents pay their rent and utilities.
- Unemployment compensation tax relief: This part of the act waives $10,200 of unemployment benefits that middle- and lower-income taxpayers received in 2020.
- State Small Business Credit Initiative: This program provided $10 billion for states to protect vulnerable small businesses, particularly the smallest businesses with fewer than 10 employees and businesses owned by economically disadvantaged people.
- Employee Retention Credit: Finally, this indirect benefit allowed many workers to keep getting paid who might have otherwise been filing for unemployment benefits. It gave qualifying small businesses $7,000 per employee per quarter up to $28,000 to help ease payroll burdens.
Inflation Made Everything More Expensive
Many factors have contributed to the rising inflation that’s been making headlines for months, and many of those factors were in place before Biden took office, such as the COVID-19 pandemic. Even so, the current inflation rate of 6.2% is the highest it’s been in decades, according to the Brookings Institute. Although inflation isn’t always bad and often accompanies economic growth, many economists have sounded the alarm over how quickly and how dramatically prices have risen in 2021.
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The Stock Market Has Gone Up, Up, Up
The stock market is affected by a number of factors, but it’s impossible to ignore the impressive gains the market has enjoyed over the last year.
- The S&P 500 — which produced 50 record highs by Aug. 28, according to MarketWatch — is up about 22% year to date.
- The Nasdaq composite — which topped 16,000 in November — is up more than 18% year to date.
- The Dow Jones Industrial Average — which topped 36,000 in November — is up nearly 14%.
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But So, Too, Have Gas Prices
Few outcomes impact Americans more directly than the price of gas — and it has been an unpleasant year at the pump. According to the U.S. Energy Information Administration, the average price of gas nationwide across all grades was $2.42 in January when Biden took office. By November, that price had risen by more than a full dollar all the way up to $3.49.
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