Updated: February 24, 2021
A new report from the Brookings Institution estimates that President Joseph R. Biden Jr.’s American Rescue Plan would boost gross domestic product (GDP) by about 4 percent at the end of 2021, relative to current projections.
“The Biden Administration recently proposed an additional $1.9 trillion in federal spending to address the ongoing pandemic. We estimate that the package would boost economic activity, as measured by the level of real gross domestic product (GDP), by about 4 percent at the end of 2021 and 2 percent at the end of 2022, relative to a projection that assumes no additional fiscal support.
[read_more id="2" more="Read full article" less="Read less"]
“Without additional fiscal support, we project that real GDP would remain below the pre-pandemic level for the next several years. In the near term, without additional federal resources to contain the resurgence of the pandemic and distribute vaccines, the economy will face substantial headwinds. More broadly, millions of households will suffer as a result of waning fiscal support for the unemployed and households and businesses suffering financially. Indeed, Biden’s fiscal package should be judged primarily based on the extent to which it invests in COVID-19 containment and vaccination and provides needed relief to help households and businesses weather the pandemic,” the report says.
The report is the latest economic analysis that highlights the need for and economic benefit of the American Rescue Plan. Moody’s Analytics, in an independent analysis, estimated that Biden’s plan would create 7.5 million jobs in 2021, double economic growth, and return the economy to full employment a year faster than previously projected. The International Monetary Fund’s Chief Economist also said that her organization’s preliminary analysis found that President Biden’s American Rescue Plan could boost U.S. economic growth by 5% over three years. And, more than 120 economists, signed a letter calling on Congress to pass Biden’s American Relief Plan and noted the importance of immediate action.
The American Rescue Plan has received praise from across the political spectrum – from the U.S. Chamber of Commerce and the Business Roundtable to Senator Sanders and organized labor. And, top economic advisors from the last four presidents: Kevin Hassett, Gene Sperling, R. Glenn Hubbard, and Alan Blinder have all said that additional stimulus is needed to rescue the economy
President Biden on Friday again called on Congress to act urgently. Biden has argued that passing his Plan will allow the United States to ramp up vaccinations, testing, and public health capacity and get the virus under control, get relief and support to the families and communities that have been hit hardest by the pandemic, and revive economic growth.