Biden’s stimulus has put pressure on the economy, but its political effects are muddled

The $1.9 trillion economic stimulus package that President Biden signed shortly after taking office has become both an anchor and a buoy for his re-election campaign.

The American Rescue Plan, which the Biden administration crafted and Democrats passed in March 2021, has stoked voter discontent in sometimes paradoxical ways. Some Americans blame the law, which included direct checks to individuals, for fueling soaring inflation.

Others appear dismayed that the aid to individuals, businesses and school districts was short-lived. The Federal Reserve Bank of Dallas recently reported that several business contacts in its district “expressed concerns about the phasing out of American Rescue Plan Act dollars and whether nonprofits and K-12 schools will be able to support certain programs without that funding.”

Polls show that Americans still support Biden’s opponent, former President Donald J. Trump, on the economic front. They often indicate that only relatively small portions of the electorate believe Biden’s policies have helped them or their families financially.

At the same time, though, the stimulus could boost Biden’s November chances in ways pollsters rarely ask about.

Economists say the relief package, along with the stimulus measures that Mr. Trump signed into law in 2020, helped accelerate the U.S. recovery from the pandemic recession. The United States has grown and created jobs in a way that no other wealthy country has experienced post-pandemic.

Supporters of Mr. Biden and the law say the improved growth has helped the president remain electorally better positioned than his counterparts across Europe. Many European leaders have seen their popularity plummet and some have suffered party losses in recent elections or face the likelihood that voters will soon remove them from power.

Price increases continue to weigh on Biden’s popularity, and it’s unclear whether he’ll win a second term. But he remains more popular than the leaders of France, Germany, Britain and other allies. America’s rapid economic growth and low unemployment rate, boosted by stimulus, may help explain the difference.

“One reason Biden has better approval ratings than most other world leaders is that his policies have contributed to big gains in wages and prosperity, leaving most Americans better off despite these challenges,” said Bharat Ramamurti, a former deputy director from Biden’s National Economic Council. who has written a lot on the political and economic benefits of the rescue plan.

The plan included money for the U.S. response to the pandemic, including accelerating vaccinations. The plan also provided relief for people, businesses and governments affected by the pandemic recession. That included one-time direct payments of $1,400 for low- and middle-income individuals and several months of more generous unemployment benefits for people who didn’t return to work after the recession.

The law also expanded food stamps, increased a tax credit for parents, provided relief to renters and homeowners and provided hundreds of billions of dollars to state and local governments to help shore up their budgets amid the pandemic’s declining revenues. All of these programs were intended to be temporary, although some lasted longer than others.

Aid to local governments and schools lasted for several years, but began to run out. As a result, school districts across the country to have started making cutswhich for parents and workers is a visible sign of the end of pandemic money.

When Mr. Biden signed the rescue plan, his advisers were confident it would speed the nation’s recovery from the pandemic recession. Republicans and even some liberal economists screamed that the bill was too big and would stoke inflation.

A broad range of economic evidence suggests that both sides were right. Employment and economic growth rose in the United States in the months after the law was passed, fueled by spending by consumers and business owners who had been lavishly provided with government aid. The unemployment rate fell rapidly. America’s recovery remains the envy of the rich world, outpacing Europe, Japan, Canada and other allies.

But Mr. Biden’s team also believed the law would be a clear political victory for the president. That hasn’t been the case, in part because economic research has blamed its spending at least in part for the wave of inflation that started in 2021.

The largest estimate, from the Federal Reserve Bank of San Franciscoconcludes that the stimulus measures signed by Biden and Trump in 2020 contributed as much as three percentage points to an inflation rate that reached 9 percent in 2022. Other estimates are more modest.

After initially hailing the stimulus as a political and economic slam dunk, Biden is now being forced to defend it in speeches to key voting blocs such as Black Americans. He blames companies for continued price increases and calls out Republicans for failing to extend certain benefits of the law, such as an increased tax credit for parents that lasted only one year.

Mr. Biden is also struggling to remind voters that some of the pandemic aid they relied on came from the stimulus package he — not Mr. Trump — signed. While Mr. Trump insisted that his signature be on checks going to individuals, Mr. Biden has not put his name on the payments.

“Trump takes credit for sending all the checks for pandemic relief alone,” Biden said at a campaign rally in Philadelphia late last month. “It is a lie.”

With the help of Black lawmakers in Congress, Mr. Biden added, he and Vice President Kamala Harris “have passed legislation to put more checks in the pockets of millions of Americans, including Black Americans — $1,400 checks from the American Rescue Plan that we passed, and then $300 a month per child per family through the child tax credit, which has cut child poverty for Black families in half. And I’m going to make sure that gets fixed in the second term.”

Biden aides say he will amplify that message in the coming weeks. “It will become increasingly clear who was responsible for passing these crucial policies and who voted unanimously against them,” said Gene Sperling, a senior adviser to Mr. Biden who oversaw spending from the package.

Much of the reaction to the plan has been driven by the country’s deep political divisions.

Scott Smith, 59, a real estate agent in Canton, Ga., said he worried that trillions in stimulus funding would exacerbate inflation and increase the national debt. Mr. Smith, who voted for Mr. Trump in 2020, said he was also skeptical that everyone receiving the aid needed it and that some of his friends had used the stimulus money for vacations.

“It was poorly conceived,” Mr. Smith said. “It’s a huge debt for the next generation to take on.”

Other Americans who received pandemic aid said they struggled with higher prices since those programs ended. Ashley DePover, 35, a paraprofessional in Inver Grove Heights, Minnesota, said the expanded child tax credit was a significant boost for her and her family after they unexpectedly found themselves homeless for several weeks in early 2022. She said the extra money she received in a tax refund helped pay for hotel expenses, food, housing applications and a down payment on the apartment her family later moved into.

Ms. DePover said she hoped lawmakers would expand the child tax credit again as she has faced higher grocery and rent costs in recent years. Still, she said she did not blame Mr. Biden for the end of stimulus aid and that she was “fairly confident” she would vote for him in November.

“I would have liked to see it continue, but we all knew it was limited when it came out,” Ms. DePover said.