The COVID-19 recession was out of the ordinary in every way. The start of the pandemic, coupled with state-ordered lockdowns, caused the economy to contract at its fastest rate ever recorded in the United States.
More than 22 million workers lost their jobs in just two months.
Due to the crisis’s unprecedented nature, lawmakers turned to fresh kinds of financial assistance. That covered a variety of things, such as forgiving small business loans and providing generous enhanced unemployment benefits (through the program known as PPP). But stimulus checks were the most well-liked.
Due to both economic need and political popularity, the first round of $1,200 checks was issued through the $2.2 trillion CARES Act, which was passed in March 2020.
This was followed by checks for $600 and $1,400 that were issued in December 2020 and March 2021, respectively. (In each round, some people with higher incomes received smaller checks or none at all.)
The end of the stimulus checks in America should come with the resolution of the coronavirus crisis, right? Well, maybe not always. Although a fourth nationwide stimulus check is not planned, this does not mean that stimulus programs are a thing of the past.
Here are four things to be aware of regarding stimulus checks going forward, through 2022 and beyond.
Even though some progressive activists are advocating for another check, neither the Democratic nor Republican leadership is in favour of it.
Similarly, Vice President Biden: A fourth check wasn’t on the administration’s to-do list, White House press secretary Jen Psaki said when questioned about it earlier this year, adding that the checks “were not free.”
She is correct: Stimulus checks are expensive. The federal government spent about $400 billion on the last round of $1,400 checks.
In contrast, just over $350 billion is the combined GDP of North Dakota, Rhode Island, South Dakota, Montana, Alaska, Wyoming, and Vermont.
Second, the economy is currently performing much better. The economy has created 17.4 million new jobs since May 2020.
The 4.8 per cent unemployment rate in September is just under the 5 per cent mark that economists have traditionally regarded as “full employment.” Furthermore, it’s a sharp decline from the 14.8% rate recorded in April 2020.
Simply put, there is almost no chance that Congress will approve a fourth stimulus payment.
The majority of American households received a third stimulus payment from the $1.9 trillion aid package that Biden signed into law this March.
However, some households owe an additional payment of up to $1,400: According to earlier this year’s reporting by Insider and Fortune, eligible parents of newborns in 2021 will receive a stimulus check once they file their tax returns for the following year.
See, those $1,400 checks weren’t for 2021 babies because they were distributed based on the most recent tax return on file.
The check will therefore be deducted from the parents’ and guardians’ 2021 tax returns. Taxpayers would still need to satisfy the income requirements, of course. This eligibility information is available at this link.
The American public quickly embraced stimulus payments. A Fortune-SurveyMonkey poll conducted in March 2020 revealed that 85% of Republicans and 89% of Democrats supported a one-time direct payment.
Its appeal continued after that: A $2,000 stimulus check may have helped Democrats win the two Georgia Senate runoff elections in January. Naturally, those victories gave Democrats control of the U.S. Senate and the ability to approve the third check in March.
There is no doubt that those direct payments had an effect on the overall economy. Look no further than a study conducted by scientists at the University of Michigan, which discovered that the recipients’ financial instability decreased when they received the checks.
However, the COVID-19 recession’s stimulus checks are not expected to be a long-lasting policy innovation due to their economic advantages. The popularity and political clout of the checks are to blame instead.
Read more:-
- Here are the 18 states that are providing money to residents in relief checks to fight inflation, as federal stimulus payments are unlikely to do so.
- Recent Developments in the American Financial System, All Updates Are Here
- According to a study, over half of US seniors living alone cannot afford basic expenses.
This past summer, Mark Zandi, the chief economist at Moody’s Analytics, told Fortune that “the politics of it suggest there will be future stimulus checks.”
According to Zandi, lawmakers will undoubtedly come under pressure to make direct payments during future recessions from some voters.
Residents of the Golden State will have one last opportunity on Friday to file their taxes and claim their second state-issued stimulus check. California’s second COVID-19 stimulus check was available to about two-thirds of the state’s citizens.
