The economic impact payments, or the stimulus checks, that supported Americans during one of the most difficult phases of the American economy were effective in increasing consumption. It brought about changes in consumption patterns that limited the extent to which the payments stabilized the broader economy, including employment.
They along with the expanded unemployment insurance were both equally effective at stimulating consumption. Though there were concerns about money going into undeserving hands and allegations of fraud, the unemployment insurance measures helped stimulate consumption.
The third of the largest income support programs totaling $1.6 trillion went out directly to American workers, households, and individuals. It was part of the series of stimulus checks from the federal administration.
The expanded version of the Child Tax Credit stimulus checks delivered long-term benefits for both children and parents. It brought out millions of families from the clutches of poverty for the first time. It had little or no impact on the American labor market.
These three pandemic-linked stimulus check programs were effective together at ensuring workers did not have to face the sudden and swift loss of jobs that assailed them in the initial months of 2020 right after the pandemic.
It also bolstered consumption. But the expansion of the expanded child tax credit stimulus checks and Unemployment Insurance led to problems with implementing schemes of such a vast scale.
The question remains whether the series of stimulus checks succeeded in stabilizing the economic situation or alleviating hardship post the pandemic.
The three rounds of the stimulus checks, or the Economic Impact Payments, were composed of non-targeted direct payments that went out to most citizens and legal residents of America between April 2020 and March 2021.
The three rounds of the stimulus checks alone sent out a total of $823 billion in direct money from the federal administration. This is according to the latest estimates from the non-partisan Committee for a Responsible Federal Budget.
Unemployment Insurance too received a temporary boost through September 2021 and cost the federal government an estimated $680 billion. This money was spent on including additional workers, increasing the insurance amount, and elevating the income support levels of the unemployment insurance programs.
And finally, it was the expanded Child Tax Credit that has proved to be the most beneficial to the most affected section of Americans, its children. At an estimated cost of $113 billion, the payments went out between July and December 2021 for 50% of the payments.
The rest of the CTC stimulus checks were adjusted against the 2021 income tax returns filed in 2022. The payments allowed near-universal eligibility and high-income support levels. The stimulus checks went out monthly in the initial part instead of annually throughout the expanded program.
Goals Of The Multiple Stimulus Checks
American policymakers were motivated by two goals in supporting these transfers to individuals, families, and workers. They wanted that the economy should receive a strung stimulus through bolstering consumption. This was intended to prevent any long-term recession by boosting demand.
Policymakers also wanted to alleviate the poverty, homelessness, and credit defaults that threatened to engulf low and moderate-income families. They were the most severely affected by the onset of the pandemic and the recession that followed in 2020.
But the trillions of dollars pumped into the economy were effective at increasing consumption. But the changes in consumption patterns constrained the extent to which this stabilized employment in the broader economy.
The expanded Unemployment Insurance was also equally effective in stimulating consumption as the direct stimulus checks. Though there were initial backlogs and concerns over fraud, the rate at which the payment went out to those who had lost their jobs for reasons that were out of their control.
Hopes Of Stimulus Checks In 2023 Rekindled By President Biden’s New Year Tweet
2022 proved to be the toughest of the past three years. While the pandemic wreaked havoc in 2020 and to some extent in 2021, Americans had at least the support of the stimulus checks and other federal measures to see them through the initial tough period of the pandemic.
But many residents believe that the economy needs another stimulus check to help push the nation out of a recession. the stimulus checks coming in through the IRS proved to be a huge relief for Americans.
A New Year’s Eve tweet from President Biden has created hope of a new stimulus check.
President Biden’s tweet celebrated the accomplishment of the Democrat-led administration. The US president spoke about the signing of historical legislation that is expected to lower expenses for seniors, the disabled, and working families.
The president said that it will help keep American communities safe from the plague of gun violence. He said that it will also help create good-paying jobs across the country.
Biden had tried to implement various provisions in the Build Back Better legislation that he proposed throughout the first part of his term.
One important provision that has time and again come up for consideration is the expanded Child Tax Credit stimulus check. Though Biden has been unsuccessful in pushing through the legislation in the face of Republican inflexibility.
This is one credit measure that remains close to Biden’s heart. It was included in the bill that also included the third economic impact payment, the American Rescue Plan Act. He signed this bill in March 2021 immediately after he assumed power.
Many Democrats are for the extension of the expanded version of the CTC stimulus check. but will the House of Representatives now be in Republican hands, the task has become even more onerous for President Biden and would require some deft political maneuvering to get another tax credit stimulus check through Congress.
But the expanded Child Tax Credit stimulus check also remains one of the few possible forms of stimulus check that could potentially have bipartisan support.
And if the president continues to push for extending the CTC stimulus check millions of children might benefit from the largesse in such troubled times. But for that, some Republicans have to break ranks and support President Biden in keeping with the popular mood of American citizens.