It has been a rollercoaster ride for the US economy ever since the pandemic hit the nation. The total economic downturns fueled by the pandemic were compensated by the successive stimulus check issued by the administration starting March 2020 when the CARA act was passed. It gave $1,200 to Americans and marked the start of successive rounds of stimulus checks that continue to this day.
The massive influx of money of around $5T through stimulus checks and other federal support kept the economy afloat throughout the extended period of the pandemic. It kept the US economy out of a recession, perhaps a depression even. But the direct influx of huge sums into the hands of individuals also led to inflation that started in the last quarter of 2021 and rose to record levels.
The prices of essential items, including foods and gasoline kept rising with the price of the latter doubling in 2 years. It had an adverse effect on all prices of goods and services. The opposition Republicans have laid the blame squarely on President Biden and the American Rescue Plan Act under which the third stimulus check was allowed.
The Stimulus Check And The High Inflation Rate
This dilemma among policymakers has forced them to step back when it comes to allowing more stimulus checks for citizens. It is a fine balance between pouring more money into the economy to help out people facing a high inflation rate and trying to rein in prices by austerity measures including raising bank rates.
Though the extent of the influence inflation had on the economy is debatable, there is no doubt that the $5T pumped into the economy during the long period of the pandemic had some effect.
The San Francisco Federal Reserve estimated that inflation contributed to around a 3% increase in the rate of inflation by the end-2021. The prices have continued to climb at a steady rate to this day.
The stimulus checks led to soaring bank balances in the US and they continue to remain way high than during the pre-pandemic levels. This indicates that further stimulus payments will not go towards basic needs and would be spent more on discretionary purchases, nonessential costs that a household can survive without if necessary.
A Section Of The Population Continues To Hurt Badly And Need A Stimulus Check Immediately To Tackle Rising Costs
While there are arguments to discontinue stimulus checks immediately to tackle inflations, federal data released by the Dept of Health and Human Services suggest that federal intervention during the prolonged pandemic kept 11M Americans out of debilitation, and that includes both low and moderate-income families.
Many families were faced with the prospect of poverty for the first time in their lives. The whole economy came to a grinding halt once the nation went into a total lockdown. People living paycheck to paycheck were suddenly without a source of income the prompt action by the federal administration saved them the ignominy of having no food to put on the table.
It was found that the American Rescue Plan Bill and the Economic Impact Payment or the third stimulus check, were the most impactful of the programs for alleviating poverty along with the unemployment stimulus checks and the CTC stimulus checks.
Many subsystems still believe firmly that while it appears highly unlikely at this stage, a fourth stimulus check at this stage could help Americans cope with the rising inflation rate, especially the lower-income groups.
Such households do not keep money in the bank to fall back in the case of emergencies. This makes injecting some cash into the economy more necessary now than ever before. This will protect such individuals and families from the inflation that has gripped everyone around them.
Many analysts and politicians believe that the stimulus checks have been at the receiving end of more s blame than they deserved. He said that the effects of the stimulus checks if any would have lasted a couple of months at the most. People would have speck this extra money by the middle of 2021 and it was unfair to lay the blame on the stimulus checks.
Former presidential candidate Andrew Yang, a proponent of Universal Basic Income, believes that only additional direct stimulus checks can keep citizens out of the clutches of poverty. It can keep the American economy stable during any crisis in the future.
States Seek To Strike A Balance With Inflation Stimulus Checks
With federal stimulus checks falling victims to the gridlock in Washington, states have gone ahead with their version of the stimulus checks. But the amount of the stimulus checks and the mode of delivery has varied for each state. Some have gone for direct payments to residents either through paper checks or direct transfers to bank accounts. Others have opted for tax rebates, gas or transit cards, or waiver of sales tax on essential items and gasoline.
California under Democratic Governor Gavin Newson mas proposed a $400 gas card for residents owning a vehicle registered in the state. Each family can avail of this stimulus check for a maximum of up to 2 vehicles.
Georgia governor Brian Kemp has signed into law a stimulus check of $250 for single filers and doubles that for married couples filing jointly.
Maine has gone for a conventional stimulus check instead and has been the most generous of the lot. Governor Janet Mills has signed a bill that is sending an $850 stimulus check to residents. It is one of the strongest relief programs among American states.
The initial 5,000 relief checks went out in the first week through the US Postal Service. They are expected to reach beneficiaries within a week. The department will continue to issue 200,000 every week t residents of Maine who have already filed their state income tax returns for 2021.
Governor Mills’ proposal receives bipartisan support in the state legislature and is expected to reach around 858,000 residents to protect them from the high costs of inflation. Over half the state’s surplus from the budget, around $729.3M will be returned to its residents and the average family will receive around $1,700 each.
The adjusted gross income has to be less than $100,000 for individual filers and double that for married couples filing jointly. For heads of households, the stimulus check is allowed for those earning $150,000 or less.