Is It The End Of The Road For Federal Stimulus Checks? How Effective Are The State Inflation Relief Payments

Stimulus Check
Stimulus Checks

The American relief economics underwent a dramatic transformation in the past two years. Successive stimulus checks brought immediate relief for citizens hit hard by the economic downturn following the COVID-19 pandemic. The first of the three rounds of stimulus checks sent out within a space of one year as part of a massive relief package in early 2020 represented a genuinely unprecedented relief measure for American citizens.

In the past, the US administration in the past had issued refunds for taxes paid. And those refunds had seemed a bit like they were unconditional checks, as was done in 2001.

But the first of the stimulus checks of $1,200 was not refunded. They were direct stimulus checks, and for the first time, they were available even to low-income citizens with low or nil tax burdens.

These stimulus checks were the closest the US or most other rich capitalist countries had ever come to trying out a universal basic income. According to estimates, 93% of all Americans got money under these successive programs from the federal administration. They received benefits for families of four who even earned as high as $218,000. 93% basic income was not exactly universal basic income, but it came close enough for once.

The onset of the pandemic seemed unreal to the world as if the world that we knew was on the verge of collapsing under the onslaught of a strange disease that was crossing into more countries faster than the authorities could shut down the borders.

The Pandemic Took Roots Even As The Republican President Dithered About The Pandemic And Dismissed It Lightly

The then US president, Donald Trump dithered for weeks as he told the American public that the virus was totally under control. He continued with his lies, evasions, and distortion of the coronavirus outbreak even as it was documented by dozens of diligent studies by the media and experts.

The series of fraudulent miscommunications perpetrated by Trump in the first two months of 2020 overwhelmed the American health system as it had spread too deep by the time the administration finally shut the border and declared a pandemic in March 2020.

Trump and his close aides were initially skeptical of the serious nature of the coronavirus. The president alternated between disinterest when he was abroad, and downplaying the incident once he returned from a world tour.

The coronavirus is totally under control in America, he declared in late February. He became a cesspit of disinformation and deliberate confusion, as he owned up to the enormity of the situation too late and tried to deflect any criticism of his handling of the situation. Confusion and a series of slip-ups in the lower ranks of the administration made matters worse.

The Trump administration contradicted itself on the pandemic as many as 14 times within a month. Before the virus exploded in America, a cascade of warnings went ignored. Government exercises, including one last year, made clear that America was yet to be ready for a pandemic similar to COVID-19. But little was done during the time the administration should have been getting ready on a war footing.

The US economy cratered in a matter of two weeks. Ignoring the threat for months rests directly on Trump. And as the nation slid into chaos, he failed miserably. And till the end he refused to own, supported by a partisan section of the media and an uninformed and insulated population who fed from his hands.

Successive Stimulus Checks Issued Within A Year

Following the issue of the first stimulus check of $1.200 under the Coronavirus Aid, Relief, And Economic Security (CARES) Act, around $2.2 trillion economic stimulus amount was injected into the economy to prevent it from collapsing as businesses completely shut down following the worldwide lockdown.

President Trump pushed for more cases in spring and summer, resulting in the second batch of stimulus checks of $600 in December sent to most adults. Following the December Stimulus check passage, Trump expressed his preference for an even bigger $2,000 as the US was in the middle of the presidential election.

Joe Biden also rode on the momentum of the $2,000 stimulus check promise and assured that he would top up the $600 with a stimulus check of $1,400 to reach the full magic figure of $2,000. Some politicians such as Republican Senator Mitt Romney of Utah at that stage even demanded $4,200 per year permanently and not just a one-off stimulus check.

Too Much Of Goodness Upset The Apple Cart

Even when the pandemic has passed, COVID-19 convinced the political class that giving out cash in the form of stimulus checks was a popular and economically effective policy. But things turned sour in the middle of 2021.

Google search interest in the stimulus check exceeded interest in Taylor Swift or the Kardashians during the pandemic. The bipartisan popularity of handing out direct cash and the large-scale public interest and support it garnered suggests that more such payments would become a trend in the future.

But the super inflation figures that reached a four-decade high in the last three quarters have put off the Biden administration, and it has shied away from promoting any additional legislation on stimulus checks.

With the Republicans effectively controlling the Senate as two Democratic Senators chose to oppose Biden at every step, Biden’s bid for an additional $22.5 billion from Congress was shut down effectively.

States Step In To Pick Up The Slack In The Federal Response

With Capitol Hill frozen in its decision on further stimulus checks, around a dozen states have taken the initiative to avoid an undesirable situation for their residents.

Maine and New Mexico were the first two states to legislate on the issue. Maine has been the most generous of the states with an $850 stimulus check for qualifying individual residents and double that for married couples filing jointly.

New Mexico has approved multiple payments that include a $250 inflation relief payment for its residents who earn $75,000 or below.

There is also an additional rebate of $500 for all filers in June and August, while the $250 payments will be issued in July.

California has not yet legislated on the issues but given Governor Gavin Newsom’s hold on the state legislature, California residents could get up to $1,050 for a family of three or more.

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