The average American has been caught in an impossible situation, and they have the federal stimulus checks to thank for it.
The US economy has experienced many economic recessions and downturns throughout history and each time the US government has been led to respond at multiple levels.
While legislative responses helped move money back into circulation, at other times federal decisions have hinged upon providing jobs, implementing social measures, and advancing infrastructure.
The COVID-19 recession forced businesses to shut their doors, many permanently and by the end of the first quarter of 2020, over 23 million citizens had filed for unemployment, spiking the level to 14.7%, the highest ever. The stock market crashed, falling by over 20% and a recession was declared by the administration starting in February.
A series of bills were passed by Washington to support all those affected by the pandemic, and that included the CARES Act, the first move to give direct stimulus checks to Americans. The act was different from previous stimulus check initiatives as it did not lead to a fresh job, expand the internet or create any medical innovation.
Two more rounds of stimulus checks followed in quick succession. Families received around $10,000 and more on average. But a year later many Americans are struggling to make ends meet. The federal administration initially sought to pump in more money to step the desperation among people as the money they had in hand or stashed away lost its value rapidly.
For The First Time, A Stimulus Check Package Did Nothing More Than Put Money Directly Into People’s Hands
The series of stimulus checks issued by the Federal administration was necessary at that stage and the financial aid was made to help struggling families stay afloat in a struggling economy. But the economic crisis and its solution were different from all other previous stimulus check programs.
In the past stimulus packages had included employment programs, and the development of infrastructures to support the economy, and help stimulate and develop it further. It was more about the future than the immediate crisis.
The federal government moved away after the third stimulus check and has concentrated more on creating infrastructure, creating jobs, and stimulating the economy. It is finally about implementing permanent changes to protect people from another global economic crisis.
People Continue To Hurt From Record Inflation In A Healing Economy
The three stimulus checks provide immediate succor to Americans and helped them provide for their families during the complete economic shutdown during the peak months of the pandemic. It helped them avoid falling into a debt trap and losing their homes.
But pouring $5 trillion into the economy was bound to have its side effects. It created an incurable Catch-22 situation, both for the federal administration and the common people.
Even as more money got pumped into the economy, it created an imbalance between demand and supply. The pandemic had already disrupted production and the supply chain severely. The war in Europe further complicated the situation.
And with each injection of further stimulus check payments, inflation got worse, making the extra money in people’s hands fall in value with each passing day.
The price of gasoline has almost doubled in two years, a dicey proposition for a nation with the highest consumption of oil in the world at 300 gallons of gasoline per person. That puts Americans on top among the 128 other nations included in a study.
The prices of other essential items also went up sharply, including food, utilities, and home rent. But with the federal administration firm on not going for another stimulus check, at least for the present, people are finding it difficult to stay afloat.
The only move by Congress to rein in rising prices of essential items was led by several Democratic representatives. They proposed a Gas Rebate Act, 2022. The act would have enabled eligible taxpayers to get a $100 stimulus check a month plus one for their eligible dependents.
The proposal fell through as the GOP was not interested in any more stimulus support. It could not even pass the preliminary steps at the committee level.
States Step In To Help Out Residents
Once it was apparent that expanded tax credit and direct stimulus checks from the federal administration were a thing of the past, states moved in swiftly to bring a degree of normalcy to the overheated economy.
The states were helped in their decision by a boom in the economy in the last two-quarters that led to a record revenue collection for most states. 14 states have taken legislative measures or are in an advanced stage to send money to their residents.
The stimulus checks proposed by the states are more focused and are smaller. Millions of Americans will benefit from these stimulus checks depending on the state they reside in and also their income.
New Mexico Among Two States To Step In Early
Even as states contemplated legislative measures, New Mexico was among the first states to go ahead with legislative measures. The state is issuing relief to its residents in the form of two different tax rebates spread over payments in three successive months.
The first stimulus check from the state administration was issued in June with the second round of payment scheduled for July and will be worth around $500 each. The final round of payment is scheduled for August.
Around 800,000 payments have already been issued totaling around $290M.
California The Latest State To Announce A Stimulus Check
Around 23M residents of California will receive a single stimulus check to protect them against the high inflation rate. Families could end u with a $1,050 stimulus check in case of a family of three.
The checks are part of a $17M inflation relief package signed by Gov. Newsom on Thursday.
The agreement comes even as California drivers confront the highest price of gas in the nation. The average price stands at $6.27 on Friday.
Newsom had earlier proposed gas cards worth $400 to residents with a maximum of two cards per family. The proposal was revised upwards to a stimulus check.
California is sitting on a hearty surplus and the office of the Governor tweeted that the budget would take immediate action to give money to millions who continue to grapple with rising costs even as they confronted one of the greatest challenges faced by the nation.