With states the only hope for citizens when it comes to a stimulus check, 4 more have joined close to 20 states that are offering support to residents. The inflation relief includes direct payments in the form of paper checks and account transfers, tax holidays, waiver of sales and income tax, rebates, and pre-paid debit cards.
The federal stimulus checks came to an abrupt end not because the American government was unable to muster the money if it wanted to, but because the opposition Republicans were not willing to support the initiative.
Over the past 4 decades, policymakers and successive administrations have made it normal to prop up the economy and the markets spontaneously at every turn. This has been true during crucial phases with the more recent in 2008 and then in 2020. It was also evident in late 2018 on a smaller scale when equities sold off 20% and the Feds stepped in to cut rates to cool down the markets.
Were The Stimulus Checks Overused?
Detractors have claimed that the stimulus checks support system was overused and has led to the spike in inflation that is complicating the current situation just when all restrictions linked to the pandemic have been lifted.
With the President facing stiff resistance from the Republican opposition, and a couple of Senators within his party, he was forced to detract from his stated plans to go for a 4th stimulus check.
Even his plans to invest in everything from the internet to other infrastructure, infant care, and innovation in semiconductors have all been put on hold or curtailed beyond recognition. And in a tight senate, even Democrats, the centrists among them, have expressed their concerns about the federal administration’s plans saying it could be more inflationary or lead to too much spending.
The Third Stimulus Check And The Driving Inflation
Research data from the San Francisco Federal Reserve Bank have thrown up some interesting fire. Economists looked at the effect that the last major spending bill, the $1.9T American Rescue Plan Act which was enacted last winter to provide major relief from the pandemic recession.
The plan was all-comprehensive and covered every aspect of the economy, way more than individuals and families. Businesses, states and local bodies, educational institutions, and medical organizations came under this blanket economic support measure.
Analysts have shown that the difference between European and American inflation figures was the result of the third stimulus check and other parallel support measures initiated in March 2021. They say that the successive stimulus check came too close to one another and put too much money into the hands of people.
The researchers pointed out that the bill was perhaps responsible for a 0.3 percentage point increase in the inflation rate as measured by the personal consumption expenditure index. That index showed a growth of 4.3% in the 12 months before August. This suggested that without the influence of ARPA, inflation would still be higher than normal due to the pandemic and also the effort of the Fed to let the prices increase faster than usual.
Thus while the estimated influence of the ARPA on inflation is meaningful, it is not significant enough to match the strong overheating seen in the 1960s.
State Stimulus Check To Provide Relief To Residents In An Overheated Economy
With California and even Republican-ruled Florida jumping into the ring. Around 21 states have already started disbursing or have firm plans to do so by the last quarter of this year.
One of the more generous of the states is Colorado. The Centennial State is in the process of mailing a $1,5000 stimulus check to married couples filing jointly and $750 for individual filers. This amount will go out to virtually all of the taxpayers who are residents of the state. the program has been dubbed Colorado Cash Back.
Senior state official, Sarah Barnes has said that families in Colorado continue to feel the economic pinch of the pandemic. that has combined with the rising cost of living in the state. She maintained that only by providing direct payments can the state hope to be successful and direct payments are one of the most impactful ways to support state families. The Colorado Cash Back stimulus checks are already hitting mailboxes around that state.
This cashback payment was made possible thanks to an amendment to the Taxpayer’s Bill of Rights (TABOR) that requires the government of Colorado to return excess state revenues.
While the revenues are normally returned through a temporary reduction in the income tax rate of the state, this is the first time that there is a tax refund and reimbursement.
The Cash Back rebates offered by Colorado are an early refund of the fiscal year TABOR surplus for the fiscal year 2021-22. The program is expected to provide instant relief to residents by disbursing stimulus checks this summer instead of the spring of next year.
The original refunds were to be around $400 per individual taxpayer, but a huge budget surplus fueled by a booming economy in 2021 led to a boost in the funds sanctioned.
The refund amounts will soon start to arrive in the mailboxes of residents and will continue to go out on a rolling basis till September 2022. this was stated by Dave Young, the Colorado Treasurer.
The number of payments being processed has climbed to 2.4M, according to the Dept. of Revenue of the state of Colorado.
Minnesota has started sending out stimulus checks for more than a month. It is among 8 states that are getting ready to roll out stimulus checks this month. These direct payments will help residents even as inflation continues to remain astronomically high for over a year starting April 2021.
The news was announced by the commerce department of Minnesota. Frontline workers in the state are eligible for a one-off payment of $750 and the checks have begun going out to beneficiaries.
Residents of Illinois are getting ready to receive another round of stimulus checks. Lieutenant Gov. Juliana Stratton said that while residents continue to feel the pressure of buying gas, food, and other essential items, the state was stepping in to ease the burden.
The Illinois $1.83 billion relief package has gone into effect in July and includes property and income tax rebates for resident taxpayers of the state.