It has been a financial roller coaster ride for over two years for an overwhelming majority of Americans starting with the advent of the pandemic in March 2020. Even as then-President Trump finally got down to admitting that the pandemic had finally hit the shores of the US, the administration affected a total shutdown of the economy to halt the spread of the virus and pushed them to hand out stimulus checks.
But by then it was too late to halt the spread of the pandemic and all that was left to do was measures to contain its spread. And by the time the lockdown was effected, the backlash on the economy was swift and severe.
Millions were out of a job within days and had to depend on whatever savings they had. An overwhelming 52% of the population of American live paycheck-to-paycheck. They did not have the saving to sustain them through the difficult months of the pandemic. for the first time, the low-income and even middle-income families struggled to put food on the table, pay their utility bills, home rent, and mortgage, and buy gasoline and other groceries.
The successive stimulus check saved them from the ignominy of starvation, defaults, and homelessness. The initial rounds of the stimulus checks helped them pay their debts, ensure food was on the table, and removed the specter of homelessness. For the first time, some families even managed to save a part of their income as the federal administration stepped in with multiple measures that ensures generous payment and rebates for residents.
The third stimulus check was part of the most comprehensive exercise in disaster and emergency funds ever undertaken anywhere in the world. Families received direct stimulus checks, economic impact payments, and multiple rebates. The American Rescue Plan Act, of which the third stimulus check was a part, also made provisions for businesses.
This helped small and medium businesses avoid shutdowns and even bankruptcy during the pandemic. They could afford to retain and pay their staff and even resume production thanks to generous aid during the pandemic. This support was crucial during the total shutdown of the American economy for more than three months.
The Federal Stimulus Checks Ensured That The Economy Bounced Back Fast After The Recession
This ensured that the economy was able to absorb much of the pressure of the inevitable recession that followed the pandemic. Despite being the worst economic situation the nation faced since the Second World War, the recession this time was the briefest and the economy bounced back in the last two quarters of 2021.
This ensured a healthy budget surplus for most states on the back of the massive increase in revenues. This helped them in 2022 when the federal stimulus checks dried up and the ARPA funds allocated to states, local, and tribal bodies, were the only support aid that remained after the extended unemployment benefits and the expanded Child Tax Credit stimulus checks dried up after 2021.
The end of all forms of federal direct aid coincided with the abrupt rise in inflation. The inflation figures had been creeping upward after March 2021, the month the ARPA was signed into law by President Biden. It crossed the 8% mark and reached an alarming 9.1% in June 2022, the highest since November 1981.
States moved in to help out residents and have continued to increase support measures. The number of states giving out various tax rebates, cash-back plans, sales tax holidays, debit cards, and stimulus checks on paper has swelled to 21. With billions more in payout, the Republicans have warned of further inflation as they sought to pin the rise in prices and the recession solely on the stimulus check, conveniently ignoring the fact that other first-world countries are equally suffering from the global economic meltdown callused by the pandemic and the supply chain issues that followed.
The stimulus checks were responsible to some extent, but the nation had no social measures in place to stave off such disasters, unlike the Europeans. The federal administration was forced to take emergency measures to ensure that citizens did not starve, default on their payments, or were turned out of their homes.
Successive State Stimulus Checks Ensured That People Continued To Lead Normal Lives
Starting with states like Maine and New Mexico, most states are considering sending stimulus checks to residents to tide over the inflation that has touched levels unseen since November 1981.
The California Middle-Class Cash Back is scheduled this week and will give up to $1,050 per family for an overwhelming majority in the Golden State. This is effectively their third round of payments after the Golden State stimulus checks I and II.
Governor Gavin Newsom signed the bill in June 2022 as part of the $308 billion annual budget. The $17 billion set aside as part of the budget will fund the third stimulus check, also called the Middle-Class Cash Back for 23 million Californians, almost 60% of the population.
The payment will start on October 2022 and families and individuals will get it almost immediately through direct bank transfers. Filers who receive the past two payments through stimulus checks and those who filed state tax returns electronically in 2020 will receive their compensation through direct bank transfers.
The payments will go out between October 7 and October 25 in the first phase and October 28 and November 14 in the second phase of payments.
An overwhelming majority of payments will go out through direct transfers. The rest of the payments will be distributed through debit cards. Filers who received their Golden State stimulus checks by debit cards can expect the same for the gas rebate. They will get their payments between October 25 and December 10, 2022.
All remaining debit card payments will be sent by the second week of January next year.
The Franchise Tax Board has stated that they will send out 90% of the payments by the end of October.
Individual tax payments will receive between $200 to $700 depending on their income and the presence of dependents. For joint filers, the amount is between $1,050 and $400 for a family that declared a dependent.
Other measures that are part of the package for California include a tax holiday for sales tax on diesel for one year, emergency rental assistance worth $1.95 billion, and $1.4 billion in funds to cover utility bill dues.