States have stepped in to take the lead on stimulus checks even as federal funding dries up. Politics remains mired in partisanship in Washington and President Biden is in danger of losing control of both houses in the coming midterms. The only course open for federal relief at this stage was the suspension of gas taxes. But is unlikely at this stage as even Democratic Congressmen have opposed this move.
Congressmen contend that oil majors will take advantage of federal cutbacks to further increase prices. Thus, the benefits will hardly trickle down to customers as envisaged by President Biden and his policymakers.
But states are stepping in at this stage to provide relief to residents in the absence of further stimulus checks. States are now falling over backward to support their residents and the payments have become a backdrop to a bigger rivalry as two states have upped the ante in what is being seen as a fight between two potential Presidents instead of a rivalry between two states.
California And Florida Governors Clash Ideologically Over Stimulus Checks
California is sending around 23 million stimulus checks that could go up to $1,050 for a family of two with two tax filers among them. Governor Gavin Newsom is taking help of the surplus of $97 billion with the state.
Governor Ron DeSantis’ proposal for Florida is instead more focused and has targeted the aid for only 59,000 households, which will entail far lower costs.
But while the relief measures could offset the high cost of inflation for low-income families, the program initiated by both the states on either end of the political spectrum could further increase prices across the board.
Both States Adopt Radically Different Approach And Target Base
On the opposite end of the US, the two governors of the coastal states have prepared to send out stimulus checks to help their residents deal with the cost of gasoline, other essential items, high utility bills, and increasing home rents.
But their approaches could not have been more different. On the Eastern coast, Republican Governor Ron DeSantis is preparing to send out money to support residents as they are ravaged by the record inflation figures.
But the Florida stimulus check targeted only a small subset of the population, those hit the hardest by soaring prices. DeSantis is a strong fiscal conservative, and he has picked a targeted group of only 59,000 households instead of an expensive and sweeping stimulus check program as has been adopted by Newsom at the other end of the country.
Governor Gavin Newsom is taking a radically different approach and is tapping into the record reserves to send aid to 23 million out of its total population of 39 million. So while 60% of the population of the Golden State will receive a stimulus check, for Florida it works out to less than 3%.
Critics Of Stimulus Check Payments Worry About Further Rise In Inflation
A section of conservative economists worries that more direct relief measures similar to the stimulus checks given by the federal government will set further inflation. While it might provide immediate relief to the targeted group, it will gradually lead to another round of increases in prices across the board.
Larry Summers, former Treasury Secretary, said that stimulus checks on a level seen during World War II instead of normal inflationary pressure will set off a recession that has not been seen in a generation. And he had spoken way back, just before President Biden released the $1.9 trillion package that included the stimulus check and other support measures that went out to almost every sector of the economy.
It helped prevent starvation and homelessness during the pandemic and helped guide the nation out of a recessionary trap. But it also is being blamed for starting the inflationary pressure, though most economists realize that it is a worldwide phenomenon, the after-effect of the pandemic, followed by the supply issue and the war in Europe.
But that does not explain the difference between the rate of inflation in the US when compared t the rate in other developed nations, including the European Union nations and the UK.
Stimulus Check Served The Purpose While It Remained Active
The stimulus checks and other monetary support measures for citizens served the crucial role of giving money directly to people when millions suddenly found themselves out of any source of income.
This sudden windfall led to a marked shift away in consumer spending patterns. They shifted from spending on services to goods. This led to an immediate improvement in the quality of life for low and moderate-income groups. But it also contributed to the supply issue as the demand for products far outstripped the supply that was possible at a crucial stage of the pandemic.
Factories were still forced to follow strict COVID-19 protocols and employ far fewer workers to maintain social distance. Secondly, finding transport workers was a tough proposition.
People also began saving at a high rate and for the first time in several decades, credit cards and other high-interest rate loans saw a marked decline, and n many cases, people were free of card debts for the first time in their lives.
States are getting into the stimulus check bandwagon and have announced measures that vary radically between states.
Democratic States Place Their Bets On Bigger Stimulus Check
Democratic-ruled states are betting that stimulus checks will immediately fill the hole that has been dug in the financial position of the nation through further stimulus checks.
Republicans on the other hand are putting their money on more stringent measures amid a warning that high volume stimulus for the majority of the population could lead to a spurt in the prices of gasoline and other essential commodities.
California is not the only nation with stimulus checks for its residents. Colorado, Illinois, Hawaii, and a handful of other states are expected to start sending stimulus checks by the third-fourth quarter.
Maine and New Mexico have already started sending out stimulus checks. While Maine has been the most generous of the states with an $850 stimulus check for individual filers and doubles that for married couples filing jointly.