The stimulus checks sent by the federal government were not the first payments of this nature. But it was undoubted the biggest and for the first time, three rounds were sent out by the federal administration as it desperately tried to keep the economy on an even keel and also help out millions of citizens from falling under the weight of the economic downturn caused by the most dangerous pandemic in recent history.
Even as the pandemic stuck America in the first quarter of 2020, the federal administration was ready for such an eventuality. Within weeks, the stimulus checks of up to $1,200 were dispatched to beneficiaries through direct stimulus checks and transferred to bank accounts.
When America began to shut down following the discovery of affected carriers, it meant that millions of individuals and families suddenly found themselves without any form of income. Businesses in their thousands suddenly shut down while others had to cut down drastically on wages to remain profitable.
At this stage, the economy threatened to go under due to a lack of any form of economic activity. Within weeks many more were in danger of losing their jobs. The first of the stimulus checks proved to be a big boost both to individuals and families and also to an economy that threatened to go under any time soon.
The first of the stimulus checks, with $1,200 started going out to people and the people of America heaved a collective sigh of relief. The stimulus checks served a double purpose. While it gave immediate relief to citizens even as the economy went immediately into recession.
There would be two more federal stimulus checks of $600 and $1,400 within a year. The last was the economic impact payment, a part of the American Rescue Plan Act worth $1.9T signed by incoming president Joe Biden.
The support was way above the third stimulus check as there were equally strong steps taken to support businesses, schools, hospitals, and other affected institutions. States and local and tribal bodies received a substantial amount of support to spend on measures adopted to deal with the pandemic.
The scope and the magnitude of the three stimulus checks were way larger than anything ever attempted before. The ARPA had other support measures ready as it extended the weekly unemployment stimulus checks and continued with them up to September 5.
The Three Rounds Of Stimulus Checks Followed By Other Measures
The child tax credit stimulus checks were a boon even as the federal payments ended. For the first time, the enhanced Child Tax Credit stimulus check was paid in advance. And again for the first time, the payments were given even to regular non-filers. This benefitted many minority communities including Blacks and Latinos as they continue to be wary of dealing with whites-only banks.
The three stimulus checks were followed by the unemployment stimulus checks and the extended child tax credit stimulus checks. People for the first time had more money in their hands than they required, and they even managed to pay off high-interest credit card debts and other loans. People even managed to save a part of these amounts and invested in long-term benefits. But what was notable was that people shifted from services to goods, which led to a spurt in demand.
For the first time in decades, the demand for goods far outstripped the supply, there was already a gap in the supply after the pandemic led to the disruption of the whole manufacturing and supply process.
This imbalance between demand and supply led to a rise in the price of goods and it has continued to grow steadily over the past year, culminating in the highest inflation rate of 9.1% in June 2022, the highest ever since November 1984.
Distributing The Stimulus Check
The process of sending out the stimulus check and ensuring that it reaches its destination was one of the biggest issues ever faced by the IRS and other agencies. This was a massive larger than any ever attempted by the American government.
And with each round of payment, the IRS and the Treasury Department became quicker and more efficient in sending out the money to the right beneficiaries.
During the initial days of the programs, the IRS managed to send the stimulus check to 89.5M families and individuals. But when the third stimulus check was passed by Congress on March 11, 2021, m the IRS had already disbursed close to 90M stimulus checks within a week.
There were a few glitches, including payments made out in the name of deceased citizens, but it was a very small percentage of the massive total.
Were The Stimulus Checks Too Spread Out
A section of experts believes that the stimulus check payments were too spread out and people who did not deserve to be paid during the pandemic also receive benefits. They contend that people whose source of income was not affected during the pandemic also receive the same amount of stimulus checks.
The economists believe that this was a more potent reason for the rise in inflation. They contend that this amount was not spent on essentials like food, utility bills, and home rent. The IRS was forced to sacrifice a
People for the first time we’re saving per se. and this loose cash in hand also led to a huge demand for consumer goods. And this demand triggered massive inflation. Though there were more issues at play, including the war in Europe.
States Move In With Stimulus Checks On Their Own
The states have sought to pay for the record inflation figures that have increased prices to unmanageable levels. Most states have strong reserves from the Rescue Plan funds and the 2 last two quarters of 2021 proved to be particularly beneficial for the states.
These combined riches have led to states moving in to compensate for the lack of federal funds for beneficiaries. They have also urged the federal administration to move in with further aid to negate the effect of the pandemic.
The state stimulus packages were not on the scale of the federal funds and will not have the impact that the third stimulus check had. This makes it more important to realize that the federal funds at this stage are definitely a necessity.