The stimulus checks benefitted million from the three rounds of federal stimulus checks after the onset of the pandemic in the first quarter of 2020. The payments, at least the initial rounds, were pushed through with haste to allow people to access funds quickly as initial federal inaction over the pandemic had already convoluted the situation.
The rush to get the stimulus payments across to individuals and households as quickly as possible during an unprecedented situation also meant that there was a certain amount of sacrificing of accuracy. But did the money help all those who needed it most, or did some of it go out to people who did not need it in the first place?
Another issue is that were the checks a factor in the high inflation that has brought millions of Americans back to the same situation which they fought out with the definite help of the stimulus checks and other measures that were taken to alleviate the economic pain felt by millions.
When America began to shut down in the wake of the onset, it meant that millions of families found themselves staring at the prospect of losing all means of income for an indefinite period.
After the initial inertia that complicated the situation in the first place, Congress moved in swiftly and passed an enormous emergency aid package aimed at providing relief. In that legislation came the first of the series of economic impact payment checks amounting to up to $1,200 per eligible adult.
It was followed by a total of three rounds of such stimulus checks. It included the follow-up payments of a maximum of $600 in the same year in December. This was followed by $1,400 for each person in 2021.
The third check, which came within two months of the $ 600-second stimulus check has drawn the blame for the inflation that has followed.
The American Rescue Plan Act brought a slew of measures that included the much-maligned third stimulus check of $1,400. But it was also much larger and provided support to various organizations and local governments.
The amount that they sanctioned for states and local governments later came in handy for governors and state legislators to help resident people with state stimulus checks in 2022 even as federal stimulus checks dried out by the end of 2021.
While the federal government had deployed stimulus checks before on multiple occasions in the wake of the financial crisis. but what was a first in many ways was the scope and size of the direct stimulus checks.
The IRS Did A Commendable Job In Sending Out The Stimulus Checks Quickly
The three stimulus checks along with the other parallel relief measures, including the expanded Child Tax Credit stimulus check provided comprehensive coverage that kept most low and middle-income households under the coverage of assurance for close to two years.
And with each of the payments, the treasury department and the Internal Revenue Service because quicker and more efficient at sending out stimulus checks. In the initial weeks of the first stimulus checks back in 2020, the IRS could only deploy 89.5M payments.
When then the third round of stimulus checks was approved by Congress on March 11, 2021, the IRS announced that in less than a week by March 17, it had already disbursed around 90M stimulus checks.
It was a commendable effort by the IRs and they did an extraordinary job of sending out the stimulus check under circumstances that were difficult and unprecedented. True there were glitches along the way with some payments going out to deceased Americans.
But experts have also pointed out another flaw. A section of Americans, among the most deserving as they were among the lowest earning section of society, were left out initially from the list of beneficiaries. This was especially true for those whose earnings were too low to be listed in the books of the IRS.
Individuals with an Adjusted Gross Income of $12,500 or less and joint filers with an AGI of $25,000 or less are not required to file income tax returns and hence do not figure in IRS records.
Experts point out that the IRS had to sacrifice accuracy at some point for the sake of speed. And speed was imperative at that stage immediately after the complete shutdown was declared and the pandemic raged, and during the long months post the pandemic when the economy went into a deep recession.
The payments naturally could not be as targeted as they should ideally have been. In normal times such glitches could have been ironed out, but it would have entailed sacrificing the pace at which the stimulus checks were sent out to prevent large-scale starvation and homelessness.
And a large percentage of tax filers received the stimulus checks without considering whether they were facing any form of financial difficulties in the first place. To correct that the third stimulus check of $1,400 per individual was phased out faster to ensure that there was a limit on how much people with higher incomes received.
With each successive check, there was a noticeable drop in the number of households that were spending them. The first check of up to $1,200 came at a time Americans needed it the most during the peak period of the pandemic.
Naturally, the payments went towards household spending on essential items. The later stimulus checks were not typically used for paying down various debts or were invested or saved. This was a trend noticeable along all income levels during the third stimulus check in the first two quarters of 2021.
It was also the time that the inflation rate went past the 3% mark and continued in its relentless march across the spectrum. It finally crossed the 8% mark at the beginning of 2022 and has largely remained above the 8.5%, in June it even crossed the 9% mark to settle at 9.1%, the highest since November 1981.
With states stepping in to fill the void created by the absence of federal stimulus checks in 2022, people have been granted some measure of relief, though it cannot supplant the support of the federal stimulus payments.