The IRS has issued 156 million payments in the third round of direct stimulus assistance, with 25 million people lined up this week to receive the $ 1,400. But some lawmakers are pushing for a fourth round of stimulus grants that will effectively send recurring payments until the pandemic ends.
So far, the federal response to the economic crisis caused by the Coronavirus pandemic has delivered $ 3,200 to each eligible adult: $ 1,200 through the Coronavirus Economic Aid and Safety Act in March 2020; $ 600 in a relief measure in December; and $ 1,400 under the American Rescue Plan signed in March by President Joe Biden.
Despite this financial aid, millions of Americans remain in financial difficulties, with about 4 in 10 people claiming their incomes remain below pre-pandemic levels, according to a recent survey by financial services firm TransUnion. Unemployment remains high, especially in low-wage industries such as food and hospitality services, where demand continues to fall amid rising coronavirus rates.
For many people, in short, the last round of $ 1,400 checks may not last long, a problem found in the minds of many Americans who continue to struggle with unemployment and a weak labor market.
Twenty-one senators (all Democrats) signed a March 30 letter to Mr. Biden to support recurring stimulus payments, noting that the $ 1,400 payment handed out by the IRS will not affect people for long. of time.
“Nearly 6 out of 10 people say the $ 1,400 payments that will be included in the rescue package will take them less than three months,” the senators wrote in the letter.
While the letter does not specify how large the payments senators are looking for are, a separate effort by Democratic lawmakers in January pushed for monthly checks of $ 2,000 until the pandemic ends. Instead, the American Rescue Plan authorized $ 1,400 for each eligible adult and dependent.
He continues to live payroll to payroll
Some top economists have called for more direct help from Americans. More than 150 economists, including former Obama administration economist Jason Furman, signed a letter last year advocating “recurring direct stimulus payments, which would last until the economy recovers.”
Although the economy is improving, including one increase in hiring last month, millions of people continue to suffer from low incomes and have been unable to take advantage of government aid programs, said Greg Nasif, political director of Humanity Forward, a nonprofit that pressures recurring stimulus payments. According to a March study by economist Eliza Forsythe, only 4 out of ten unemployed workers received unemployment benefits.
Many people never applied for unemployment benefit because they did not believe they were eligible, while others may have dropped out due to long waits and other problems.
“You’ll see reports on how the economy is starting to grow, but there are a lot of Americans living on payroll, and for many of them, government relief programs have been unable to help,” Nasif said.
What is the probability of a fourth stimulus control?
Don’t hold your breath, according to Wall Street analysts. “I think it’s unlikely right now,” Raymond James analyst Ed Mills told CNBC. One reason is that the Biden administration is focused on moving forward on its own $ 2 trillion infrastructure plan, which would reshape the economy by rebuilding aging schools, roads and airports, and investing in projects ranging from affordable housing to broadband.
The proposal, which the White House says would be funded by raising the corporate tax rate from 21 percent to 28 percent, may be “harder to pass” than the relief law that provided the $ 1,400 checks to most Americans because of opposition from both Republicans and some Democrats, Washington’s policy strategist, Stifel, Brian Gardner pointed out last month.
Many households will receive an additional form of support for the stimulus this summer when families with children under the age of 18 will receive direct payments for six months through the revised child tax credit. From July to December, families with children under the age of 6 will receive $ 300 a month and those with children between the ages of 6 and 17 will receive $ 250 a month per child.
“A lot of people will be surprised when that first check comes,” Nasif said. “This will obviously add to the increasing popularity of the controls.”
Bounce fed by vaccination
At the same time, the economy is expected to rebound this year thanks to increased vaccination rates against COVID-19 and as states begin to reopen. JPMorgan Chase CEO Jamie Dimon predicted in his annual letter to shareholders this week that an economic boom it could last until 2023.
“[W]ith excessive savings, new stimulus savings, huge deficit spending, more [quantitative easing by the Federal Reserve], a potential new infrastructure bill, a successful vaccine and euphoria at the end of the pandemic, the U.S. economy is likely to grow. That boom could easily come in 2023 because all spending could be extended to 2023, ”Dimon wrote in the letter published Wednesday.
This could diminish the justification for the government to offer more direct aid, especially if the unemployment rate recovers and more marginalized workers are produced.
By the end of the year, the country’s unemployment rate could drop to 4.3%, according to Oxford Economics. However, the road to recovery “remains long” as there are still 4 million workers out of the workforce, Oren Economics economists Oren Klachkin and Gregory Daco noted in a research note.
“Looking to the future, the job market is poised for an impressive career as the expansion of vaccine distribution, more reopening and fiscal stimulus lead to increased hiring,” they predict.