It seems like only yesterday that many millions of Americans received the greatly anticipated $1,400 stimulus check. Even with that being the case, there are already conversations occurring on Capitol Hill about the need for more direct stimulus to Americans.
Is it going to be another $1,400? Will it take the form of recurring payments? Will it be attached to a larger bill? There are loud voices on both sides of this issue, firmly planted in their beliefs. Keep reading and I’ll cover everything that’s known about the conversation about the next stimulus check.
What’s the Latest News on the Fourth Stimulus Check?
21 Democratic Senators have just sent Biden a letter asking for further stimulus. In this letter they encourage the President to support not just one more check, but ongoing rounds of financial aid to individuals and households. These payments would continue for the remainder of time that the US economy is affected by COVID. The payments would be tied to unspecified economic conditions that must be met before the payments can end. The lofty goal of ongoing, automatic payments sets up a big challenge in deciding upon how to define “affected by COVID.”
They cite numerous studies that detail the positive effects enacted stimulus programs have had on protecting millions from economic ruin. Most powerfully, they cited a collective letter of over 150 economists that outlines the need for continued economic stimulus and specifies the ways in which the COVID crisis is more serious than the Great Recession of 2008.
Biden and his Press Secretary Jen Psaki have thus far remained mum on the topic of a fourth round of stimulus payments. That is something that will only last for so long, as the media has begun to discuss the Democrats’ letter to the President and the likelihood that their wishes will come to be signed into law.
While much of the conversation is speculative at this point, it’s a conversation that’s happening, which is very telling. Nothing that happens in Washington comes without discussion, and Democrats have begun that discussion.
It’s no secret that the Biden administration is pushing to get a comprehensive infrastructure bill passed in the coming months.
In their letter, Senatorial Democrats requested that Biden accept recurring relief payments as an aspect of the larger, unrelated bill. One could see this as the liberal wing of the Democratic Party preemptively turning the screws on the President, making clear that their support for his infrastructure projects would be tied to ongoing relief payments to Americans still in need of financial support.
The majority of voters polled in January 2021 (from both sides of the political spectrum) supported continued cash payments. “Well, that was before the new stimulus debate!” You’re right, I should give more current data: the level of support has actually gone up since then. A whopping 70% of Americans have voiced support for the ARP signed into law by President Biden. In a time where everything seems to be up for debate, it’s a borderline miracle that you can find a law that 70% of people support.
With this in mind, it’s understandable why a fourth or ongoing stimulus check is being discussed even while all the checks from the last round haven’t even been issued yet.
What Are the Arguments For More Stimulus?
The economic situation is starting to improve as a result of recent stimulus, help it along with more of what’s worked thus far. Until the economy and workers are able to stand on their own, it doesn’t make economic sense to give anyone a weight they cannot bear.
Americans Are Still Suffering
It’s been feeling more like life is returning to normal, but there are still rather bleak numbers coming in from a recent poll from the US Census. A staggering 40% of respondents still have less income than prior to the pandemic, 15% percent of renters are behind on their rent payments, and almost ⅓ have reported struggling with everyday expenses. Perhaps the most shocking number, 18 million adults acknowledged food shortages in their households.
The Urban Institute recently released a report on the recently passed ARP, suggesting that its programs will lift 14 million people (5%) out of poverty. They continue to present a few options for continued cash relief, and estimate how many people would be pulled out of poverty as a result. It remains to be seen whether or not Congress will take the Urban Institute’s report into consideration as more legislation gets written, but it’s certainly not making it easier for them to ignore the idea of giving more cash relief to Americans.
Stimulus is Working
The most recent stimulus checks resulted in a 9.8% increase in retail sales, giving weight to the argument that this money is helping both individuals and businesses, two birds with one stone. Supporters can point to this to prove this is not like other instances during the pandemic in which some entities received funds that the public thought were less than needed. This is a situation in which the people most in need are getting money and spending it in ways that it was intended.
What Are the Arguments Against More Stimulus?
Continued stimulus checks and expanded unemployment benefits might be disincentivizing returning to work. There’s also the risk that introducing ‘free money’ into circulation is certain to cause inflation that will be difficult and painful to get under control.
It’s inarguable that some form of relief was necessary during the worst periods of the pandemic. When COVID hit, millions upon millions of workers suddenly found themselves unable to go to work and unable to pay for the most basic of necessities. It would have been disastrous to have millions of households defaulting on their mortgage, failing to pay their bills, or even being unable to feed themselves and their dependents.
Even the most conservative voices have supported and pushed for some form of stimulus, but some have begun to argue that we have done what’s necessary to stave off disaster.It’s now time to allow individuals to return to work
Stimulus Discourages Returning to the Workforce
Much has been done, and some believe that with reduced infection rates and ever climbing percentage of the population that is vaccinated, the time is right to allow the American economy it the workers that power her to stand on their own feet.
Those against further stimulus suggest that direct payments and broad programs discourage workers from returning to their jobs. This is not rocket science, or even complicated economic theory. If someone is being paid more not to go to work than they would if they went to work, they’re probably going to choose the option that puts more money in their pockets; who can blame them?
Prior to the pandemic (2018), I had a conversation with a friend who worked in a trade union. At the time he had been laid off and was collecting unemployment. In addition to that, he was putting his skills to use by doing side-jobs, saving his customers money while he took in more income than he would had he been doing his union work. When the next union project began and he had the opportunity to return to his regular life, he opted not to for the longest period of time possible. We laughed about it, but by the end of the conversation I noted that “it’s kind of unethical what you’re doing, don’t you think?” He agreed with me, but said, in so many words, that his sense of social responsibility wasn’t greater than his desire for economic security; again, who can blame him?
It’s situations like this, en masse, that have more conservative voices concerned that desire to alleviate individual suffering is going to create economic catastrophe in the long run.
Stimulus Causes Inflation
A major concern of conservative economic voices is that continued cash infusions are going to lead to inflation. This is a reasonable concern. We live in a (mostly) free market economy, and perpetually printing and distributing money will have an effect on inflation. There’s only so much the FED can do to prevent prices from rising and the purchasing power of the dollar from decreasing.
Many conservative figures have cited liberal economist Larry Summers in their case against further stimulus. The fact that Summers has been warning against excessively generous relief payments is very helpful to the argument of fiscal conservatives. Summers has noted that there are many parallels between the present and the late 1960’s when inflation shot up and continued for much of the 1970’s. The idea that inflation won’t happen, or if it does happen, there will be some button to push to make it go away, are just false, explains Summers.
We’ll Be Paying Attention
It’s too soon to say whether or not some Americans can expect to receive regular payments from the federal government. The debate will no doubt be heated, and the result is certain to have an impact on many millions. Whether you are for or against continued stimulus payments, I hope this has been an opportunity to get a more complete understanding of the topic and why certain people feel how they do about it.