The IRS has made more than 169 million payments in its third round of direct stimulus, with more than 2 million people receiving the $1,400 checks in July. But some lawmakers are pushing for a fourth round of stimulus that would effectively send recurring payments until the pandemic is over.
So far, the federal response to the economic crisis caused by the coronavirus pandemic has paid out $3,200 to eligible adults: $1,200 under the Coronavirus Aid Relief and Economic Security Act in March 2020; $600 in a December relief measure; and $1,400 under the US bailout plan signed by President Joe Biden in March.
Despite that financial support, millions of Americans remain in financial distress, and the spread of the Delta variant creates new economic headwinds. Nearly a quarter of Americans struggled to pay their household expenses in the past week, according to new Census surveys that surveyed people in the last two weeks of August.
The unemployment rate, still above the pre-pandemic level of 3.5%. And while companies are hiring, there are still about 5.3 million fewer people on payroll than before the pandemic. Economists signal alarm about the spread of the Delta variant, with Oxford Economics recently lowering its forecast for 2021 global economic growth from 6.4% to 5.9%.
“Uncertainty and hesitation from here could ultimately lead to a slower-burning recovery than our baseline assumes,” Ben May, director of global macro research at Oxford Economics, wrote in the report.
At the same time, 9.1 million people lost, when federal benefits expired. That will wipe out about $5 billion in weekly benefits that had flowed to unemployed workers — aid that had supported those workers in paying for groceries, rent and other necessities.
In short, for many people, the latest round of $1,400 checks is long gone, even if other pandemic stimulus is coming to an end — a lurking problem.who continue to struggle with unemployment and a weak labor market. Indeed, more than 2.8 million people signed a Change.org petition last year calling on lawmakers to pass legislation for recurring monthly payments of $2,000.
Some lawmakers have picked up on the idea. Twenty-one senators — all Democrats — signed a letter to Biden on March 30 in support of recurring stimulus payments, pointing out that the $1,400 payment being distributed by the IRS won’t help people for long.
“Nearly six in 10 people say the $1,400 payments to be included in the rescue package will take less than three months,” the senators wrote in the letter.
Meanwhile, some states. About two-thirds of California residents are likely eligible for a “Golden State Stimulus” check through a new effort by Governor Gavin Newsom. That effort will yield $600 for low- and middle-income residents who have filed their 2020 tax returns. Florida and parts of Texas have approved bonuses for teachers to help offset the impact of the pandemic.
US senators’ letter does not specify how much payments they want, but a separate effort by Democratic lawmakers in Januaryfor $2,000 monthly checks until the pandemic ends. Instead, the US bailout plan approved $1,400 for each eligible adult and dependent.
Child Tax Credit: Deposits on July 15
Some families received a different form of stimulus on July 15 when the IRSon bank accounts of parents who are eligible for the Child Tax Credit (CTC). Families received an average of $423 in their first CTC payment, according to an analysis of Census data from the left-wing advocacy group Economic Security Project.
Eligible families will receive up to $1,800 in cash through December, with the money distributed in equal installments over the six months from July through December. The aid is due to the expanded CTC, which is part of President Joe Biden’s US bailout plan.
Eligible families receive $300 per month for each child under 6 and $250 for children between 6 and 17 years old. Multiple families whosaid the extra money would go toward childcare, school supplies and other necessities.
Families could enjoy more of a tax break in the coming years, as Mr Biden’sgoes forward. Under that plan, the extension of the child tax credit would last until 2025, giving families an additional four years of child tax breaks.
Emergency funds, savings
So far, people who have received the three rounds of stimulus payments said they use most of the money to pay off debt or put the money in savings, according to a recent analysis by the Federal Reserve Bank of New York. That could indicate that people are using the money to pay off debt incurred during the pandemic and build an emergency fund in the event of another shock.
Nearly 7 in 10 Americans who have received, or expected to receive, a third payment said it is important for their short-term finances, Bankrate.com said in April. That’s down from about 8 in 10 people in March 2020, when the pandemic caused widespread unemployment, but overall, the proportion of people needing extra support remains high more than a year later, according to the personal finance firm.
About 1 in 3 people said the stimulus would help them for less than a month, the survey found.
Millions of Americans were spared hardship thanks to the three rounds of stimulus payments, researchers have found. But when stimulus measures faltered, such as last fall when Congress stalled on another round of aid, hardships increased “significantly” in November and December, according to a May analysis of University of Michigan census data.
Still living paycheck to paycheck
Some top economists have called for more direct aid to Americans. More than 150 economists, including former Obama administration economist Jason Furman, signed a letter last year calling for “recurring direct stimulus payments, which will last until the economy recovers.”
Although the economy is improving, millions of people still suffer from reduced incomes and have been unable to take advantage of government aid programs, Nasif said. According to a survey by economist Eliza Forsythe in March, only 4 in 10 unemployed workers actually received unemployment benefits.
Many people have never applied for unemployment benefits because they thought they were ineligible, while others may have given up because of long wait times and other problems.
“You’ll see reports of how the economy is starting to grow, but there are a lot of Americans living from paycheck to paycheck, and for many of them, the government’s emergency response programs haven’t been able to help,” said Greg Nasif, political director of Humanity Forward. .
How likely is a fourth stimulus check?
Don’t hold your breath, according to Wall Street analysts. “I think it’s unlikely at this point,” Raymond James analyst Ed Mills told CNBC. One reason is that the Biden administration is focused on promoting its…, which would reshape the economy by rebuilding outdated 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% to 28%, is likely to gobble up lawmakers this fall, Stifel’s Brian Gardner said in an Aug. 11 research paper.
“Fall is going to be a busy time in Washington as Congress tries to finalize two infrastructure bills (one of which includes tax hikes), passes annual spending bills and raises the debt ceiling,” he noted.
At the same time, the economic recovery is facing headwinds as the Delta variant spreads across the country. Some states with low vaccination rates are experiencing a spike in COVID-19 cases that could deter people from taking service jobs in restaurants and other jobs that involve public exposure.
Texas’s failure to halt the COVID-19 wave in its state has led to:and an annual drop in production of more than $13 billion, a recent study found. Fear of contracting COVID-19 is also leading to job losses in Texas, as workers choose to stay home or stay home to care for relatives with the disease, the study said.
Meanwhile, federal pandemic unemployment benefits came to an end on Sept. 6, marking the end of innovative programs that had extended jobless assistance to handymen, part-time workers and others typically ineligible for unemployment benefits. That could add to the hardship for many households, experts say.
“This cliff threatens the progress of the economic recovery that we have made by draining the economy from consumer spending, and will put millions of workers at risk of lasting hardship,” Andrew Stettner, senior fellow of the Century Foundation, said in a statement.