Will there be a fourth stimulus check? Here is the case against it
Will there be a fourth stimulus check?  Here is the case against it

Will there be a fourth stimulus check? Here is the case against it

The payout of $ 1,400 stimulus checks included in the US $ 1.9 trillion rescue plan is well underway. The Internal Revenue Service has already issued over 127 million payments since 11 March 2020, although 30 million social security beneficiaries still waiting for your money. With the pandemic-hit economy still not fully recovered, speculation has already begun as to whether Americans will receive another stimulus check. The odds of a fourth stimulus check are still very unknown and will depend on many factors. Here’s the reason why a fourth stimulus check is unlikely to turn into anything.

The coronavirus crisis is reaching a turning point

Three coronavirus vaccines are now approved in the United States, and production is increasing rapidly. President Biden announced last week, where he doubled the target that his administration had originally set and would now aim to get the United States to administer 200 million vaccine shots by May 1, 2021. Vaccination of a large enough section of the population is crucial to help the country return to a sense of normalcy.

In addition, scaling of the rollout of Pfizer

Modern and Johnson & Johnson

Vaccines are seen by economists as the driving force to reopen large parts of the economy. Economists point to strong economic growth that fits in with Biden’s vaccination success and the Democrat’s adoption of the $ 1.9 trillion stimulus package. In mid-March, economists at Goldman Sachs raised their forecast for GDP growth to a surging eight percent in 2021. As Axios noted“not only would 8% annual growth mark a great turnaround from the coronavirus pandemic,” but it would also “mark the largest economic expansion for the United States in generations.”

While Goldman’s forecast is among the most bullish, Biden and his staff have also signaled a turning point. Finance Minister Janet Yellen has argued that the United States could achieve full employment in 2022, crediting the U.S. rescue plan to help create a bridge to help Americans “reach the other side of this pandemic with the foundation of their lives intact.” Federal Reserve Chairman Jerome Powell reiterated Yellen’s remarks, saying “the recovery has progressed faster than generally expected and appears to be strengthening,” due to unprecedented fiscal and monetary stimulus from Congress and the Fed.

$ 1.9 US rescue plan already shows effect

The recently adopted stimulus package added nearly two trillion dollars to the economy. Biden credited the Covid relief bill for brightening the economic outlook. “Since we passed the U.S. rescue plan, we have begun to see new signs of hope in our economy,” he said said during a press conference.

Data aggregated by Bank of America shows that credit and debit card spending has risen 23 percent over the past two years and, not surprisingly, 45 percent over the years. Sectors that saw the biggest gains after the third round of stimulus checks began to hit bank accounts, including furniture, online electronics and clothing. In addition, spending on those receiving stimulus support increased 49 percent from two years earlier compared to 9.7 percent for those not receiving support. In short, the stimulus package works.

MORE FROM FORBESStimulus checks of $ 1,400 already act as credit, debit expenses increase by 45%, says BofA

Biden also pointed to renewed signs of optimism in the labor market. 684,000 Americans filed new state unemployment benefits claims in mid-March, which, as ForbesSarah Hansen noted, is “down 97,000 from the previous week and the lowest level in more than a year.” “Just this morning, we learned that the number of people applying for weekly unemployment insurance fell by almost 100,000 people,” Biden noted. “So there are still too many Americans out of work, too many families injured, and we still have a lot of work to do, but I can tell the American people that help is here and hope is on the way,” added Biden. at its last press conference.

Let’s be clear, this is great news, and every American should rejoice in a full and speedy recovery. However, a faster recovery would likely take any wind out of a fourth stimulus check sail.

Shift away from stimulus control and towards other democratic priorities

With economic momentum in the back, Democrats are likely to feel less pressure to send yet another round of direct payments to the Americans. Instead, Biden and his administration have already begun to turn to more long-term agenda items, including climate change and infrastructure. The White House wants that debut the first part of Biden’s $ 3 trillion Build Back Better package later this week and the second part at the end of April. The original bill will focus on infrastructure investments, while the second part will focus on health care and childcare.

“These packages will be designed to address long-term economic problems such as infrastructure, climate change and the skewed income and wealth distribution,” Mark Zandi, chief economist at Moody’s, recently said. told Assets. “I would not consider these packages as fiscal stimulus, designed to support the economy in the short term,” and therefore, “I do not think there will be a fourth round of stimulus checks,” he added.

Other economists agreed with Zandi, including Brett Ryan of Deutsche Bank. “I’m going to say that this is definitely going to be less about direct income support – which the latest $ 1.9 trillion plan somehow gets you through this transition period where the economy is reopening – and more about, as Biden said, build better back, “Ryan told Assets. He was even more forthright than Zandi, saying the $ 1,400 stimulus payment round “will be the last on that front. No more checks.”

Opposition may rise to more direct help

Zero Republicans are voting for the $ 1.9 trillion stimulus package, which included $ 1,400 stimulus checks. In addition, lawmakers on both sides of the political aisle lobbied the White House to be more focused in the disbursement of stimulus payments. While Biden refused to shake the size of the checks, he did indicate that specific income limits are open to negotiation. “There’s a legitimate reason for people to say, ‘Did you draw the lines the right way? Should it go to someone who earns over X number of dollars, or why?'” Biden said at a press conference. “I’m open to negotiating those things.”

In fact, the U.S. rescue plan retained the same amounts for stimulus control, but introduced a steep phasing out for eligibility. With three rounds of stimulus payments already out the door, moderate Democrats like Senator Joe Manchin (D-West Virginia), who has a huge influence in a divided Senate, could join Republicans in opposing a fourth payment.

The result

The increased availability of vaccines and the recent infusion of $ 1.9 trillion in stimulus funding point to a turning point for the U.S. economy. Lower unemployment demands and renewed optimism drive President Biden to focus on long-term strategic priorities such as infrastructure and healthcare. It may leave a fourth stimulus check as nothing more than speculation.

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