Will there be a fourth stimulus check? Here’s the case against it – Community News
Stimulus Check

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

The payout of $1,400 stimulus checks included in the $1.9 trillion US bailout is well underway. The Internal Revenue Service has made more than 127 million payments as of March 11, 2020, although 30 million Social Security beneficiaries are still waiting for their money. With the pandemic-ravaged economy still not fully recovered, there has been speculation about whether Americans will receive another stimulus check. The chances of a fourth stimulus check are still very unknown and will depend on many factors. Here’s the bear case for why a fourth stimulus check is unlikely to happen.

Coronavirus crisis reaches inflection point

Three coronavirus vaccines have now been approved in the US and production is increasing rapidly. President Biden announced last week that he is doubling the target originally set by his administration and that he now aims to have the US administer 200 million vaccinations by May 1, 2021. Vaccinating a sufficient proportion of the population is critical to helping the country return to a sense of normalcy.

In addition, scaling the Pfizer rollout

, Moderna and Johnson & Johnson

vaccines are seen by economists as the impetus for reopening large parts of the economy. Economists point to strong economic growth in line with Biden’s vaccination success and Democrats’ approval of the $1.9 trillion stimulus package. In mid-March, Goldman Sachs economists raised their forecast for GDP growth to a whopping eight percent in 2021. axios noted, “not only would an 8% annual growth rate signal an astonishing reversal of the coronavirus pandemic,” but it would also “mark the largest economic expansion for the US in generations.”

While Goldman’s forecast is one of the most optimistic, Biden and his staff have also indicated an inflection point. Treasury Secretary Janet Yellen has argued that the US could achieve full employment by 2022, recognizing the US bailout plan as helping build a bridge to help Americans “get the other side of this pandemic with the foundations of their lives.” intact”. Federal Reserve Chairman Jerome Powell echoed Yellen’s remarks, saying that “the recovery has progressed faster than widely expected and appears to be strengthening” as a result of unprecedented fiscal and monetary stimulus from Congress and the Fed.

US $1.9 bailout already showing impact

The recently passed stimulus package brought nearly two trillion dollars into the economy. Biden praised the Covid relief bill for clarifying economic outlook. “Since we passed the US bailout plan, we have begun to see new signs of hope in our economy,” he said at a news conference.

Data collected by Bank of America shows that spending on credit and debit cards is up 23 percent over the past two years and, unsurprisingly, 45 percent year over year. Sectors that saw the biggest gains after the third round of stimulus began to hit bank accounts include furniture, online electronics and clothing. In addition, the expenditure of those who received stimulus assistance increased by 49 percent from two years earlier, compared to 9.7 percent for those who received no aid. Simply put, the stimulus package works.

MORE FROM FORBES$1,400 Stimulus Checks Already Work Like Credit, Debit Expenses Up 45%, Says BofA

Biden also pointed to renewed signs of optimism in the job market. 684,000 Americans filed new claims for state unemployment benefits in mid-March ForbesSarah Hansen noted, “down 97,000 from the previous week and the lowest level in more than a year.” “We learned this morning that the number of people applying for weekly unemployment insurance has fallen by nearly 100,000,” Biden noted. “So there are still too many Americans out of work, too many families in pain, and we still have a lot of work to do, but I can tell the American people that there is help and there is hope,” Biden added. . at his latest press conference.

Let’s be clear, this is great news and every American should be cheering for a full and speedy recovery. However, a faster recovery would likely take all the wind out of a fourth stimulus control sail.

Deviating from stimulus controls and towards other democratic priorities

With economic momentum at their backs, Democrats will likely feel less pressure to pass another round of direct payments to Americans. Instead, Biden and his administration have already begun to focus on longer-term agenda items, including climate change and infrastructure. The White House will debut the first part of Biden’s $3 trillion Build Back Better package later this week and the second part in late April. The first bill will focus on infrastructure investment, while the second 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. Fortune. “I wouldn’t view these packages as fiscal stimulus, intended to support the economy in the near term”, and therefore: “I don’t think there will be a fourth round of stimulus,” he added.

Other economists agreed with Zandi, including Brett Ryan of Deutsche Bank. “I’d say this is definitely less about direct income support — which is what the latest $1.9 trillion plan will get you through this transition period, when the economy reopens — and more about, as Biden said, building it back up better,” he says. Ryan. told Fortune. He was even more blunt than Zandi saying the round of $1,400 in stimulus payments “will be the last on that front. No more checks.”

Opposition may rise for more direct aid

Zero Republicans vote for the $1.9 trillion stimulus package, including $1,400 stimulus checks. In addition, lawmakers on both sides of the political aisle lobbied the White House to be more focused on stimulus disbursements. While Biden declined to budge on the size of the checks, he did indicate that specific income thresholds are negotiable. “There’s a legitimate reason for people to say, ‘Did you draw the lines just right? Should it go to someone who makes more than X dollars or why?” Biden said at a news conference. “I’m open to negotiating those things.”

The US bailout did indeed keep the same amounts for stimulus checks, but introduced a steep phase-out to eligibility for payments. With three rounds of stimulus payments already out the door, moderate Democrats like Senator Joe Manchin (D-West Virginia), who has 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 indicate a turning point for the US economy. Lower unemployment claims and renewed optimism are driving President Biden to focus on longer-term strategic priorities such as infrastructure and health care. That can leave a fourth stimulus check as nothing but speculation.