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Sunday, December 4, 2022

A Fourth Stimulus Check Is Not On The Federal Administration’s List: States Step In Amid Fear Of Further Inflation

It is obvious now after over 6 months since the last of the Child Tax Credit stimulus checks were dispatched that the federal administration has moved away from any more stimulus payments shortly. At least not along the lines of the three rounds of stimulus checks that went out in the two years starting April 2020.

The third round of relief has long been spent but that has not stopped the criticism surrounding it from one section of economists and the opposition Republicans. The stimulus checks, especially the third stimulus check, which was part of the American Rescue Plan Act signed by President Biden in March 2021, have borne the brunt of the attacks.

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The Republicans say that this economic impact payment was the major reason for the runaway inflation that has remained the highest since November 1981. The Democrats have hit back and say that major supply issues and the war in Europe are major to blame though they concede that the stimulus checks were partially to blame for it.

Stimulus Checks Only Option During The Long Period Of Economic Shutdown

But they say that the stimulus check was the only option to support citizens during the long months of the pandemic as the economy went into a tailspin, rendering millions jobless. As the economy went into a prolonged shutdown, the downturn rendered millions jobless overnight.

People who lived paycheck-to-paycheck suddenly found that they could no longer afford the basics of life including providing for the family, paying their utility bills, and home rent. They were in danger of starvation and homelessness. Credit bills remained unpaid and they were facing defaulting on their loans.

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In this instance, the stimulus checks were the only option to send immediate and direct aid to the suffering millions. The administration was also desperate that people should not move from their homes in search of work.

This would have hastened the spread of the pandemic at that initial stage, the most dangerous period when medical experts were totally in the dark about the treatment and management of the virus and the vaccine was still some way off.

The stimulus checks worked on multiple funds. While it provided the necessary support to individuals and families, the support afforded by the ARPA signed by President Biden also ensured that businesses, educational institutions, and medical facilities had the resources and funds necessary to continue to operate.

Funds sent to states and local bodies also ensured that the economic downturn could be managed at the local level. businesses managed to hold their own despite a complete halt in production in many sectors.

Workers were retained throughout the length of the pandemic and continued to draw their wages, though it was less than normal in many cases. But the federal support saved many businesses from shutting down totally and also ensured that workers continued to remain employed and draw their wages.

States Rely On Federal Funds And Budget Surplus To Support Residents

Close to 20 states have opted to issue payments of their own. The inflation relief payments are different from the federal stimulus check both in their scope and reach. It is apparent that the states cannot afford to spread out the funds in the way the federal administration could in the two years of the pandemic.

Most states have limited their support to the low-income sanctions and some have gone even further and restricted the payments to certain sections of society. This is to ensure that the funds reached only individuals and families who are desperate for aid.

With the economy opening up, the situation is much different from what it was immediately after the pandemic was declared, leading to the total shutdown of the economy.

But with the economy opening up, people are back at work. but the issue now is their inability to match income with expenses. Despite a generous increase in all-around income over the past two years, people continue to hurt badly as inflation has stayed way ahead of the increase in wages.

This has led to a situation where people are earning less when the inflation figures are factored into the calculation. Gasoline prices almost doubled in 2 years before stabilizing a bit in the past month.

Republican States Like Florida Too Have Stepped In With Stimulus Checks

California and Florida are two of the late entries into the list of states sending out stimulus checks. California has already sent two rounds earlier, but this is the first inflation relief payment. Governor Gavin Newsom had initially proposed a more modest gas card and transit card to ease the burden of the rapid increase in the price of gasoline and the cost of public transportation.

But he has changed tack and gone for a bigger stimulus check, made possible by the huge budget surplus of around $97 billion enjoyed by the states, largely due to the economic boom of the last two quarters of 2021.

California will be sending a $1,050 stimulus check to families who file jointly and earn below $150,000. They must declare at least one dependent to avail of the full amount of the stimulus check.

Even families earning as much as $500,000 jointly are entitled to a stimulus check though it would be less at around $600 for a family reporting at least one dependent.

Florida was a surprise addition to the list as Trump protégé Ron DeSantis has been vehemently opposed to the stimulus check. but the 2024 presidential hopeful has dipped into the Rescue Plan funds to send a $450 stimulus check to around 60,000 families.

To be eligible for the inflation relief stimulus check, residents of Florida must meet at least one of the following qualifications as of July 1, according to the statement released by the Dept. of Children and Families. They must either be a foster parent or a relative or non-relative caregiver. Families receiving temporary aid for needy families and participants in the guardianship assistance program are also eligible for the assistance.

Maine and New Mexico were among the first states to legislate on inflation relief funds and have already sent out stimulus checks to residents. Maine has one of the most generous of schemes and will be giving around 858,000 residents a payment of $1,700 for joint filers earning less than $100,000.

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