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Friday, June 18, 2021

Concerted Efforts Towards A 4th Stimulus Check: What Is Fueling The Strong Demand?

Many Democratic lawmakers and common citizens have put forward demands for another round of stimulus checks, and they want it to be recurring this time around. They have made further demands for a recurring mode of payments to continue till the economic downturn triggered by the pandemic ends.

The latest round of payments as part of the Economic Impact Payments should put another million checks in the hands of Americans. This week’s payments will push up to 165 million the stimulus checks sent since the American Rescue Act was passed by President Biden on March 11, 2021. 

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The three rounds of stimulus checks starting March 2020 have given around $3,200 per American. It started with the CARES Act that was worth $1,200 for each individual. They came to an additional relief measure in December that was worth $600 per individual.

The American Rescue Plan passed under President Biden was the biggest, at $1,400. But Americans continue to be under severe financial distress.

Getting Food On The Table Still Reliant On The Stimulus Check

Around 40% of Americans say that their income continues to remain way below pre-pandemic levels, a survey by financial services major TransUnion has revealed. Several industries continue to be more affected than others. The hospitality and food services industries continue to suffer from after-effects.

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A poll by the Kaiser Family Foundation has revealed that a third of Americans are struggling to meet basic expenses.

The $1,400 stimulus check is not expected to last more than two to three months for most Americans. The job market continues to be grim and the turnaround has been sluggish till now.

A Petition For A Fourth Stimulus Check

An online campaign started by Stephanie Bonin asking the lawmakers to approve a recurring payment of $2,000 for adults and $1,000 for children has collected more than 2.2 million. Plans are to collect 3 million signatures.

Bonin said that just another one-time check will not solve the problem. The effects have been too severe. Only a monthly check will bring some relief from the immediate problem. People should not have to wonder where their next meal will come from.

Many Democratic Lawmakers Get Behind The Idea

Stimulus check
Stimulus check

It began with 21 senators addressing a letter to President Biden on the last day of March. It made similar demands for a recurring stimulus check. They have said that the stimulus checks worth up to $1,400 have already run out for most.

The senators wrote that 60% of the people have said that the third stimulus check won’t last more than 3 months.

The States Get Into The Act, On Their Own

Millions of Californians may get a fourth stimulus check in an initiative helmed by Governors Gavin Newsom. The plan is to send a check of $600 to residents as part of a plan he launched this week. It will help around 65% of Californians.

The Senators have not gone into the specifics of the payment in their letter. An unconnected effort had earlier called for putting $2,000 per month till the effects of the pandemic end. That had led to the American Rescue Plan, which put a one-time check of up to $1,400 in the hands of Americans.

A Break Up Of The Expenditure

Most funds received in the three stimulus checks have mostly gone to service debts. A few have managed to save, as per a fresh analysis by the Federal Reserve Bank of New York. It indicates that individuals are more concerned about their crippling debts and have made every effort to set aside some for a rainy day.

But that was after the people had spent on food and other basics. Money has also been expended on housing, shown by a research poll by Bloomberg /Morning Consultant.

The priority is on immediate financial needs, feel 7 out of 10 Americans. Though that is a bit down from the 8 out of 10 who felt that the same in March 2020, as the world went into lockdown. But more people felt that regular support is still needed to tide over the crisis. Over a third feel that the third stimulus check would not last them more than a month.

Getting Through Direct Aid Still The Top Priority

Stimulus Check

Over 150 leading economists have argued for recurring and direct stimulus support. In a letter signed last year, the economists, including Jason Furman, a former economist in the Obama administration, said this direct support to Americans should last till the economy mends.

There have been signs of a turnaround with an increase in hiring in April. But millions of Americans are still in the grips of a near poverty-like state. They have also been unable to tap into the federal aid programs, according to Greg Nasif, the political director at Humanity Forward. This non-profit is pushing for regular stimulus checks. Only 40% of jobless Americans get access to unemployment aid, going by a study initiated by Eliza Forsythe, an economist.

Various issues dissuade people from applying for unemployment assistance. Many are ignorant that they were entitled to receive it. Others are put off by the long wait and other causes.

Many Americans continue to be unable to meet regular expenses. And many are ignorant of the benefits that they should have access to.

The Chances Of A Fourth Stimulus Check

With the administration preoccupied with the infrastructure plans, the immediate chances of a fourth stimulus check look bleak indeed. The infrastructure plan, as big as the American Rescue Plan in terms of the outlay, would go a long way in revamping the American economy. It would pour much-needed funds to develop roads, airports, and telecom infrastructure. There are also outlays for schools and other sectors in immediate needs.

The funding would come from raising the corporate taxes to 28% from the present 21%. This is the most contentious part with the Republicans strongly against any raise. Even some Democratic lawmakers are sitting on the fence on this issue.

Only a third of Americans believe that the third stimulus check has helped them a lot. Most feel that there is a lot more support needed to tide over the crisis. And the support has to be more than a one-off check. More recurrent and long-term support can only help them out of the crisis.

Some Relief Around The Corner

Families having children are in for some extra benefit starting July 2021. The Child Tax Credit is set to start and will put up to $3,600 per child in the bank for Americans. Children below 6 will receive the maximum benefits of $300 every month through December 2021. Children between 6 and 17 will contribute $250 each. This is half the total amount. The rest will come in during the tax season next year.

There is also the proposed American Families Plan envisaged by President Biden. One of the proposals under this plan is to continue Child Tax Credit payments till 2025. This additional tax break of four years will bring many families with children out of the grips of poverty.

Faint Signs Of A Turnaround

The accelerated vaccination programs will lead to a reopening of the economy. Jamie Dimon, CEO of JPMorgan Chase has predicted an economic boon lasting 2023.

A host of factors, including stimulus savings, strong deficit spending, and the euphoria fuelled by the success of the vaccine will lead to a boon, he feels. That should diminish the need for continuous and direct stimulus support as more workers get back to work.

Oxford Economics has predicted that the unemployment percentage could come down to 4.3. But the road to recovery is long as more than 4 million workers remain jobless, noted leading economists Gregory Daco and Oren Klachkin of Oxford Economics. But it should be a smoother path ahead with a remarkable run predicted in the labor market. More reopening, fiscal stimulus, and more coverage under vaccination programs will fuel a surge in hiring across sectors they feel.

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