It has been a never-ending economic struggle for Americans starting when the pandemic first struck the nation in February 2020. People in the low and middle-income category were shaken out of the stability of a job and thrown into the deep end as the economic downturn of the pandemic meant that they were out of a job suddenly. And with all sectors affected in varying degrees, there was little chance of crossing over to another job. At this juncture, the stimulus checks proved to be a great help.
The federal administration realized quite early that this pandemic was unlike other emergencies, even those with steady jobs were for the first time facing starvation and homelessness. People were suddenly in danger of defaulting on their debts including credit card payments. People living in rented homes also risked homelessness for the first time.
People were resorting to relying on their credit cards even to meet basic expenses. Getting food on the table and not getting thrown out of their homes was a luxury under such desperate circumstances. And debts immediately began to pile up, mostly high-interest ones such as from credit cards.
The federal administration acted with alacrity and the first round of stimulus checks began reaching bank accounts and mailboxes around America. This $1,200 stimulus check was the first in a series of direct payments, enhancement and extension of existing ones, and multiple tax rebates.
The federal administration also moved to the rescue from the other end when it took up the causes of businesses, educational institutions, medical facilities, local and tribal bodies, and state governments. The funds were sent specifically for spending on the pandemic-related matter, though Republicans used the funds and spent them as they saw fit, including building prisons, as in Arizona.
The stimulus checks continued through 2021 as the first stimulus check under the CARES Act was followed by another $600 stimulus check in December of the same year followed by the $1.9 trillion support measures signed by new President Joe Biden in March 2021.
The American Rescue Plan Act was a comprehensive measure with a total budget of around $1.9 trillion. Other than the $1,400 stimulus check there was a host of other facilities for businesses, local government bodies, and organizations.
But that was the last of the stimulus check and the federal government put a stop to a fourth stimulus check for several reasons. One of the main reasons was the stiff opposition put up by the opposition Republicans. The fear of inflation also held back the Democratic ruling party from pressing ahead with the measures.
The Effect Of The Stimulus Checks On Record Inflation Figures
the record inflation figures have started a heated debate on the reason behind it. Economists have cited several reasons for the high inflation in the US, starting with the unprecedented situation created by the pandemic. but the Republicans have tried to spread the narrative that stimulus spending by the Biden administration was the main reason for the highest inflation figures since 1981.
Economists have cited multiple reasons for the record inflation that has brought back the pandemic-era despair and despondency as Americans struggle to match earnings with expenses that are increasing in double digits.
But with the midterm elections just weeks away, the Republicans have gone on a campaign overdrive and have blamed the whole mess on the third stimulus check. They have conveniently failed to talk about the other two which had a budget greater than the third stimulus check.
But economists have consistently maintained that the American Rescue Plan Act is a part of the present situation but it can never be held to be the only reason for the inflation.
The Democrats on the other hand have focused on the pandemic-linked supply chain issue and the war in Europe as the reason behind the record inflation. And the reason lies somewhere in between. And it is hard to disentangle all of the elements that led to such high figures.
Republicans Try To Pin Down The Third Stimulus Check For The High Inflation Rate
The latest figures indicate that inflation rose 9.1% year over year in June. And the Federal Reserve has hiked the interest rate to control further rise. The Republicans have given out their estimated calculation which reveals that an average family would be spending $5,000 more per year due to the high rate of inflation.
This is how much each family would have to spend on the same quantity of goods that they bought last year when prices were low. But it is an estimate that does not break down the amount by the inflation factors that have led to the price hike in the first place. And increased savings along with higher wages can cushion these costs for now. But the inflation rate has to come down in the long run.
The Benefits Of The Third Stimulus Check Under The Arpa Has Conveniently Been Ignored
Economists maintain that the $1,400 economic impact payment, also called the third stimulus check, had many benefits that saved the country from slipping into a recession. It led to expanded unemployment benefits and spending money on schools, hospitals, small businesses, and local and state governments.
Even conservative economists concede that the ARPA continued to only around 2.5% of the total inflation figures.
Secondly, the total budget of ARPA was $1.9 trillion against the cost of the two previous stimulus checks that were passed under Republican Trump. The bill for the combined first and second stimulus checks comes to around $3.1 trillion. And if a true measure of inflation has to be arrived at, then both the previous round of stimulus checks has also to be considered.
The ARPA came later on top of the trillions that have already gone out to people.
But the relief measures are deliberately being targeted for causing inflation. The pandemic fallout remains the core reason for the economic fallout. The supply chain breakdown was a result of the disruption in production and transportation as workers across sectors refused to return to work fearing the pandemic.
It was not until the vaccines began to be injected in large numbers that workers dared to venture out and join the regular workforce.