Residents continue to struggle for necessities even as the federal government stays mired in midterm politics that has made inflation a political plank for the Republicans to bash the Democrats. Amidst the political fight in Washington, states move in with stimulus checks for residents that are expected to help them at least get some relief from the record inflation.
The record rate of inflation did not come as a bolt from the blue and was a long time coming, creeping in for more than a year now. The first startling signs came in March 2021 when it began to increase by one percentage point every month. It then took off in the last quarter and ended the year at a little over 7%.
It continued to inch upwards and reached record levels in the second quarter of 2022, crossing the 8.5% mark by the end of the first quarter and ending at 9.1% in June, the highest since November 1981. Prices of gasoline almost doubled against the rate two years ago and food, utilities, and rent rates also showed double-digit growths.
The end of federal stimulus checks and other support measures in December 2021 spelled further trouble for low and medium-income individuals and families, many of whom continued to depend on these funds to support their families even as the economy was slow to recover in many sectors despite a brief overall boom.
States Step In With Stimulus Checks On Their Own From ARPA Funds And Budget Surplus
Several states realized that residents were in danger of facing a situation similar to what they faced when the pandemic was first declared officially in February 2021. Only the promptness of the federal administration saved millions of people from facing the prospect of starving, defaulting on their loans, and failing to pay their utility bills and home rent.
The first of the stimulus checks came within a month and people received $1,200 each, saving both the people and the economy from totally collapsing.
There was support for other sections too, with businesses, an organization like hospitals and educational institutions, and local and state governments receiving generous support that helped them help out residents at the local level.
The support to businesses kept businesses afloat when they were on the verge of shutting down. This ensured that the rate of unemployment stayed low, it kept the economy on an even keel, and the recovery was quicker when the economy finally opened up a few months later.
The stimulus checks and other measures ensured that the recession that followed the pandemic was the shortest on record, lasting just three months and the recovery was quicker. The year 2021 ended on a bright note as the last two quarters witnessed a mini-economic boom. This helped states to shore up their finances and built up healthy budget reserves.
These budget surplus funds have come in handy to support residents with stimulus checks even as federal funds have dried up on all fronts, including the extended unemployment checks and the expanded Child Tax Credit stimulus checks.
The child tax credits would have lasted through 2025 if the Republicans had not sabotaged a support measure that pulled millions of children out of poverty. President Biden personally tried to intervene to sort it out but the Republicans and Democratic Senators Joe Manchin and Kyrsten Sinema remained adamant. With the Senate equally split, their refusal ensured that the extension of the Child Tax Credit stimulus checks fell through.
As over a quarter of American households struggled to pay their household expenses, the state stimulus checks are expected to bring temporary succor. But it is some way off before the economy limps back to normal. And we could be faced with a recession before things begin to normalize as the Federal Reserve is forced to increase interest rates to cool down the overheated economy.
Around 16 states have implemented their stimulus programs and have begun sending out stimulus checks or an advanced stage of negotiation to get them through to residents as quickly as possible.
The latest to step in to help their residents include California and Florida. Other states that have come forward include Colorado, Delaware, Florida, Hawaii, Georgia, Idaho, Illinois, Indiana, Maine, Massachusetts, New Jersey, New Mexico, Oregon, South Carolina, and Virginia.
Colorado Comes Up With A Generous Stimulus Check For Residents
One of the truly generous states is Colorado. The Centennial State will be sending as much as $1,500 to families filing jointly and $750 to individual filers. The amount will go out to virtually all resident taxpayers in an initiative that has been dubbed the Colorado Cash Back program.
Senior state official Sarah Barnes, a director for Children’s Campaign, a non-partisan advocacy group and the head of its economic prosperity initiative for families, said that most families in the state continue to suffer from the economic downturn of the pandemic. This has been aggravated by the rising cost of living as inflation touches 4 decade-high levels. She said that sending payments directly to families was the most impactful way to support them.
The Cash Back program initiated by Colorado is already benefitting residents as stimulus checks have begun to hit mailboxes. The cashback payments that are being sent to residents were made possible thanks to an amendment to Colorado’s Taxpayer’s Bill of Rights (TABOR). It requires the state government to return revenues to residents if it crosses a stipulated mark.
Normally such revenues would go out as tax rebates against state income tax returns. It is also sent as a sales tax refund or as a reimbursement to counties for senior homesteads. But an exception has been made just for the current year as legislators have approved direct payments to taxpayers as a way out to refund such revenues that are deemed excessive.
This program will now provide immediate support to residents through the stimulus check that will be sent on an emergency basis this summer. If it would have instead gone at the normal pace, that would have pushed the payments to the spring of 2023.
The original refunds would have been $400 for taxpayers. But a booming economy the TABOR payments this year have been pushed up to the $1,500 mark for families filing jointly and half that for individuals.