(TBEN DFW) – Many are already asking for a fourth stimulus check, even as the third round of economic relief is still being distributed to eligible Americans. Approximately 156 million payments of up to $ 1,400 per person were made in the current round. That’s well over three-quarters of the $ 422 billion allocated in the $ 1.9 trillion American Rescue Plan Act. Paper checks and EIP cards continue to arrive in the mail every day.
These relief payments are part of a larger effort to cushion the economic impact of COVID on households and support the economy as it recovers from the pandemic. The stimulus package also extends unemployment benefits, strengthens the child tax credit and much more. The recent round of stimulus checks follows payments of $ 1,200 at the start of the pandemic and payments of $ 600 in early January.
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But the economy is far from where it was at the start of last year. Financial insecurity is rife, with 40 percent of survey respondents saying their current income is less than their pre-pandemic income. About 744,000 people initially applied for unemployment insurance last week, up slightly from the week before. (A typical week before the pandemic saw about 250,000 new jobless claims.) Another 152,000 requested Pandemic Unemployment Assistance, which supports the self-employed and the self-employed. But many unemployed Americans did not receive unemployment insurance and other government benefits, due to long waits, perceived ineligibility and other issues. Hiring (and re-hiring) in low-wage industries like restaurants and hotels is proceeding slowly, while these industries are declining.
The latest round of stimulus checks will help Americans pay their bills and put food on the table. Yet, they remain a short term solution for a long term problem. The money will likely be used up long before many are able to earn a living again. And some politicians believe that this latest effort, in addition to previous efforts, will still not be enough.
Who takes care of a fourth stimulation check?
Last week, a group of Democratic senators, including Ron Wyden of Oregon, Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont, sent a letter to President Joe Biden requesting “recurring direct payments and automatic extensions of insurance. -unemployment linked to economic conditions ”.
As the senators explained in their letter, “This crisis is far from over and families deserve to be assured that they can put food on the table and keep a roof over their heads.” Families should not be at the mercy of ever-changing legislative timetables and ad hoc solutions. “
An earlier letter to President Biden and Vice President Kamala Harris of 53 representatives, led by Ilhan Omar of Minnesota, staked out a similar position. “Recurring direct payments until the economy recovers will help ensure that people can meet their basic needs, provide racially just solutions, and shorten the duration of the recession.”
A majority of Americans are also in favor of recurring relief payments. According to a January poll by Data For Progress, nearly two-thirds of all voters support monthly payments of $ 2,000 to all Americans for the duration of the pandemic. Supporters include a majority of Independents and Republicans. Many economists are also on board. A 2020 open letter from experts in the field argued that “direct cash payments are an essential tool that will enhance economic security, boost consumer spending, accelerate recovery and promote certainty at all levels of government and economy – as long as necessary. “
Why a fourth pacing check is unlikely
All of this expressed support keeps the possibility of another round of stimulus checks – or recurring stimulus checks – alive. This does not make them probable, however. And there are a number of reasons for this.
Vaccinations are progressing well, with three different options available to the public. The president recently said that 90% of American adults would be eligible by mid-April. In fact, putting the needles up takes longer, although most states have lowered the age of eligibility to include most adults. The administration is on track to meet its revised target of delivering 200 million doses in its first 100 days. Americans have received more than 171 million doses, with 32.6% of the population having received at least one dose and 19% fully vaccinated. The number of vaccines continues to increase at a rate of approximately three million doses per day.
With vaccinations steadily increasing, the economy is also showing signs of recovery. The four-week average of new jobless claims is the lowest in more than a year. Consumer confidence continues to climb, reaching its highest level since the start of the pandemic. Almost 41% of consumers also see business conditions improving over the next six months, up more than 10% from the previous month.
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Consumer spending drives two-thirds of the country’s economy. And the third stimulus test increased people’s purchasing power and probably made them more optimistic about the future. The current vaccinations, which will ultimately reopen hard-hit sectors of the economy in a safe way, will certainly help. All of this additional spending, along with the release of pent-up demand, is expected to lead to more jobs as companies hire to meet consumer needs. As the economy opens up, a fourth round of stimulus checks becomes less necessary.
The American Rescue Plan Act was passed according to party principles. Republicans weren’t interested in spending nearly $ 1.9 trillion, although some supported the third round of stimulus checks. They called the package a “blue state bailout”, saying it went well beyond the reach of COVID and would increase the deficit, leading to inflation.
Democrats used a process called reconciliation to pass the bill in the Senate without Republican backing. This allows budget matters to proceed by simple majority rather than the 60 filibuster votes. In general, only one reconciliation bill can be adopted per fiscal year. But a recent decision by the Senate parliamentarian, who interprets the rules of the legislature, has paved the way for additional spending legislation. Without reconciliation, any bill would need at least 10 Republican votes, plus every Democratic vote.
But the Biden administration has other priorities. One of its most important is the adoption of the recently introduced infrastructure plan, which also faces Republican opposition. The US jobs plan was unveiled last week. Valued at $ 2 trillion, it aims to rebuild roads, repair bridges, remove lead pipes, modernize the country’s electricity grid and much more. It does not include another stimulus check. Republicans oppose the plan, in part, for its reliance on higher corporate taxes.
The US family plan is expected to be announced in a few weeks. What it will contain has not been revealed, although it could cost an additional $ 1 to $ 2 trillion. According to the administration, the financing would come from the increase in taxes on wealthy individuals. Republicans will likely oppose these tax increases as well.
Many negotiations and a possible reduction seem inevitable before either plan is put to a vote. And Biden will face an uphill battle attracting 10 Republican votes in the Senate in either case. As a result, Democrats may well anticipate the need to use reconciliation again to push through signature legislation. The chances that they will also use it to pass a fourth stimulation test are low.
What other help is coming from?
Although a fourth stimulus check is unlikely, more direct payments to Americans have already been enacted. The American Rescue Plan Act includes an enhanced child tax credit and extended unemployment benefits.
Under the revised Child Tax Credit, the Internal Revenue Service (IRS) will pay $ 3,600 per year for each child up to age five and $ 3,000 per year for each child between the ages of six and 17. July to December 2021, with the remainder being issued when the recipient files their 2021 taxes. (Many expect “periodic” to actually mean monthly or possibly quarterly, but the IRS has yet to determine that.) benefit will not depend on the recipient’s current tax burden. In other words, eligible families will receive the full amount, regardless of how much – or little – they owe in taxes. Payments will begin to disappear beyond an annual income of $ 75,000 for individuals and $ 150,000 for married couples. The most generous credit will only apply for 2021, although Democrats will likely look to extend it.
The American Rescue Plan Act also extended the weekly federal unemployment insurance premium by $ 300 until Labor Day. Recipients with a household income of less than $ 150,000 will not have to pay tax on the first $ 10,200 of unemployment benefits. People eligible for Emergency Pandemic Unemployment Compensation (PEUC), which covers people who have exhausted their state benefits, and Unemployment Assistance in the Event of a Pandemic (PUA), which covers freelancers and on-demand workers, will also see their benefits extended until early September. PEUC runs out after 53 weeks. PUA expires after 79 weeks.
There are some elements in the far-reaching US employment plan that are not traditionally associated with infrastructure. These range from $ 213 billion for affordable housing to $ 100 billion for workforce development among underserved groups. The plan also aims to increase the salaries of caregivers caring for the elderly and disabled. Each of these efforts would mean more money for those affected. On a larger scale, the plan also has the potential to create many jobs across a large part of the economy. The extra money in people’s pockets is still speculative, of course. The plan has yet to find its way through Congress.
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Originally published April 5 at 4:45 p.m. ET.