The IRS made 156 million payments in the third round of direct stimulus assistance, with 25 million people lining up this week to receive the $ 1,400 checks. But some lawmakers are pushing for a fourth round of stimulus assistance that would effectively send recurring payments until the pandemic ends.
So far, the federal response to the economic crisis has been triggered by the corona pandemic provided $ 3,200 to each eligible adult: $ 1,200 through the Coronavirus Aid Relief and Economic Security Act in March 2020; $ 600 in an emergency measure for December; and $ 1,400 under the US bailout plan signed by President Joe Biden in March.
Despite that financial aid, millions of Americans remain in financial distress, with about 4 in 10 people saying their income remains below the pre-pandemic level, according to a recent survey by financial services provider TransUnion. Unemployment remains high, especially in low-wage industries such as food services and hospitality, where demand continues to lag behind rising coronavirus rates.
In short, for many people, the final round of $ 1,400 checks won’t last long – a problem that arises ghosts of many Americans who continue to struggle with unemployment and a weak labor market.
Twenty-one senators – all Democrats – signed a letter to Mr. Biden on March 30 in support of recurring stimulus payments, pointing out that the $ 1,400 payment distributed by the IRS will not take the people by surprise for long.
“Nearly 6 in 10 people say the $ 1,400 payments that will be included in the bailout package will take less than three months,” the senators wrote in the letter.
While the letter does not specify the size of the payments senators are seeking, a separate effort from Democratic lawmakers in January pushed for $ 2,000 monthly checks until the pandemic ends. Instead, the American Rescue Plan authorized $ 1,400 for each eligible adult and dependent.
Still alive from paycheck to paycheck
Some top economists have called for more immediate aid to Americans. More than 150 economists, including former Obama administration economist Jason Furman, signed a letter last year calling for “recurring direct stimulus payments, which will continue until the economy recovers.”
Although the economy is improving, including one increase in the number of recruitments last month, millions of people continue to suffer from lower incomes and have been unable to tap into government programs, said Greg Nasif, political director of Humanity Forward, a nonprofit pushing for recurring stimulus payments. According to a March survey by economist Eliza Forsythe, only 4 in 10 unemployed workers actually received unemployment benefits.
Many people have never applied for unemployment benefits because they thought they were ineligible, while others may have given up because of long waits and other problems.
“You will see reports of how the economy is starting to grow, but there are a lot of Americans who have to pay off their wages, and for many of them the government assistance programs have not been able to help,” Nasif said.
How likely is a fourth stimulus check?
Don’t hold your breath, Wall Street analysts said. “I think it’s unlikely at this point,” Raymond James analyst Ed Mills told CNBC. One reason is that the Biden government is focused on promoting her $ 2 trillion infrastructure plan, which would reshape the economy by rebuilding outdated schools, roads and airports, and by investing in projects ranging from affordable housing to broadband.
The bill, which the White House says would be funded by raising the corporate tax rate from 21% to 28%, may be “ more difficult to pass ” than the bill that brought the $ 1,400 checks to most Americans because of opposition from both Republicans and some Democrats, Brian Gardner, Washington chief strategist, noted last month.
Many households will receive some form of additional incentive aid this summer, when families with children under 18 receive direct payments for six months through the revised child tax credit. From July to December, families with children under 6 receive $ 300 per month, and families with children between 6 and 17 receive $ 250 per month per child.
“A lot of people will be surprised when that first check comes in,” said Nasif. “That will clearly increase the popularity of the checks.”
Vaccine-fed rebound
At the same time, the economy is expected to recover this year thanks to rising COVID-19 vaccination rates and the reopening of states. Jamie Dimon, CEO of JPMorgan Chase, predicted an economic boom in his annual letter to shareholders this week could last until 2023
[W]he excess savings, new stimulus measures, massive deficit spending, more [quantitative easing by the Federal Reserve], a new potential infrastructure law, a successful vaccine and euphoria surrounding the end of the pandemic, the US economy is likely to boom. This boom could easily continue into 2023 as all spending could continue well into 2023, ” Dimon wrote in the letter released Wednesday.
That could lessen the reason the government is providing more direct aid, especially as the unemployment rate recovers and more workers are left on the sidelines.
According to Oxford Economics, the unemployment rate could fall to 4.3% by the end of the year. Still, the road to recovery remains “long,” as there are still 4 million workers in the labor force, Oxford Economics economists Oren Klachkin and Gregory Daco noted in a research note.
“Looking ahead, the job market is poised for an impressive streak, as the expansion of vaccine distribution, more reopenings and fiscal stimulus drives a rise in the workforce,” they predict.