A group of more than 125 economists organized by the Economic Security Project is calling for lawmakers to authorize another round of direct payments to Americans to help tide the economy over through the winter months.
The economists said stimulus checks have been an “essential tool” that helped keep millions out of poverty in the spring, especially those who did not qualify for unemployment benefits.
The economists noted that the first round checks boosted spending the most among low-income people, and suggested a second round, “especially if targeted to the bottom half of households,” would help support vulnerable low-income households and households of color.
Research from the University of Chicago in August said that the first round of direct payments was a “blunt instrument” and posited that more targeted payments could have been a more effective policy intervention.
Any additional checks should be accompanied by other aid measures including enhanced federal unemployment benefits (two key programs that expire in December will leave 12 million without benefits), state and local aid, and funding for nutrition and child care programs, the economists said.
Experts including Federal Reserve Chairman Jerome Powell have argued that despite positive vaccine news from Pfizer and Moderna, additional fiscal stimulus is necessary to keep the economy afloat through the winter months, especially as the coronavirus continues to surge to record levels in the United States.
“We urge policymakers to use all the tools at their disposal to revitalize the economy, including direct cash payments,” the economists wrote, “which are one of the quickest, most equitable, and most effective ways to get families and the economy back on track.”
14 million. That’s how many people could be kept out of poverty by two more rounds of stimulus checks, according to Urban Institute research cited by the economists’ letter.
Lawmakers have for months been unable to agree on a comprehensive federal coronavirus relief bill to follow the CARES Act, which authorized the IRS to send direct payments of $1,200 to eligible individuals making less than $75,000 per year (and $2,400 to eligible couples filing jointly with income of less than $150,000 per year), plus $500 payments for eligible dependent children aged 17 and under. Those payments phased out for income up to $99,000 per year for individuals and $198,000 per year for couples. Democrats have included a second round of stimulus checks in their proposals over the last six months, and President-elect Joe Biden has also signaled his support for the policy. Senate Republicans have twice attempted to pass narrow relief measures in the Senate that did not include money for a second round of direct payments.
What To Watch For
House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.) have urged Senate Majority Leader Mitch McConnell (R-Ky.) to return to the negotiating table to hash out the next aid bill after talks with the White House fell apart this fall. But with Congress already out of session for the Thanksgiving holiday and a looming government shutdown deadline on December 11 with no federal budget agreement in sight, there’s no guarantee lawmakers will be able to reach a stimulus agreement before the end of the year.
Source: Forbes – Money