Is there a fourth stimulus check on the way?
The success the federal government has had in helping Americans endure the economic disarray caused by the COVID-19 pandemic has prompted at least one financial group – and probably millions of consumers – to ask: Why wouldn’t we do it again?
The Economic Security Project, a decisively liberal organization, says the $3,200 that the poorest Americans received from three stimulus checks over the last 12 months, raised their income by 20%. The 159 economists tied to the ESP report, went on to say the $1,400 stimulus payment from President Joe Biden’s American Rescue Plan, kept 11 million people out of poverty.
“Evidence from the last year shows stimulus checks to be the fastest and most impactful investments helping Americans get through this crisis, lifting more people out of poverty than any other single policy,” says the ESP report said.
Another organization, Data for Progress, say 65% of Americans are in favor of $2,000 a month payments until the pandemic is over.
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So, Will There be a Fourth Stimulus Check?
It doesn’t seem likely there will be a fourth stimulus check, but keep in mind that the politicians who vote on it, said many times there would never be a third stimulus check.
In fact, Democrats already are gathering support, though their goal appears to be for recurring payments to the lowest-income Americans. A Jan. 28 letter to Biden from 57 members of Congress, says most of the money from the first two checks was used by many people to pay immediate basic necessities.
“As we look at the coming year, another one-time round of checks would provide a temporary lifeline, but when that money runs out, families will once again struggle to pay for basic necessities. One more check is not enough during this public health and economic crisis,” the letter says.
On March 30, a group of 21 senators, led by Senate Finance Committee Chair Ron Wyden, D-Ore., and Budget Committee Chair Bernie Sanders, I-Vt., sent Biden a similar letter, pushing for recurring $2,000 payments.
Biden has not responded to calls from Congress for recurring cash payments to Americans, which began before the third stimulus check was approved.
But given all that, most economic experts say another check is not likely. The focus has now shifted to the battle over Biden’s Build Back Better plan, which faces a tough fight from Republicans, who were strongly against the third stimulus checks and don’t want to spend more money.
“Exactly when American workers are counting on an economic recovery, Democrats want to slap the economy with a massive set of tax increases,” Senate Republican Leader Mitch McConnell, R-KY, said on the Senate floor April 13.
Do Americans Need Another Round of Stimulus Checks?
Economists say that recurring payments to the poorest will have more of a lasting impact than direct cash payments to individuals.
A study published April 10 by the Tax Policy Center of the Urban Institute and Brookings Center said the American Rescue Plan, including the stimulus payments, helped lift millions of Americans out of poverty while boosting the economy. A fourth stimulus check could help even more struggling Americans the report said.
Another $1,400 would reduce overall poverty to between 6.4 and 6.6%, the report said. It would reduce poverty among Blacks from 10.5% to between 7.7 and 7.8%. The effect would be greatest on the U.S. Latin population, with a fourth stimulus check decreasing poverty from 13.3% to between 9 and 9.9%.
“The American Rescue Plan is expected to reduce poverty substantially. But even with the legislation, 28 million people are projected to be in poverty in 2021. If Congress wanted to further reduce poverty or provide additional resources more broadly, additional payments could accomplish that,” the study’s conclusion says.
But many argue that the recovering economy, boosted by the fact that, as of April 18, more than 50% of Americans had received at least one COVID-19 vaccine shot, will boost the economy without the payments.
As of April 15, more than 159 million third-round stimulus checks, a total of more than $376 billion, had been issued by the IRS. The checks were part of four-pronged attack that has reduced the projected 2021 poverty rate in the United States from 13.7% to 8.7%, according to an Urban Institute study. Those checks helped retail sales climb 9.8% in March, according to the U.S. Commerce Dept.
Child Stimulus Money Coming
Millions of parents also anxiously await the child portion of the stimulus, which will begin in July, according to IRS Commissioner Charles Rettig.
Families with an adjusted gross income of $75,000, or $150,000 for a married couple filing jointly, will get monthly payments through December, and then another lump-sum payment in April 2022, that will total an annual payout of $3,000 per child ages 6 to 17 and $3,600 per child under 6. The benefit is lower for those making between $75,000 and $95,000.
While Rettig had previously said the IRS is so backed up it’s unclear when those payments would start, he testified before the Senate Finance Committee April 13 that they will begin July 1. “The IRS will be working hard to deliver this program quickly and efficiently,” he said.
Maureen Milliken has been writing about finance, banking, investment, entrepreneurship, real estate and other related topics for more than 30 years. She started as the “Business Beat” columnist for the now-defunct Haverhill (Mass.) Gazette and currently is one of the hosts of the Mainebiz business-focused podcast, “The Day that Changed Everything” in addition to her daily writing. She also is is the author of three mystery novels and two nonfiction books.
- Maag, E.; Werner, K; (2021, March 30) How Additional Cash Payments Would Reduce Poverty. Retrieved from https://www.taxpolicycenter.org/publications/how-additional-cash-payments-would-reduce-poverty/full
- Romano, A. (2021, March 29) New Yahoo/YouGov Poll: Stimulus Checks and Covid Optimism Raise Biden’s Approval Rating to Highest Level Yet. Retrieved from https://www.yahoo.com/entertainment/new-yahoo-news-you-gov-poll-stimulus-checks-and-covid-optimism-raise-bidens-approval-rating-to-highest-level-yet-090009749.html
- N.A. (2021, April) The Covid Recession And The Year Of Checks. Retrieved from https://www.economicsecurityproject.org/wp-content/uploads/2021/04/The-COVID-Recession-and-the-Year-of-Checks.pdf
- N.A. (2021, January 4) 65 Percent of Amercans Support Monthly $2,000 Coronavirus Relief Payments. Retrieved from https://www.dataforprogress.org/blog/2021/1/04/65-percent-support-monthly-2000-checks
- Sraders, A; Lambert, L. (2021, March 26) A Fourth Stimulus Check? Don’t County on it Retrieved from https://fortune.com/2021/03/26/fourth-stimulus-check-covid-relief-biden-congress-direct-payments/