Why is a fourth stimulus check being pushed

According to the Internal Revenue Service, more than 169 million payments have been made in connection with the third wave of direct stimulus cash, with more than 2 million taxpayers receiving $1,400 checks in July. Some senators, on the other hand, are advocating for a fourth round of stimulus cash, which would essentially serve as a series of recurring payments until the pandemic is over.

Up to this point, the government’s response to the economic crisis caused by the coronavirus pandemic has paid out $3,200 to eligible adults: $1,200 under the Coronavirus Aid Relief and Economic Security Act, which was passed in March 2020; $600 under a December relief measure; and $1,400 under the American Rescue Plan, which was signed into law by President Joe Biden in March of this year.

The fact is that millions of Americans are still in financial hardship despite the support they have received, and the expansion of the Delta variation is creating fresh economic headwinds. According to new Census survey data collected during the last two weeks of August, about one-quarter of Americans struggled to pay their household bills in the previous week, according to the survey.

The unemployment rate currently stands at 5.2 percent, which is still higher than the 3.5 percent recorded before to the pandemic. Even if businesses are expanding, there are still approximately 5.3 million fewer individuals on payrolls today than there were before to the epidemic. Economists are becoming increasingly concerned about the spread of the Delta variety, with Oxford Economics recently lowering its prediction for global economic growth in 2021 to 5.9 percent from 6.4 percent.

Ben May, director of global macro research at Oxford Economics, noted in the study that “uncertainty and hesitation may eventually contribute to a more slow-burning recovery from here than our baseline predicts.”

At the same time, 9.1 million people lost their enhanced unemployment benefits on Labor Day, as the federal payments were no longer available. This will result in the elimination of around $5 billion in weekly benefits that had been flowing to unemployed employees – help that had assisted those workers in meeting their basic needs such as food, rent, and other essentials.

In other words, for many people, the most recent batch of $1.400 checks has long since passed them by, even as other forms of fiscal stimulus are being phased off, a topic that is on the concerns of many Americans who are still struggling with joblessness and a sluggish labor market. As a result, more than 2.8 million people have signed a Change.org petition that was established last year and called on lawmakers to pass legislation that would require recurring $2,000 monthly payments from individuals.

Some members of Congress have expressed interest in the notion. Twenty-one senators, all Democrats, sent a letter to Vice President Joe Biden on March 30 in support of periodic stimulus payments, pointing out that the $1,400 payment being given by the Internal Revenue Service will not be sufficient to tide individuals over for an extended period of time.

The senators noted in the letter that “almost 6 in 10 people believe that the $1,400 payments intended to be included in the rescue package will last them fewer than three months.”

Some states, on the other hand, are developing their own kind of stimulus checks. With the help of Governor Gavin Newsom’s new “Golden State Stimulus” program, almost two-thirds of California residents are likely to qualify for a cash payout. Low- and middle-income residents who have submitted their 2020 tax forms will get a total of $600 as a result of this endeavor. In response to the epidemic, Florida and parts of Texas have authorized bonuses for teachers to assist offset the effects of the disease.

Even while the senators’ letter does not specify how much money they are asking, a previous effort by Democratic lawmakers in January called for $2,000 monthly payouts until the pandemic is brought to a close. As a substitute, the American Rescue Plan provided $1,400 for each qualifying adult and dependant under the age of 18.

Deposits for the Child Tax Credit must be made by July 15.

On July 15, the Internal Revenue Service (IRS) transferred the first of six monthly cash payments into the bank accounts of parents who qualify for the Child Tax Credit, providing additional stimulus assistance to some families (CTC). According to an examination of Census data conducted by the left-leaning advocacy group Economic Security Project, the average amount received by families in their first CTC payment was $423 per family.

Families who qualify will get up to $1,800 in cash from July through December, with the money being disbursed in equal monthly increments over the course of six months from July to December. The assistance is being provided as a result of the expanded CTC, which is a component of President Joe Biden’s American Rescue Plan.

Families who qualify will get $300 per month for each kid under the age of six and $250 per month for each child between the ages of six and seventeen. Several families who talked with CBS MoneyWatch said they planned to use the extra money to pay for child care, back-to-school supplies, and other necessities in the coming months.

If Vice President Biden’s American Families Plan is implemented, families may be able to claim a larger tax relief in the following years. According to that idea, the growth of the Child Tax Credit would continue through 2025, providing families with an additional four years of increased tax relief for children.

Having emergency cash and putting money aside

According to a recent analysis by the Federal Reserve Bank of New York, persons who have received the three rounds of stimulus payments have stated that they have used the majority of the funds to pay down debt or put the money into savings thus far. That could imply that people are utilizing the money to pay down debt they incurred during the pandemic, as well as to set up an emergency fund in case of another disaster like the one that struck in 2009.

According to a survey conducted by Bankrate.com in April, nearly seven in ten Americans who have gotten or anticipated they would soon get a third payment felt it is important for their short-term financial situation. According to the personal finance firm, this is a decrease from about 8 in 10 people in March 2020, when the pandemic caused widespread unemployment, but the overall share of people who want further assistance remains elevated more than a year later.

According to the results of the study, approximately one in every three participants indicated the stimulus money will help them for less than one month.

Thousands of thousands of Americans have been spared suffering as a result of the three waves of stimulus payments, according to new study. The University of Michigan found that when stimulus fails, such as last fall when Congress was unable to agree on another round of help, hardship increases “significantly” in November and December, according to a May review of Census data.

Even now, I’m living paycheck to paycheck.

Some of the world’s leading economists have recommended for increased direct assistance to Americans. A letter signed by more than 150 economists, including former Obama administration economist Jason Furman, was published last year in which they urged for “periodic direct stimulus payments, which would continue until the economy recovered.”

Despite the fact that the economy is improving, millions of individuals continue to suffer from lower income and are unable to take advantage of government assistance programs, according to Nasif. According to a research conducted by economist Eliza Forsythe in March, only 4 out of every 10 jobless people really received unemployment benefits.

Many people never registered for unemployment benefits because they didn’t believe they were qualified, and others may have given up owing to long wait times and other obstacles, according to the Bureau of Labor Statistics.

According to Greg Nasif, political director of Humanity Forward, “You’ll read news about how the economy is starting to grow, but there are a lot of Americans living paycheck to paycheck, and for a lot of them, the government relief programs haven’t been able to help.”

What is the likelihood of a fourth stimulus check?

According to Wall Street analysts, it’s best not to hold your breath. CNBC spoke with Raymond James analyst Ed Mills, who stated, “I believe it is improbable at this point.” A primary reason for this is that the Biden administration is focused on moving through with its infrastructure plan, which will change the economy by reconstructing old schools, roads, and airports, as well as investing in projects ranging from affordable housing to high-speed internet.

According to Stifel’s Brian Gardner in an August 11 research note, the idea, which the White House claims would be funded by increasing the corporate tax rate from 21 percent to 28 percent, will certainly consume Congress this fall.

In his words, “the fall is shaping up to be a hectic period in Washington as Congress attempts to finish two infrastructure packages (one of which includes tax increases), approve the yearly budget bills, and raise the debt ceiling.”

Are there delta headwinds?

Moreover, as the Delta variety expands throughout the country, the economic recovery is encountering headwinds as a result of this. Some states with poor vaccination rates are seeing an increase in COVID-19 cases, which could discourage people from working in restaurants and other industries that need them to interact with the general public.

According to a recent research, Texas’ failure to contain the COVID-19 outbreak in the state has resulted in approximately 72,000 job losses and an annually decrease in productivity of more than $13 billion. According to the study, the fear of getting COVID-19 is also contributing to employment losses in Texas, as workers choose to stay at home or are compelled to stay at home to care for family members who are sick.

Meanwhile, federal pandemic unemployment benefits expired on September 6, bringing to an end a series of innovative programs that had provided jobless assistance to gig workers, part-time workers, and other workers who did not otherwise qualify for unemployment benefits, such as taxi drivers and delivery drivers. According to experts, this could result in increased hardship for many families.

According to Century Foundation senior scholar Andrew Stettner, “this cliff endangers the gains we have made in the economic recovery by emptying the economy of consumer spending, and it will put millions of employees at risk of long-term hardship.”