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As Democrats move forward with their plan to pass another massive economic relief package, all indications are that the final bill will include a round of $1,400 stimulus checks. The question of just who will receive those checks, however, appears far from settled.
In his initial $1.9 trillion proposal, President Biden called for giving the full $1,400 to individuals making up to $75,000 and married couples making up to $150,000, with payments gradually decreasing for anyone making more. This is similar to the eligibility criteria used for checks in the first two stimulus bills, passed during the Trump administration.
But some moderate Democrats are pushing to lower those thresholds as a way of trimming the total cost of the package. One proposal would begin phasing out checks at $50,000 for individuals and $100,000 for couples. A group of 10 Republican senators released their own plan with similar cutoffs and $1,000 checks.
About 85 percent of American families would receive the full $1,400 if the initial income thresholds are used, compared with about 71 percent under a stricter plan, according to an analysis from the American Enterprise Institute.
Why there’s debate
Advocates for lowering the income thresholds for stimulus checks say it would prevent billions of dollars from going to people who don’t need it. While the recession has hit some Americans incredibly hard, a large share of workers are actually doing better than they were before the pandemic. Previous rounds of checks show that people on the lower edge of the income scale immediately spent the money on essentials like rent and food, but those people making more than $75,000 were likely to put their checks into savings. Lowering the eligibility for future checks would prevent the government from taking on extra debt to send out cash that won’t do anything to stimulate the economy, supporters say.
Critics of the idea say there’s little risk to sending checks to people who may not necessarily need it right away, especially when compared with the risk that tighter eligibility leaves out those who are in desperate need of help. Others argue that annual income is a bad way to determine which people are facing financial hardship, since so many people have seen their circumstances upended in the past year. It may also be likely that more middle-class Americans will spend their checks this time around with the end of the pandemic in sight, some say.
Another group argues against sending stimulus checks to anyone. Lump cash payments, they argue, are an inefficient way to boost the economy, and it would be better to put that money toward critical services like unemployment insurance and the vaccine rollout.
Biden has taken a firm stand on keeping the checks at $1,400, a figure he sees as fulfilling his promise to provide $2,000 checks when combined with the $600 payments that went out in December. He did, however, say he’s “prepared to negotiate” on who is eligible to receive them.
The timeline for when a final bill will be passed is unclear, but Democrats are eager to have a bill signed into law before enhanced unemployment aid expires for millions of Americans in mid-March.
Relief should go only to those who need it the most
“There are people who genuinely need financial assistance due to the pandemic, and they should get it, but we don’t need a fiscal free-for-all. Sure, most Americans would welcome free money from the federal government, but it isn’t really free. The bill eventually will come due.” — Editorial, Post and Courier
Checks won’t relieve the problems middle-class people are facing
“The things that ordinary real Americans are suffering right now, like the inability to send their kid to school, or the inability to go out for a meal that’s not in 24 degree-weather, shivering in a parking lot, those things can’t be fixed by a check.” — Washington Post writer Megan McArdle to KCRW
Checks should go to people who are going to spend them
“If we are going to send money to people, we want it to stimulate the economy. Targeting the payments to lower-income households gives you a much higher bang for the buck.” — Economist Michael Stepner to CBS News
Wider eligibility made sense in the early days of the pandemic, but not now
“Dumping money broadly across the public is not a bad idea when the economy needs a spark. But the economy … doesn’t need stimulus at this point. The public needs relief — not everyone, just the minority who’ve experienced the pandemic most acutely.” — Editorial, Los Angeles Times
Congress should be wary of increasing the deficit unnecessarily
“For Washington to skimp on urgent needs during a crisis would be a false economy. But that doesn’t excuse pumping out cash with a fire hose. Every dollar borrowed enlarges the swollen federal debt. We’re lucky that interest rates are low now, making it cheap to borrow. But they won’t stay low forever, and when they rise, taxpayers will groan under the weight.” — Steve Chapman, Chicago Tribune
Stimulus checks are not what the economy needs
“The problem is that more buying power — the purpose of stimulus checks — isn’t what the U.S. economy needs. While the unemployed clearly require help, the vast majority of Americans still have their jobs, pension checks, Social Security benefits, and welfare payments.” — Geoff Colvin, Fortune
There is little downside to sending out more money than is necessary
“The bottom line is that checks are popular with the public, easy to deliver, will help the fortunes of those who are struggling, and don’t pose a near-term inflationary risk to the economy. Congress should go ahead and send ’em.” — Conor Sen, Bloomberg
The extra money will have supercharged the recovery once the pandemic subsides
“Checks are a golden opportunity to make sure Americans’ wallets are nice and fat in 2021 so that the economy will pop back to real full employment when everyone is finally vaccinated.” — Ryan Cooper, The Week
There’s no way to determine who actually needs help without leaving people behind
“It isn’t crazy to think that maybe we should spend more of this $1.9 trillion on those who’ve been impoverished, and less on those who are more financially secure than they’ve ever been. But there is a big problem with trying to accomplish this by means-testing COVID relief checks: It is not within the federal government’s capacity to get relief to every American who is struggling economically, while withholding it from every American who is not.” — Eric Levitz, New York
Checks are an inefficient form of stimulus, but they are still worthwhile
“Americans are not going to see two grand appear in a bank account and go, Huh, I can’t put my finger on it, but I’m feeling subconsciously nudged to buy more socks. They’re going to feel very consciously, very fist-pumpingly elated. Checks are the confetti cannon of the economic-stimulus arsenal — not maximally efficient, just maximally awesome.” — Derek Thompson, Atlantic
Congress should stop allowing fear of backlash over who ‘deserves’ help guide policy
“Every proposal is analyzed not in terms of how many people it can help but in terms of how mad others would be to see those people helped.” — Alex Pareene, New Republic
The extra money can be recouped through taxes in the future
“The proper trade-off would be to give the money to EVERYONE, absolutely everyone, and claw it back in 2021 taxes based on 2021 income.” — American Prospect executive editor David Dayen
Eligibility will be determined based on income information that is wildly out of date
“People have not filed their taxes for 2020, meaning that targeted checks would go out based on income information that is now one to two years out of date, with a pandemic and mass job loss having occurred in the interim. This is not targeting. It is the illusion of targeting, an illusion that will end up hurting tens of millions of people who are currently in need but weren’t in 2019.” — People’s Policy Project founder Matt Bruenig to Washington Post
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