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The pandemic stimulus checks were a big experiment. Did it work?


Shutdown DC organized a protest to support Covid-19 relief on the National Mall, Washington, D.C., February 25, 2021.

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The sudden loss of income for millions of Americans was caused by the U.S. closing down in the aftermath of Covid-19.

Congress passed an enormous emergency assistance package within weeks. It was designed to help those in need. There were checks called “economic impacts payment”, which could be up to $1,200 each for an eligible adult.

There have been a total of three rounds of such checks — including additional payments of up to $600 and $1,400 per person in 2021 — referred to as “stimulus checks” by many Americans.

While the government had deployed stimulus checks before — particularly in the wake of the Financial Crisis — the size and scope of the direct checks was in many ways a new experiment.

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Howard Gleckman (senior fellow, Urban-Brookings Tax Policy Center) stated that the three individuals together were far more than the government has done in the past.

Each stimulus check made it faster and easier for the IRS and the U.S. Department of the Treasury to deploy the money.

In just a few weeks, 89.5 Million payments were made by the IRS under the stimulus-check program for 2020.

The IRS reported on March 17 that it had disbursed approximately 90 million payments after a third stimulus-check was approved by Congress.

Gleckman declared that the IRS receives credit overall. “They did an amazing job of getting these checks in such difficult circumstances.”

There were some glitches, and even initial checks, but it was all part of the process. sent to deceased Americans.

Experts believe that money could have targeted better as well, with some money going to wealthy taxpayers unaffected by the pandemic.

Erica York is senior economist at Tax Foundation and research manager. “There was a tradeoff between speed and precision,” she said.

York stated that the payments weren’t as specific as could have been had lawmakers considered other options. Because of the severity of the pandemic, lawmakers had to prioritize getting quick relief.

According to her, about 90% of taxpayers got money regardless of financial hardship.

To limit the number of people receiving higher income checks, the $1,400 third check was phasing out quicker.

York reports that the payment system saw a decrease in household spending as they were being deployed. While the first checks were mostly devoted to household spending, the later checks were more typically used for saving or paying down debt – a trend seen across all income levels.

Payments missing

One of the main issues that was persistent throughout the deployments of the stimul checks and the subsequent monthly child tax credit payments was reaching non-tax filers. These people are not likely to file returns because they have too low incomes.

Joe Biden was President in January 2021 issued an executive orderto renew efforts by the government to locate 8 million people still unchecked.

Although the overall number of people reached may have decreased with increased outreach efforts, some may still have fallen through the cracks.

It was not easy for them to make the money.

Dorian Warren

as co-president for Community Change

Dorian Warren, copresident of Community Change (a national nonprofit that helps low-income Americans and people of color), stated, “It was really really hard to get money in the hands of people that were transient or unbanked, or people with very little or no internet access or people who are not banked, or people that are most vulnerable.

He said, “There wasn’t an easy way for them get the money.”

Warren also said that some people hesitated signing up for payment due to IRS forms being complex or because they were afraid of shame.

Too much help?

House Speaker Nancy Pelosi, D.Calif., with Senate Majority Leader Mitch McConnell, R.Ky., at U.S. Capitol in Washington, D.C. to honour late Rep. John Lewis, D.Ga., on July 29, 2020.

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The decision to make additional payments was a major issue for Capitol Hill legislators throughout 2020. Former President Donald TrumpAdvocated for an additional round of $2,000 checks. So did then President-elect Biden.

Washington leaders reached a compromise of $600 per person to fund the second round. After Biden’s election, another package was created with $1,400 payments.

The economy was on the verge of improving, so those last checks were necessary.

Gleckman said that third round of checks was “probably unnecessary” with the benefit of hindsight. But I believe it was reasonable at the time.”

Some believe stimulus money might have contributed to the U.S.’s record high levels of inflation.

York explained that inflation is occurring across all sectors, with the U.S. experiencing a very high level. It’s not the stimulus itself, it is the amount of relief.

Yet Gleckman argues the surge in prices has been affected by supply rather than demand issues — and those problems aren’t directly connected to the stimulus money.

This includes restrictions on workers in factories due to the pandemic and problems shipping internationally. Then there was the Russia-Ukraine War, which created additional bottlenecks.

Gleckman explained that “it’s too convenient to put inflation on excessive stimulation payments.” While they didn’t directly contribute to this phenomenon, they aren’t as involved as people think.