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President Joe Biden is expected to soon sign the bill after the House on March 10 approved a version of the legislation passed by the Senate a few days earlier. Moderate Senate Democrats, who had voiced concerns about how many people would receive direct payments in the original proposal endorsed by the House, managed to make them more targeted at lower-income households, which means an estimated 17 million fewer people will get a check.
No one turns down extra money, after all. But as economists, we also believe that these direct payments make little economic sense — even with the lower income threshold. And this is true whether you think the purpose of the checks is relief or stimulus. The purpose of a measure primarily designed as relief during an economic crisis is to help those most affected.
The latest jobs report shows about 10 million people are unemployed, including 4. These people — mostly workers in the hospitality and leisure industries, disproportionately low-income and people of color — are in desperate need of aid and support, without which destitution and homelessness are real possibilities.
These are mostly office workers and other professionals who have had to work from home for all or part of the pandemic but saw no change in their income. OK, then how about the checks as a stimulus? There are two problems with that.
OK, then how about the checks as a stimulus? There are two problems with that. While the jobs report showed millions of people remained unemployed, the February numbers came in a lot better than expected, adding to signs the U. And there are also growing concerns about inflation , given the sharp rise in some market interest rates, which too much stimulus could accelerate.
Research conducted on the first round of checks found that the vast majority of Americans saved most of the money or used it to pay down debt. Moreover, a third of likely recipients of the next round of checks said they would save the money. At a minimum, relief payments should be targeted, such as to people who lost jobs or are working fewer hours due to illness.
Or take the U. Another very helpful and focused measure would be to help people pay for their mortgages and rent — otherwise a massive housing crisis is looming on the post-pandemic horizon. Edition: Available editions United Kingdom. Become an author Sign up as a reader Sign in. Most people used the first coronavirus check to pad their savings or pay down debt. Authors should indicate upon submission in instances where papers use proprietary data.
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