Biden wants to send more stimulus checks, but who will get them?
President Joe Biden said he is willing to a negotiate the income threshold for stimulus checks and researchers say a targeted approach would be best for the economy
President Joe Biden wants to send $1,400 coronavirus stimulus checks to Americans.
A third round of pandemic-induced impact payments — similar to the pair of direct payments approved by Congress last year — are part of the White House’s $1.9 trillion American Rescue Plan. But unlike the income threshold of $75,000-a-person used generally for the last two payments, the earnings cap on future direct payments is still up in the air.
The reason? Policymakers want to target stimulus payments to those most affected by the economic maladies of the coronavirus, while also ensuring that the direct payments will be used to revive the economy.
“There’s legitimate reason for people to say, ‘Do you have the lines drawn the exact right way? Should it go to anybody making over x-number of dollars or why?’” Biden said earlier this week about the income threshold for stimulus checks. “I’m open to negotiate those things.”
New research from Opportunity Insights — a Harvard University not-for-profit policy research organization — showed that households earning less than $78,000 typically spent their $600 stimulus payment faster than households earning more, The Washington Post reported.
Households that made less than $59,000 were much more likely to spend the influx of cash quickly, according to the analysis, thus benefiting the recipient of the stimulus and the economy immediately. Households that made more ended up putting the check into savings.
“Targeting the stimulus payments to lower-income households would both better support the households most in need and provide a large boost to the economy in the short-run,” said Brown University economics professor John Friedman, a co-director of Opportunity Insights, reported the Post. “These checks are really impactful for lower-income households.”
The president said there had been bipartisan support in the House for $2,000 checks at the end of the Trump administration. Biden’s $1,400 proposal would essentially reach that amount when added to the $600 checks that went out to Americans in December.
The nearly $2 trillion economic recovery proposal includes the expansion of unemployment insurance, additional funding to state and local governments for combating the virus, money for a national vaccination program and a federal minimum wage hike to $15 an hour.
Biden said it could takes weeks to finalize the legislative deal and policy experts believe the relief will be scaled down.
“One of the big debates right now is a balance between act fast and act big,” Ed Mills, Washington policy analyst at Raymond James, told CNBC News.
Stimulus checks and vaccine funding are “the two most bipartisan portions of this bill,” Mills said, which could give Congress an opportunity to legislate quickly.