Third stimulus check: 1 year later, where is the most relief?
Friday is the anniversary of the bill that sent $1,400 in direct payments to most Americans and created monthly child tax credit advance payments.
WASHINGTON — It’s not often a president gets everything he asks for, but that’s what happened. President Joe Biden wanted $1.9 trillion to help the country emerge from the coronavirus crisis last year, and Democrats in Congress delivered.
The US bailout was jam-packed with rent subsidies, tax refunds, direct payments of up to $1,400 per person, and money to distribute vaccines that had just become available. Less than two months after Biden took office, it was a hopeful sign that he could deliver on his campaign promise to get Washington’s often heavy-handed machinery running again.
But the legacy of the legislation is more complicated than it originally appeared. Depending on who is telling the story, this is either Biden’s first success or a trap he set for himself.
It may well turn out to have been a bit of both.
Friday is the anniversary of Biden’s signing of the american rescue planand the second anniversary of the World Health Organization’s declaration that the coronavirus had become a global pandemic. In hindsight, administration officials defend the relief program as a necessary step to insulate the economy and promote a national rebound, and they now point to the historically low unemployment rate as proof of their success.
“Looking at how resilient and fair the recovery has been in the face of delta, omicron and now military conflict in Europe, this strategy already seems wise,” said Gene Sperling, a Biden adviser hired to oversee the implementation. implementation of the legislation.
A fraction of the bill’s spending went toward directly fighting the pandemic, including buying vaccines and treatments, supporting testing and vaccination sites, and treating people infected with the virus that has killed more than 959,000 people in the United States.
The rest was intended to prop up state and local governments, ease the pain of job losses and pump money into American wallets.
Critics say this latest set of policies drove up prices by fueling consumer demand at a time when supply chains couldn’t keep up, undermining the momentum of democratic efforts to enact generational changes such as programs education, subsidized child care and financial incentives to fight climate change.
“The bet was that it would create success that would make people want to do more,” said Jason Furman, a Harvard professor and former economic adviser to President Barack Obama. “But it contributed to the inflation that made people want to do less.”
“In a way, that’s the biggest consequence,” he added. “It was a bet, and they lost that bet, and it hurts.”
Inflation reached 7.9% in the past 12 months, the highest in four decades, and Furman estimated the bailout was responsible for about 2.5 percentage points.
Michael Strain, director of economic policy studies at the conservative American Enterprise Institute, pegs the figure at 3 percentage points.
“We really didn’t need another stimulus. The economy was already growing rapidly,” Strain said, noting that President Donald Trump signed two measures totaling $3.1 trillion before Biden took office.
Administration officials dismiss those inflation estimates, citing a San Francisco Federal Reserve study that found the bailout contributed less than 1 percentage point to the increase.
“The stark reality is that there are higher prices and supply chain shocks in virtually every major economy in the world,” Sperling said.
However, inflation was paramount when Sen. Joe Manchin, DW.Va., killed Democratic dreams of using their unified control of Washington to dramatically expand the social safety net. Biden’s arguments that his agenda, known as “Building Back Better,” would limit rather than raise prices have not held up.
“Inflation is real, it’s not going away anytime soon,” Manchin told “Fox News Sunday” in December.
The failure of this legislation has also failed to extend monthly child tax credit payments which started with the rescue plan. An estimated $93 billion was sent to 40 million families with 65 million children last year.
Rep. Pramila Jayapal, D-Wash., said she doesn’t regret any inflation the legislation may have caused, describing it as a “consequence that we have to overcome.”
“There’s no question that the US bailout put money in people’s pockets, kept businesses open, got shots and did the kind of things our economy would need if it needed to recover,” said Jayapal, who chairs the Congressional Progressive Caucus.
Biden is still trying to get his aspirations back on track. White House spokeswoman Emilie Simons said the president “continues to work with Congress on his agenda to reduce kitchen table costs for American families – by addressing prescription drug prices, child care, energy costs, etc.”.
A year after signing the US bailout, the federal government has spent nearly all of its direct aid on COVID-19, boosting the supply of home testing, providing free virus treatment to the uninsured and paid for vaccine doses sent overseas to help prevent the emergence of more dangerous variants.
Hundreds of millions of dollars spent on TV ads, promotions and incentives have boosted vaccination rates at the margins, but have proven no match for the widespread misinformation and partisanship surrounding lifesaving vaccines. Lives. The adult vaccination rate in the United States stands at 75%, well below other major advanced economies.
Now the White House is pushing Congress to urgently approve more money for antibody treatments, preventive therapy for the immunocompromised and to fund community testing sites.
“We need that money,” White House press secretary Jen Psaki said Thursday. “Without additional congressional resources, the results are disastrous.”
The funding proposal may become a victim of negotiations on a broader fiscal measure it must pass by the end of the week for the federal government to continue to function.
The omicron wave of coronavirus infections is receding rapidly, but more than 1,100 people in the United States still die from the virus every day. The vast majority are neither vaccinated nor boosted.
Although the pandemic has lasted much longer than Americans hoped, the United States is much closer to its pre-pandemic normality, as mask mandates are on the way out across the country, almost every schools are open for in-person learning and offices are starting to fill up with workers again.
As with the COVID funds, much of the rest of the bailout money has already flowed to the federal government, according to administration officials.
More than 170 million direct payments to individuals, known as economic impact payments, worth at least $400 billion, have been distributed. The average amount was $2,300.
Schools received $122 billion in relief funds, with additional dollars earmarked for homeless students and children with disabilities. Nearly $40 billion has gone to colleges and universities.
Another $39 billion was provided to support child care services. More than 150,000 providers serving more than 5 million children received money.
More than $245 billion has been distributed to state, local, territorial and tribal governments. Another $105 billion is expected to be distributed in May.
This reserve of dollars for state and local governments has become one of the most controversial aspects of the bailout, with some critics saying it was unnecessary as state governments eventually saw double-digit growth. tax revenue.
Philadelphia Mayor Jim Kenney said the money helped prevent essential services like firefighters and paramedics from being cut.
“Imagine a grandfather in a medical crisis waiting a few more minutes for help to arrive,” he said.
Without the money, Kenney added, “it would have meant hundreds of layoffs of frontline municipal workers.”
Heidi Sheirholz, who heads the liberal Institute for Economic Policy, said the legislation is “one of the main reasons we’re in an incredibly strong recovery right now.”
“I’m not saying it was perfect,” she said. “But it ensured that households didn’t need to go into austerity.”
The bailout also provided nearly half the funding for a $46.5 billion emergency rental assistance package, which got off to a slow start as state and local authorities struggled to launch a new system from scratch.
However, the program expanded last summer and more than $25 billion was distributed in 4.1 million payments. Treasury officials estimate that 80% of the money went to low-income tenants. The rest of the money should be spent by the middle of this year.
Peter Hepburn, a researcher at Princeton University’s Eviction Lab, said evictions in 2021 would be about half of what they would have been in a normal year, suggesting 1.36 million evictions have occurred. been avoided. Even though the national eviction moratorium expired last summer, evictions were down 33.1% in January and 27.7% in February.
He called it a “pretty striking achievement”.
Sperling cited the rental assistance program as an example of how the bailout will pay dividends in the future, as evictions are the kind of setbacks that can derail American families for years.
“Preventing deeper damage will bring serious benefits, not only in terms of the long-term economy, but also in terms of basic human well-being and dignity,” he said.
Associated Press writers Farnoush Amiri in Philadelphia, Michael Casey in Boston and Fatima Hussein in Washington contributed to this report. Travis Pittman also contributed.