Americans think California and Florida-style stimulus checks and Biden's student-debt relief make inflation worse — but they want them anyway

California Gov. Gavin Newsom speaks during a news conference, Florida Governor Ron DeSantis speaks during the inaugural Moms For Liberty Summit.
California Gov. Gavin Newsom (left) and Florida Gov. Ron DeSantisJustin Sullivan/Getty Images, Octavio Jones/Getty Images
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  • Americans list government spending as among the main causes of inflation.

  • But many are welcoming the inflation relief measures over 15 states have adopted.

  • States' stimulus measures are smaller and more targeted than the federal government's relief.

Americans view inflation as the top problem facing the country today, and most think government spending is a big reason why. But many are still open to receiving another stimulus check from their state to help them cope with higher prices.

In an April poll from the right-leaning advocacy group Americans for Prosperity with 1,500 respondents, 73% of respondents said government spending was a "major cause" of higher prices — 51% of 1,000 respondents told Navigator the same in July, with an additional 29% calling it a "minor cause." A Pollfish survey last month of 500 US adults found that 44% of Americans felt government spending was the "biggest cause" of inflation, followed by corporate greed and supply chain issues at 32% and 23% respectively.

But as over 15 state governments that include California and Florida have taken steps to provide residents some relief, there's reason to believe many Americans are hoping their states do the same. The same September Pollfish poll — which reported a 5% margin of error — found that 75% of those surveyed "support the idea of stimulus checks as a government response to inflation." A May Public Policy Institute of California survey of over 1,700 Californians found that 62% supported the state's $18 billion inflation relief plan, the majority of which is going towards relief payments.

There's also been significant support for quasi-stimulus measures like student debt relief, despite the concern of some that it could be inflationary. A September YouGov poll found that 48% of US adults supported President Biden's student debt relief plan, versus 34% that opposed it — 18% were unsure.

A "collective irrationality" between wanting "free money" and fearing inflation

Beginning October 7, as many as 23 million Californians making less than $250,000 per year will receive a stimulus check of up to $1,050. Florida is sending one-time payments of $450 per child to 60,000 households, and Delaware and South Carolina are planning to give many residents tax rebates of $300 and $800 respectively.

If state governments thought this additional relief would come with substantial backlash from their residents, they'd presumably be much more hesitant to dole it out — particularly with the midterm elections approaching this fall. This suggests that at a minimum, residents are not strongly opposed to the sort of stimulus measures many have been blamed for inflation.

"There's some real policy reason to do this," Mark Brewer, a political science professor at the University of Maine, said in March regarding Maine's inflation relief proposal. "But at the same time, it's also clear that this is an election year, and in an election year there are few things as popular as giving voters what voters see as free money from the state."

Some of this apparent contradiction, however, can be explained by the fact that states' stimulus measures are smaller and more targeted than the federal government checks during the height of the pandemic — and therefore should have a much more modest impact on inflation.

A spokesperson for California Governor Gavin Newsom told Insider they believe the state's inflation checks would have a minimal impact on inflation in California, as they represent just 0.3% of the state's $3.4 trillion economy. In addition, the government expect households to use some portion of the income to pay down debt or add to savings, instead of just purchasing goods.

Much of the funding is also coming from substantial budget surpluses, which have nudged some states to approve these payments.

In California, the government is pushing up against a state cap on government spending, which is among the reasons the state is sending money to taxpayers. In Indiana, the government is obligated by law to return some of its surplus to residents.

But it could also be that some Americans don't see these beliefs as entirely contradictory. California residents, for instance, could ultimately benefit from the extra government dollars in their pockets — even if it adds to nationwide pricing pressures that hurt the Americans without government checks to help them keep up.

"These inflation relief payments will export inflation to the rest of the United States — with some showing up in California too, Harvard economics professor and advisor to former President Barack Obama Jason Furman wrote on Twitter in September. "Californians, on net will come out ahead."

But Furman added that Californians would "come out behind" when other states make inflation relief payments: "There is an unfortunate individual state rationality to all of this, and that adds up to collective irrationality."

Read the original article on Business Insider