Another stimulus check could help fight inflation but a fourth is unlikely, experts say
Even though pandemic relief measures like stimulus checks and child tax credits have expired, some policy experts believe another cash infusion could help many Americans and be politically advantageous - coming as inflation skyrockets the cost of gas, groceries and more everyday essentials.
The federal government has issued three economic impact payments, or stimulus checks, since the coronavirus pandemic began. The last check for $1,400 was sent to Americans in March 2021. That money was a relief for many, keeping nearly 11 million people out of poverty across two administrations, data from the U.S. Department of Health & Human Services (HHS) shows.
"The most impactful programs for alleviating poverty were economic impact payments under the ARP (American Rescue Plan) and unemployment compensation," said the HHS report.
The checks were supplemented by other pandemic-era relief measures, like the advanced child tax credit and expanded unemployment compensation, according to HHS. However, all those programs have ended, and lawmakers on Capitol Hill haven't been able to agree on extending any of them on a more permanent basis.
Elaine Magg, a senior research fellow at Tax Policy Center, told Changing America that the Biden Administration ultimately must decide "do I spend the political capital to try to push for a single payment now or do I try to push for a longer-term solution now, given that it's sort of the same players that object to either of those things."
Magg doesn't believe another stimulus check is likely, and while the Biden administration works with Congress to come up with a legislative solution, the Labor Department announced inflation has hit nearly 8 percent over the last year.
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Take grocery prices, which rose 1.4 percent in February, up 8.6 percent year over year - the fastest annual increase since 1981. That's on top of a 6.6 percent monthly increase in gas prices.
Some governors are jumping in to help address those rising costs by issuing their own form of stimulus. Wisconsin Gov. Tony Evers (D) has asked legislators to approve a $150 stimulus check to every resident, while a similar proposal was introduced in Maine for $500 checks to about 800,000 eligible taxpayers.
This type of direct state action is always welcome, according to Megan Curran, policy director at Columbia University's Center on Poverty and Social Policy. However, she argued that families across the country could use a cash infusion, facing the same sets of pressures, and shouldn't have to rely on "geographic lottery" to get some cash support.
"There continues to always be a role for the federal government and making sure that families no matter where they live in the country are able to access these kinds of things," said Curran.
Magg also noted that low-income families are especially vulnerable to inflation, as they tend to have less savings to cushion the blow of higher prices, "delivering some sort of cash benefit now would sort of protect them from the inflation that's happening around them."
Data from the University of Chicago Booth School of Business found households with $500 or less in their bank spent almost half of their stimulus payment within 10 days of receiving it.
Other pandemic-era relief measures like the advanced child tax credit were targeted to only those with young children, while expanded unemployment was only available to those who lost a job. Stimulus checks don't carry those same requirements, acting as a no-strings attached cash infusion that can uplift families no matter what situation they may be facing.
"Let families respond to whatever their circumstances, if they happen to be out of work for a while because of COVID, they have this to step in. If their real pressures are coming from increased food prices, or energy prices, this flexible cash can step in," said Curran.
However, despite the allure of sending Americans cash ahead of a pivotal election season, some policy experts worry it could actually exacerbate the problem, if the execution isn't targeted.
Michael Hayes, associate professor of public policy at Rutgers University, told Changing America two variables that lawmakers need to consider are what the income level cutoff would be for another round of stimulus and how the additional income would affect labor supply.
"Overall, there is no great solution to the inflation problem. Another round of stimulus checks, even if targeted to the lowest income group, would only provide short term relief at the risk of mid-term/long-term problems," said Hayes.
No matter what type of action the federal government takes, Magg believes low-income families shouldn't be subject "to the whims of who's sitting in Congress right now." Whether it's a stimulus check or child tax credit payments, Magg argued families should be able to plan their finances and know the government is going to be there for them.
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