Wall Street Journal’s assistant editor James Freeman talks about stimulus talk, arguing that we don’t need a massive stimulus plan.
President Biden made a third stimulus check an integral part of its nearly $ 2 trillion Coronavirus Aid package, but latest analysis shows the payments could go to wealthy Americans who don’t spend it money.
According to the JPMorgan Chase Institute, which examined the bank’s 1.8 million customer accounts and released the results in December reportThe low wage earners had the greatest profits on their accounts and the quickest exhaustion.
But top earners, or those making more than $ 68,795, held on to money – indicating that poorer Americans are more likely to spend their stimulus checks than their higher-income counterparts.
“Targeting lower income households for the next round of stimulus payments would save significant resources that could be used to support other programs with minimal impact on economic activity.”
A separate analysis by the Federal Reserve Bank of New York found that consumers received more than a third of the first stimulus checks made last spring under the CARES Act of $ 2.2 trillion, passed by Congress in March the Americans were sent to have kept. Only 29% of the payment was spent while 36% was saved and 35% was used to pay off debts.
Consumers said they expected to spend an even smaller percentage on future stimulus payments and use the money to pay off debts.
When the government sent out checks worth $ 600 in late 2020 and early 2021, part of the $ 900 billion aid package passed in December, spending spiked for households that were less than $ 46,000. US dollars earned 7.9% from January 6th to 19th compared to January 6th the period a year ago, according to researchers at Opportunity Insights.
In comparison, spending for households earning more than $ 78,000 increased only 0.2%.
“Targeting the next round of stimulus payments to lower-income households would save significant resources that could be used to support other programs with minimal impact on economic activity,” the researchers wrote.
Congress has already spent around $ 4 trillion on pandemic relief efforts, including $ 900 billion that was approved in late December. While lawmakers broadly believe that another round of emergency aid is needed, they disagree on size and scope, and deficit-weary Republicans are sounding the alarm about the price.
“The economy is recovering,” said Maya MacGuineas, president of the Committee on Responsible Federal Budget. “More resources are needed to help the pandemic unemployed, prevent state and local layoffs, fuel economic demand, prevent household incomes from falling, and end this pandemic once and for all. But it shouldn’t 1, It costs $ 9 trillion to fill a $ 400 billion or $ 800 billion hole. “
While it is still unclear what the framework for stimulus testing eligibility is, stimulus testing would decrease from $ 1,400 for individuals earning $ 75,000 more per year and families earning $ 150,000 or more, if they followed a formula passed in House Legislation last year. However, for families with more children, the exit level is rising, meaning that a family with multiple children earning more than $ 300,000 a year could theoretically get some money even if they didn’t suffer any financial setback during the pandemic.
Biden told reporters last week that he was open to negotiating income limits for the money.
“There is a legitimate reason for people to say, ‘Did you draw the lines just right? Should it go to someone who is making more than X dollars? I am open to negotiating these things,'” Biden told journalists during one signature of the Executive Order last Monday.