Good morning. Are $2,000 stimulus checks a good way to help the economy and fight poverty — or “an abomination”?
A store in Brooklyn advertised to cash stimulus checks in April.Sarah Blesener for The New York Times
The debate over the checks
The idea to send $2,000 checks to most Americans began circulating in the spring, pushed by progressive Democrats like Senator Bernie Sanders and Representative Pramila Jayapal. But the proposal has never fit into a neat ideological box.
Some moderate Democrats also saw the checks as a good way to help people during the pandemic. And some Republicans liked that the checks went directly to Americans, rather than being filtered through a government program. By the end of last year, Josh Hawley, a conservative Republican senator, and President Donald Trump were backing the idea, as well.
The checks have since become a centerpiece of President Biden’s coronavirus response plan, accounting for $465 billion of his proposed $1.9 trillion in spending. Polls show that the idea is popular.
And yet some economists — and politicians, in both parties — have deep reservations. Today, I want to lay out three main arguments both for and against the idea, based on my conversations with experts and people on Capitol Hill and in the Biden administration. I hope these points will help you decide what you think.
First, the basic facts: Because the virus-response bill that passed in December included $600 checks, Biden is now proposing $1,400 checks, with bonuses for children. A typical family with two parents and three children could receive $4,600. Families making less than $150,000 a year would likely be eligible for the full amount.
The case for the checks
1. People need help. Almost 10 million fewer Americans are working now than when the pandemic began, and normal life is still months from returning. “Doing too little has enormous downside cost,” Sharon Parrott, president of the Center on Budget and Policy Priorities, told me.
Many households are also coping with the long-term effects of slow-growing incomes and wealth over the past four decades. The checks will let people decide for themselves how to spend the money — be it to cover medical expenses, pay tuition, save for retirement or buy a car. Much of this spending will stimulate the economy and create jobs.
2. It’s simple. At a time when many people don’t trust the government, easy-to-understand policies can build trust. Matthew Yglesias, author of the Slow Boring newsletter, calls this the “does exactly what it says on the tin” principle. The Obama administration designed a complex stimulus program in 2009 and didn’t get much political credit for it. The Biden administration can heed this lesson.
3. It’s surprisingly progressive. A $4,600 check means much more to a poor or working-class family than it does to an upper-middle-class family. (Very affluent families don’t qualify for the checks.)
Consider this chart, which shows how the two rounds of pandemic checks that the government sent last year — equaling $1,800 combined for many people — affected after-tax incomes:
By The New York Times | Source: Tax Policy Center
The checks aren’t simply a stimulus program. They are an important part of Biden’s ambitious effort to fight poverty.
The case against the checks.
1. Many people don’t need the money. The current recession is a strange one. Neither house prices nor stock prices have fallen — and many people’s expenses have declined — leaving most Americans financially better off than a year ago:
By The New York Times | Source: Moody’s Analytics
As a result, many people will save the money the government sends them, which won’t help put other people back to work. “I think the checks are an abomination,” Michael Strain of the American Enterprise Institute told me.
2. It’s possible to target the money. Biden’s stimulus could instead increase unemployment benefits even more than it now proposes. Or it could do more to help small businesses stay open. Or more to expand child care.
3. F.D.R. wouldn’t have done it. Sending people money does little to address the country’s deepest problems — like climate change and the underlying causes of inequality. Those problems require coordinated government action. So why has Biden embraced an expensive, Trump-backed idea that’s basically a big tax cut?
“I don’t ever remember F.D.R. recommending sending a damn penny to a human being. He gave ’em a job and gave ’em a paycheck,” Senator Joe Manchin, a West Virginia Democrat, has said. “Can’t we start some infrastructure program to help people, get ’em back on their feet?”
What’s next
The checks will be a central part of the debate over Biden’s first virus bill. Many Senate Republicans oppose the checks, which means they may fall short of the 60 votes needed to overcome a filibuster.
In that case, Democrats would have to choose between altering their plan and passing the bill through a process known as reconciliation, which requires only 51 votes.
The New York Times
Me: Note that the politicians won’t get the stimulus checks, so they don’t care if you do or not, which means they can hold the legislation to make that happen for as long as they like – bearing in mind that Biden has “proposed” and that is about it.