Is Another Stimulus Check Worth It?
Probably not. Here’s why.
Luke Tackett
Everybody knows what happened in March of this year, so I doubt it bears repeating, but here’s what happened: The COVID-19 pandemic encompassed the entire globe and devastated millions of people from all races, backgrounds, and social class, resulting in an economic decline not seen in decades. Over 50% of Americans even argue that this recession is worse than the one in 2008, according to a survey by Edelman Financial Engines (cnbc.com). Businesses were left to suffer as a result of the mass quarantining, and many people lost their jobs, raising the unemployment rate in the U.S. to a whopping 14.9%.
As a result, the U.S. government decided to pass a stimulus check in order to assist those in need. For those who don’t know, a stimulus check is a grant of money given by the government to aid people who they deem fit, generally due to a recession, depression, or overall economic decline. The stimulus package that the government sent on March 27th of this year was part of the CARES Act (Coronavirus Aid, Relief, and Economic Security). It prioritized unemployed people but was also sent to many American families and small business owners. Each adult in a family received up to $1,200 depending on income and employment status, as well as $500 additional for each child under 17 years old (accounting.com).
This stimulus check cost the government around $300 billion dollars, and the total money spent on the CARES Act adds up to a whopping $2,200,000,000,000 (2.2 trillion) dollars. Keep in mind that although this act was praised and agreed upon by many politicians, every decision has a trade-off. In this case, there is a huge trade-off, due to the immense scope of the proposal. Yes, some families all across America have benefited greatly from this “free money,” but as we know, there is no such thing as free money. This money is coming directly from the government, which means only one thing: the national debt increases yet again. According to Rob Berger, an advisor contributor on Forbes, the U.S. spent a total of over $6.5 trillion dollars in the last fiscal year (ending September 30th), a third of that coming from the CARES Act alone. Looking at the chart below (provided by Visualcapitalist.com), it’s easy to see the immense impact that this expenditure had on the debt. Compared to 2019, the debt increased by approximately 25%.
Congressional leaders are planning to release another round of stimulus checks that are part of a relief package worth $900 billion. Supposedly, the agreement should be completed by the end of this week (12/19/20) according to The Washington Post. It will aim to help small businesses and unemployed Americans, similar to the last one. People will receive $600-$700 dollars if they lie below a certain income threshold.
Many people complain that the money from the first stimulus check was not enough to support them for any significant length of time, so considering this check will give half that amount of money, it’s not likely that this will make much of a difference. One reader on Marketwatch.com says, “As a married person with 5 kids and a mother that lives with us, I think $150,000 is too low. Kids are expensive and they eat a lot, not to mention medical and dental bills, especially now that school is out.” People are also upset that their cost of living does not play a part in the amount of money they receive, since different states have vastly different economies. On top of that, but there are still lots of undocumented workers who are not eligible to receive these benefits because they’re immigrants and not U.S. citizens.
In the end, the CARES packages may have helped some American families, but not enough are truly satisfied with its results. Throwing money at people isn’t going to help eliminate poverty because it’s not being received by the right people, or the people who are receiving it aren’t benefiting to any significant degree. The trade-off of having the national debt increase by trillions of dollars isn’t worth it. If the government continues to spend this much money on things like the CARES packages, the likeliness that this already unpayable debt will get paid off will only decrease.
Works Cited
Berger, Rob. “5 Breathtaking Numbers Reveal The Unsettling Cost Of Stimulus.” Forbes, Forbes Magazine, 18 Oct. 2020, www.forbes.com/sites/robertberger/2020/10/18/5-big-numbers-reveal-the-unsettling-scope-of-stimulus-spending/?sh=57c612e142b7.
Bernard, Tara Siegel, and Ron Lieber. “F.A.Q. on Stimulus Checks, Unemployment and the Coronavirus Plan.” The New York Times, The New York Times, 26 Mar. 2020, www.nytimes.com/article/coronavirus-stimulus-package-questions-answers.html.
“Coronavirus Stimulus Package of 2020.” Accounting.com, 18 Sept. 2020, www.accounting.com/resources/stimulus-package-2020/.
Jeff Stein, Mike DeBonis. “Congressional Leaders Add Stimulus Checks to $900 Billion Relief Package as They near Deal.” The Washington Post, WP Company, 16 Dec. 2020, www.washingtonpost.com/us-policy/2020/12/16/congress-stimulus-checks-relief/.
Lu, Marcus. “Charting America's Debt: $27 Trillion and Counting.” Visual Capitalist, 30 Oct. 2020, www.visualcapitalist.com/americas-debt-27-trillion-and-counting/.
MFoxCNBC. “The Covid Pandemic Is Worse than 2008 Crisis for a Majority of Americans, Study Says.” CNBC, CNBC, 1 Dec. 2020, www.cnbc.com/2020/11/10/pandemic-worse-than-2008-for-a-majority-of-americans-study-says.html.
“U.S. Department of the Treasury.” The CARES Act Provides Assistance to Workers and Their Families | U.S. Department of the Treasury, 14 Dec. 2020, home.treasury.gov/policy-issues/cares/assistance-for-american-workers-and-families.
Government provided stimulus checks and their effectiveness is a huge debate currently due to the impending offer of a second round. Yet, there is no denying that the national debt suffers greatly from this financial aid. Multiple coworkers of mine at both of my jobs stated that with the stimulus checks, they were making more money than they typically do from a month of work. Thus, the set amount for these checks is inefficient and a poor use of resources because there are certain households/income levels that need it more than others. If the government were to alter the distribution of money for this transfer payment and provide it on a needs-basis would you be in favor of this second round of checks? Is it plausible to have citizens fill out their income, number of people in their household, etc. and assign stimulus check amounts based on that information? Or would that take too much time and fail to efficiently benefit those that need it? In all, this topic is extremely relevant and exemplifies the importance of considering the economic consequences that accompany aid.
ReplyDeleteThis is a very relevant topic to what is going on. I was aware that a lot of people couldn't get by with just the stimulus check, but I didn't realize the impact it would have on the debt. It's a tough situation, because people who lost their jobs need more than a couple thousand dollars to support their families through an almost year-long pandemic, but the government can't really afford that. I think that the stimulus should factor in cost of living as you mentioned, but also current and prior income and savings to make sure that people who need more get what they need. I feel like it's comparable to the Federal Student Aid application, where they can analyze your tax information to determine who needs the money the most. This could help prioritize those families who have no current source of income and little savings. All in all, we need to make sure people have enough money to survive in the pandemic, but putting our country billions of dollars deeper in debt will have lasting consequences that may stunt economic growth for time to come.
ReplyDeleteAfter hearing about it on the news and doing some research about it for my country presentation, I know that Canada has a monthly stimulus check for all eligible citizens of $2,000. The economy in Canada hasn’t seen the dips and turns that the U.S. economy has, despite obviously facing a similar issue of unemployment. This check would eliminate one of the worries that you stated in your piece, that being a stimulus check of so little money would not benefit much. A greater amount of money from the government, applying to that trade off you spoke about, but also solving more personal monetary issues across the country. So, it begs the question, would a greater stimulus check, ignoring the debate that would happen in congress, be worth it? What do you think?
ReplyDeleteI appreciated how insightful this was and how well you depicted the information. I most definitely agree that the trade-off in this situation to increase the national debt by trillions is just absurd when it's not really benefiting many. It would be way more efficient if the stimulus check was based on the individuals need based on income and situation, but unfortunately that isn't exactly viable considering there's many that could lie about their situation, income, and what not to try and cheat the system. All in all, the debt-to-gdp ratio is already over 100% (which it should NEVER be) and this stimulus check just isn't a smart thing to add onto that debt.
ReplyDeleteDetermining who gets a stimulus check by looking at their income isn't a very efficient way of determining if one is needing or not. Someone who makes $100,000 yearly could have just lost their job and have no money to support themselves, but they would not be included because of their high income in previous years. Overall I think that the stimulus check was not beneficial enough to be worth the trade off of a 25% dept increase. I think that the stimulus check could have been more beneficial if the amount given was increase, and the amount of people given to decreased. Although this would only work if there was more care looking into who the check was given to.
ReplyDeleteI think that solely basing who gets another stimulus check based on their income is not fair. As the income to be considered living in poverty is around $20,000 but I know families who make around $75-100,000 that still struggle to make ends meet. However, when you mentioned the trade-off and the effects of creating another round of stimulus checks, the debt would not be worth it-- despite many people needing the money. However, this is definitely odd I've been seeing a lot of videos on social media saying Canadians receive monthly stimulus checks and haven't seen such decline like the US has. Why is that? Was their national debt low to start out with or?
ReplyDeleteThis topic has been on a lot of people's minds recently and it is likely that the small amount of money granted by the government as stimulus will not help those that need it, and if it does, it won't make a huge difference. The stimulus factoring cost of living as a metric for how much money one should receive is a viable idea if the government were to roll out a second round of stimulus checks, although it would take a while longer to get them to people. The issue of the cost affecting national debt is a serious thing to consider, but if I'm entirely honest, I do not understand the national debt. It's never going to be paid off and the debt is primarily owed to our own country so I struggle to understand why the national debt is a problem that would need to be factored into government decisions, especially since billions of dollar are thrown at government sectors that don't need nearly that much. I think a second stimulus check could be achievable without too much effect on the debt if funds were redirected from things like defense.
ReplyDeleteThis is a very well written post. Personally, I believe that the government giving stimulus checks isn't worth it in the long run-- many people either don't need the money or need much more. Instead, we should grow our welfare programs so that poorer families are able to survive during the pandemic. I believe I saw news that many Americans are now going off unemployment, leaving them with no way to get money, and no way to get a job. It's a very hard problem to solve, I understand, but the government should really be doing something better than just throwing money around. Hopefully we get that vaccine soon, as it feels like the only thing that can really solve our problems.
ReplyDeleteThis was extremely interesting. Originally I had an outlook that wanted these stimulus checks sent out but after reading your blog post, I've changed my mind. The national debt is a looming disaster and the ever increasing government spending isn't helping the situation. Thanks for bringing light to the strings attached to something that appears to benefit the people.
ReplyDeleteThe government has been tossing around stimulus checks during Covid-19 which makes sense. Covid-19 has ruined many lives, and its interesting to see how much the government will help. I agree on you saying that giving to the people a whopping 2.2 trillion dollars is highly favored. There is still tradeoffs. Giving this "free money" to the people helped hem during Covid-19 to provide for there families, but the nation dept has increased once again. I agree that it's important to help people during covid-19, but the government isn't helping to stop us from being in dept. It seems like the we keep digging a hole for ourselves.
ReplyDeleteYou make a valid argument. It wouldn't benefit the economy at all to do another one of these checks. I don't think the citizens of the US would want to suffer through it again either. I like how you used economic terms such as GDP and included information you used in class. I also like how you used a global reference as well. It gives us the big picture. Also giving light to the other side of the argument helps readers to understand. Overall well done!
ReplyDeleteThere is a valid argument presented about how another stimulus check would not be worth it, but I also think that a stimulus check would be helpful because the more money that people have to spend, the more money there is in the economy. The covid pandemic left the economy at a low point, in order to get back to a healthy economy, the US government has been lowering interest rates, and providing stimulus checks and it has been working to bring the economy back up. I think that it would be a good idea to have another stimulus check.
ReplyDelete