Stimulus checks reduced food shortages and financial hardship by more than 40%
A toddler watches local residents receive food items as the New York City Food Bank teams up with the New York Yankees to launch the monthly food distribution for New Yorkers in need at Yankee Stadium on 20 May 2021 in New York.
Michel Loccisano | Getty Images
WASHINGTON – The two rounds of economic stimulus checks distributed over the past six months appear to have significantly reduced the financial difficulties of American households, According to new analysis of Census Bureau data researchers from the University of Michigan.
Between December and April, the census household pulse survey showed that the rate of food shortages fell by more than 40%. During the same period, financial instability decreased by 45%, and anxiety and depression decreased by 20%.
The biggest improvements in food security and financial stability, according to Pulse data, occurred in the weeks immediately following the enactment of two relief bills and the IRS began sending payments with economic impact on individual bank accounts.
As part of a Covid-19 relief bill, the federal government distributed $ 600 to nearly all American adults starting in December of last year. A second bill, the American Rescue Plan Act, was passed in March with a new round of checks, this time for $ 1,400.
Two groups in particular experienced the largest overall decline in hardship in the first four months of this year: adults living with children and households earning less than $ 25,000.
A resident sorts her free groceries while others queue at the pantry of the Fourth Presbyterian Church amid the ongoing coronavirus disease (COVID-19) pandemic in Boston, Massachusetts, United States, April 27, 2021.
Brian Snyder | Reuters
The study’s authors, H. Luke Shaefer and Patrick Cooney of the University of Michigan’s Poverty Solutions initiative, recognize that the economy has improved over this period, likely helping to reduce overall hardship.
But they argue that with an unemployment rate still above 6% in April, the economic recovery alone is not enough to explain the dramatic increase in food security, financial stability and mental health that has coincided. with the stimulus payments.
Studies like this are part of a growing body of research that suggests direct cash transfers may have helped isolate U.S. families, and the U.S. economy as a whole, from the worst of the pandemic.
The unconditional payments have also proven to be extremely popular with voters, including Republicans. A March survey found that 79% of all voters supported the $ 1,400 stimulus checks; 70% were in favor of an enhanced federal unemployment benefit of $ 300 per week and 69% were in favor of an expanded child tax credit.
As of July, the Child Tax Credit will be distributed as a monthly payment to families with children: $ 300 for each child under 6 and $ 250 for each child from 6 to 17 until the end. of the year.
According to the Center on Budget and Policy Priorities, these controls alone will raise an estimated 10 million American children above or closer to the poverty line.
Critics say the payments distributed too much money to people who didn’t really need it and they had no control over how the dollars were spent. The overall cost to taxpayers of the stimulus checks was about $ 391 billion.
But given the popularity of stimulus payments and the growing evidence of their impact on people’s lives, it’s no wonder the White House is keen to draw attention to them.
President Joe Biden delivers remarks on the state of the US economy and the need for coronavirus disease aid (COVID-19) legislation as Treasury Secretary Janet Yellen listens in the room State Dining at the White House in Washington, United States, Feb.5, 2021.
Kevin Lemarque | Reuters
“President Biden’s economic plan works and eases hardship,” read the subject line of a White House press office to reporters on Wednesday, touting the results of Shaefer and Cooney’s analysis .
“The benefits of the US bailout – one of the most important pieces of legislation in recent history – have had transformational effects,” he said.
For Democrats, there is a lot to be done about whether the public ultimately views Biden’s stimulus bill as a success.
Midterm congressional elections are less than 18 months away, and historical trends are in favor of Republicans taking over the House and Senate.
Democrats are also relying on the $ 1.9 trillion relief bill to help them sell Biden’s iconic national investment plans to the American public: the $ 2.3 trillion American Jobs Plan and the ‘American Families $ 1.8 Trillion Plan.
Some of the monthly cash transfers introduced in the relief bill are also included in the domestic spending program. For example, the American Families Plan proposes to make the expanded child tax credit permanent.
A permanent, refundable child tax credit could reduce America’s overall child poverty rate by about 40%, according to estimates from the Center for Budget and Policy Priorities.