Although President Joe Biden still seeks to strike a bipartisan deal for a new round of COVID-19 relief aid and save the US economy, his $1,400 stimulus check offered to Americans is still in Congress awaits its approval.
The discussion is the latest chapter in the ongoing US stimulus checks saga that has left a lot of Americans out of work and small businesses unable to guess what's going to happen next.
One thing that has ignited a lot of debate is the $1,400 stimulus checks offered by Biden to send directly to Americans.
So how could those cash payments, including all the other financial assistance in Biden's stimulus plan, actually bring impact to the world's largest economy?
Here are the common questions Americans would badly want to raised and have answered.
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What's the purpose of stimulus checks?
The principle of it is that people get the cheque right away and spend the money. And so it will boost economic development, provided that some two-thirds of US economic growth is driven by consumer spending.
Who among the Americans will benefit from this check?
Ninety-nine percent of households in the bottom 80 percent of incomes, plus 100 percent of homes in the bottom 40 percent, will qualify for direct assistance, including stimulus checks, an extension for the child tax credit, and or an expansion of the income tax credit received, according to the Penn Wharton model.
To the least well-off household in America, how could the check help them?
Penn Wharton researchers found that stimulus cheques paired with tax credit expansions "would increase after-tax incomes by more than 50 percent" for those in the bottom 20 percent of the income distribution.
What do the researchers in Penn Wharton say about this?
The Penn Wharton report predicts that Biden's entire $1.9 trillion strategies will raise the US's gross domestic product (GDP-the value of all the economy's manufactured goods and services) by 0.6 percent compared to this year's baseline.
But all that debt will inevitably catch up with the US and reduce GDP by 0.2 percent in 2022 and GDP by 0.3 percent in 2040.
So, can the $1,400 check provide a significant stimulus?
Not according to the researchers of the Penn Wharton Budget Model. Their study indicates that the proposed $1,400 relief payments would generate only small stimulative effects.' That's because 73% of direct cash transactions are estimated to go straight to household savings.
Can the $1,400 check be received in full by the people?
Oh, no. The incentive is phased out for people making more than $75,000 a year and couples earning $150,000.
So, does the stimulus check includes the Republican plan?
Yeah, but they would be smaller, $1,000 instead of $1,400 for Biden, and they would be available only for the lowest-income earners.
For the taxpayers, how much would it cost them?
That's the thing, it's not inexpensive. Researchers from Penn Wharton predict that direct transfers and tax credit expansions will cost US taxpayers a total of $595bn in 2021.
Of that, stimulus cheques will make up $477bn. And they predict that $348bn of the stimulus cheque outlay will go into the savings accounts of people.
In totality, can the $618bn packages be enough to help the US economy?
Democrats argue the Republicans' package is not enough, like Biden's current Treasury Secretary, Janet Yellen. They claim that had Congress not been so stingy with stimulus back in 2009, the economy can recover faster from the Great Recession and that tight-fisted thinking might now prolong the recovery from the pandemic.
So in America now, how dire is its economic situation?
Just remember that at the height of the pandemic, 22 million Americans were thrown out of work last year.
Just about 12 million of those workers had been restored as of December. That still leaves the economy with 10 million jobs in a pit. And at 6.7 percent, the unemployment rate is almost double the amount it was just before last year's pandemic reached the US.
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In the bottom line, can the stimulus check of Biden help the US economy?
Like everything in the highly divided political world of America, it relies on who you ask.
The non-partisan Congressional Budget Office or (CBO) issued its forecasts showing that, after contracting 3.5 percent in 2020, the US economy would rise 4.6 percent in 2021. The CBO figures, which do not take Biden's proposed stimulus package into account, paint a rosier image than initially expected by the office.
But the CBO report also does not see American jobs returning to pre-pandemic levels until 2024, which is why Yellen says Congress needs to act on the next round of stimulus relief "desperately." Just stay tuned.
