Having survived a festive season hampered by lockdown, and then Blue Monday in January, and — in many places — a frozen February, it’s good to have something to look forward to. When it’s also something that boosts consumption and drives revenue for retailers and manufacturers, thus spurring the economy, then that is even better. This is the rationale behind issuing checks, the very welcome and timely check the U.S. government sends to taxpayers. . First distributed during the Great Recession of 2008, President George W. Bush signed the Economic Stimulus Act in 2008 to alleviate the effects and stave off the recession. The act consisted of $152 billion that included a $600 tax rebate to low- and middle-class households.
Stimulus checks and the coronavirus pandemic
More recently, in March last year, the U.S. government enacted a bill that issued stimulus checks to provide relief to Americans for economic hardships caused by the coronavirus pandemic. Due to the economic impact of COVID-19, necessary payments and financial aid were made in order to assist struggling families. These are called Economic Impact Payments.
What’s a stimulus check worth?
The IRS and U.S. Treasury Department have begun issuing the following payments authorized by the CARES Act in April 2020.
- First stimulus check: $1,200 for single individuals or $2,400 for a married couple filing jointly — plus $500 per eligible child.
- Second stimulus check: A base amount of $600 per eligible person (which is half of what was given for the first round of payments under the CARES Act).
- Third stimulus check: Under President Joe Biden’s $1.9 trillion American Rescue Plan signed into law on March 11, eligible taxpayers (individual taxpayers who earned up to $75,000 in their latest tax filing, either 2019 or 2020) can receive $1,400 (double the amount for eligible couples filing jointly who earned up to $150,000), and an additional $1,400 for each adult or child dependent. The stimulus payment is entirely phased out at an Adjusted Gross Income (AGI) level of $80,000 for single and Married Filing Single filers; at an AGI of $119,999 for Head of Household filers, and, at an AGI of $159,999 for Married Filing Joint filers.
Making a difference?
Will these payments help to pull the economy away from decline? Out of nine studies conducted in 2011 to see what difference the ARRA (American Recovery and Investment Act) had on the economy, the “Washington Post” found that six of those studies concluded that the stimulus had a significant, positive effect on employment and growth, and three found that the effect was either quite small or impossible to detect.” During the current crisis, stimulus packages differ from those previously issued, as the effects of COVID-19 are completely different from any other economic or financial crisis we have previously known and of course, as yet, this is mostly uncharted territory.
Whatever the result, a check in the mail is always welcome!
