Although the Coronavirus Aid, Relief, and Economic Security (CARES) Act authorized a stimulus payment for most Americans, that money was largely distributed by the start of June and the country has seen no further assistance from Washington since that time.
While lawmakers have begun debating the possibility of a second stimulus payment, Republicans have largely made clear this payment will probably be the last one — if it happens at all.
Sadly, while the next COVID-19 check will be a relief for the millions of Americans who have spent their cash already, it may not be enough to make a meaningful difference. In fact, more than 150 economists recently signed an open letter urging policymakers to authorize ongoing stimulus payments to households across the country.
While other countries have taken this action and some lawmakers have proposed it, reliable and steady coronavirus relief payments haven’t been seriously considered here yet — but there are three key reasons why these 150 economists believe they should be.
1. Ongoing payments would reduce widespread economic pain
As the open letter points out, it’s abundantly clear that many Americans are struggling right now through no fault of their own, as the government has forced companies to shut down.
The unemployment rate, which currently stands at 11.1%, is higher than it was at the peak of the 2008-09 Great Recession. Millions of people have lost employer-provided health insurance along with their jobs, and the U.S. GDP is expected to shrink dramatically.
Ongoing stimulus money would ensure those in need have the money to pay their bills even if they’re unemployed, and would be an effective response to a deep recession that requires “significant and sustained stimulus.”
2. Regular lasting payments would boost consumer spending
Many Americans who have been unable to return to work or who have lost their jobs have largely spent their first stimulus payments on the essentials, and many are now struggling to find the money to cover basic expenses.
As the open letter points out, this is a big problem, as consumer spending accounts for two-thirds of GDP. If people don’t have money to spend, demand will lag and the economic recovery will be much slower.
Ongoing, reliable stimulus payments that people can count on would increase confidence and prompt people to actually go out and spend, using the money the government is giving them since they won’t have to worry that the next payment will be their last one.
3. Automatic stabilizers are more efficient and would promote a stronger recovery
Finally, the open letter points out that many economists believe the Great Recession was prolonged because the government response was insufficient. To avoid a similar mistake, they believe Washington should be aggressive in offering relief by providing continued recurring payments until there’s clear evidence of recovery.
This robust response could help the economy come roaring back as it starts a chain reaction that boosts economic activity — and it wouldn’t rely on lawmakers repeatedly finding compromise so a bill can pass every time more aid is needed.
Is there any chance of ongoing stimulus money?
Although these arguments are persuasive, budget-conscious lawmakers aren’t likely to be swayed by them. In fact, it’s still an open question whether we’ll even see a second coronavirus relief check. And the sad reality is, there’s a very good chance that you’ll be largely on your own to survive the 2020 recession — even if you do happen to get one more payment.
You’ll want to make sure you’ve taken steps to get your own finances in order to weather these troubled times, and some possible steps to do that include loading up your emergency fund; securing a home equity line of credit in case you need it for emergency spending; and raising your retirement account contributions now if you can in case you have to hit the pause button later.
While you should work on making sure your own financial situation is secure, if you want lawmakers to listen to these economists and provide ongoing stimulus money, you should also contact your representative and let them know you believe that step could be critical to a strong recovery that helps everyone get back on their feet faster.
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