With Congress passing a third economic relief bill along party lines this week, most American adults will be set to receive another stimulus check after the president signs the bill into law.
There are two principles, according to economists, behind government-issued stimulus checks: financial assistance and the multiplier effect — which means that when the government sends out money, people will spend it to stimulate the economy.
Michael Ryan, an economist at UNG, explained to The Times that stimulus payments are capped and catered to groups that will be incentivized to spend it.
“The economic principles of a stimulus check is that you are going to spend that money back into the general economy, especially during turbulent economic times,” said Ryan.“Strictly from an economic lens, you wouldn’t want a recipient to spend it toward personal debts or hoard the money.”
According to October 2020 data from the New York Federal Reserve, only 29% of Americans spent their first government-issued stimulus checks.
Of those who received $1,200 stimulus checks from the Trump Administration’s CARES Act, 36% of Americans put it toward personal savings, 35% put money toward debt repayment and 29% used it for the consumption of goods and materials.
“What I consider as a priority for my stimulus check versus what you consider as a priority may not align with the economic or political intentions of issuing the stimulus check,” Ryan said.
For those who spend money, Ryan said that stimulus-based financial decisions are geared toward everyday necessities like groceries and clothing and leftover funds go toward “comfort purchases” such as personal recreation items.
However, in times of turmoil, stimulus money may also go toward addictive coping mechanisms.
“But I think in times of economic downturn or situations of distress, someone may use that money for alcohol, cigarettes, saturated fats and other potentially harmful substances,” Ryan said.
From President Trump to President Biden, many have expressed frustration over the infrequency of government-issued stimulus checks during the pandemic.
Ryan explained that the U.S. government cannot issue stimulus checks on a regular or monthly basis because they are constrained by a rising trillion-dollar deficit.
“There are certainly political factors in why there isn’t regular stimulus payment, but you also have an economic factor as well,” said Ryan. “It would be unsustainable given what the nation’s current debt is.”
In the first five months of the current budget year from October to February, the U.S. government’s budget hit a $1.5 trillion deficit in February, which is an all-time high during that span.
Not factoring President Biden’s $1.9 trillion relief plan, the Congressional Budget Office projected a $2.3 trillion deficit for the 2021 fiscal year.
For low-income households, how much will stimulus checks help?
A primary goal of the economic payments is to alleviate the economic hardship Americans faced due to the pandemic — especially lower-income Americans.
But for low-income Americans, one or two rounds of stimulus checks may not be enough.
“As the pandemic progressed, our call volume seemingly was four times as high,” said Jessica Dudley, president and chief principal officer of United Way of Hall County. “Folks are really coming to us with a variety of needs. Anywhere from medical bills to rental assistance and utilities.”
Dudley said that there isn’t enough funding from local organizations to “help every single person or family” that’s been affected by the pandemic.
United Way of Hall County classifies households on four levels.
For a family of four, 45% of the county is considered self-sufficient at an income of $60,000 and above, 14% are financially burdened which is income ranging from $45,000 to $60,000, 21% are classified as low income to very poor which is $25,000 to $45,000 and 18% are considered extremely poor which is income less than $25,000.
The goal for United Way is to help residents achieve self-sustainability during and after the pandemic. As low-income residents await their stimulus checks, one of the biggest priorities for them is keeping a roof over their heads.
“Sometimes it is just a bump in the road where a family does just need one month’s rent and they can get back to being self-sufficient the following month,” Dudley said. “But sometimes there’s a consistent need for assistance, so we try and work with families to ensure we can help them become self-sufficient.”
Dudley said that one of the pressing issues for many low-income families during the pandemic is rent payment and potential eviction.
Hall County tenants have been protected from pending evictions thanks to a September order from the Centers for Disease Control and Prevention.
But the CDC’s moratorium expires on March 31, and rent has been allowed to accrue in that time.
“For some low-income families, there are situations where one or two checks may not make a dent in months of rent that’s been building up,” said Dudley.
In February, Gov. Brian Kemp announced that the state received $552 million in stimulus funds through the federal Emergency Rental Assistance Program.
The Georgia Department of Community Affairs launched the State of Georgia Rental Assistance Program on March 8 which provides up to 15 months of rent and utility assistance for eligible applicants.
The Rental Assistance Program program is designed for those whose income is at or below 80% of the area median income, which for the Gainesville Metro Statistical Area is $57,650 for a four-person household, according to U.S. Department of Housing and Urban Development.
“Those whose incomes fall below 50% AMI will be prioritized as well as those where one or more household members are unemployed and have been unemployed for 90 days,” said David Whisnant, Georgia Department of Community’s division director of housing.
But the pandemic has provided community organizations the opportunity to find new initiatives to help low-income individuals and families.
Dudley championed the “One Hall Against Poverty” initiative, a poverty cycle-breaking effort that examines COVID-19’s effect on mental health and those experiencing poverty.
Additionally, United Way’s Compass Center has two social workers who are available to help low-income individuals and families gain access to community resources and programs.
Through the Compass Center, Hall County has been able to give out $1,000 in financial assistance to various individuals and families affected by the pandemic.
“The need for assistance has not gone away, we continue to see throughout the pandemic,” said Dudley. “For us, if there’s a way that we can assist, provide information and access when it comes to upcoming payments, we want to be a resource through this difficult time.”