As Americans prepare for Thanksgiving, a group of more than 125 economists is calling for a second round of $1,200 stimulus checks for Americans, saying in an open letter that failure to act could damage the economy for years to come.
“Unless policymakers act quickly to respond to the crisis at the scale necessary, we risk the damage to the economy lasting much longer than necessary, particularly for those at the bottom who have been hit the hardest,” the letter reads.
The group of economists, which includes former Obama administration Economic Policy Director Jason Furman, is advocating for relief measures that helped Americans during the spring.
“Learning from the 2009 stimulus bill and the recent CARES Act, we know that the next stimulus needs to be big, immediate and direct, and lasting until the economy recovers,” the letter reads. “We urge policymakers to use all the tools at their disposal to revitalize the economy, including direct cash payments, which are one of the quickest, most equitable, and most effective ways to get families and the economy back on track.”
The letter points specifically to the $1,200 stimulus checks as a key to staving off poverty for many.
“Along with the other policies, cash payments were a primary reason the CARES Act drove poverty to fall in the early months of the recession, before increasing again as aid ran out,” the group states. “The Urban Institute estimates that sending two more rounds of checks would keep 14 million people out of poverty, while expanded unemployment benefits and SNAP would together keep an additional four million out of poverty.”
Meanwhile, the outlook for swift action by Congress to pass a comprehensive COVID-19 aid bill isn’t promising.
Speaker of the House Nancy Pelosi said the Thanksgiving holiday, considered a time to show gratitude, will also be marked “with great pain, great pain that in our country in the course of this year, 250,000 Americans have lost their lives to the coronavirus.”
Pelosi noted that Congress has yet to pass any further coronavirus relief aid and placed blame for the inaction on Senate Majority Leader Mitch McConnell.
“Over six months ago when we passed the Heroes Act, Leader McConnell said we need a pause. We need a pause. Well, I would hope that for him, the pause can come to an end. Nearly 200,000 people have died during that pause, so we’re asking him to come back to the table,” Pelosi said.
Congressional Democrats and Republicans generally say a new stimulus bill is needed, but they disagree on the scope of it. Some Republicans are opposed to another round of checks directly to most taxpayers, and some don’t want Washington to “bail out” state and local governments that had financial struggles before the pandemic.
As of this week, Pelosi continues to eye a bill in excess of $2 trillion while McConnell is looking for a much smaller package in the neighborhood of $500 billion.
The New York Times reports President-elect Joe Biden’s team is urging Democrats to reach a quick stimulus deal — even if it doesn’t include everything they’re looking for. The Times notes Biden’s advisors fear economic conditions could worsen as his January inauguration approaches. They’re anxious to get more relief to Americans before the end of the year.
At issue is a huge virus relief bill that would send another direct payment, restart bonus unemployment benefits, fund additional testing and vaccines, provide aid to schools and allocate money to state and local governments, a Democratic priority.
A $1.8 trillion rescue plan in March passed the House virtually unanimously. The larger Pelosi-pushed package has run into resolute opposition from Republicans. Taking care of the issue would clear the decks for a fresh start on the congressional agenda next year.
Federal Reserve Chair Jerome H. Powell continued to push for new relief earlier this month saying, “I think we’ll have a stronger recovery if we can just get at least some more fiscal support.”
If no agreement can be reached in the next few months, a deal will fall on Biden’s new administration. Economic recovery is listed as one of his “day one priorities” on the Biden-Harris transition website. There is no direct mention of stimulus checks on the economic recovery plan outlined.
However, the president-elect has said that “we must spend whatever it takes, without delay, to meet public health needs and deal with the mounting economic consequence,” but he did not specify a stimulus payment amount.
Along with expanding free COVID-19 testing, mounting a national emergency effort, and funding state and local governments, part of his plan also calls for emergency paid leave covering 100% of weekly salaries or average weekly earnings capped at $1,400 a week.
Eligible recipients include sick workers, workers caring for family or loved ones, those with increased risk of health complications from COVID-19, domestic workers, caregivers, gig economy workers and independent contractors. Parents dealing with school closings would be eligible for paid leave as well as child care assistance.
The Associated Press contributed to this report.