There's a lot of debate about how much and who should get a third round of direct payments from the government. But the back and forth on the issue may not be all that necessary.
“It’s rare. When we have the cards set up to actually have a genuinely rapid economic recovery that could push unemployment really low in the next couple of years, I think that might happen, we should seize that opportunity,” said Josh Bivens, Research Director at the Economic Policy Institute, a nonpartisan nonprofit that advocates for the low and middle income.
Bivens says further targeting of direct payment checks isn't really necessary because no one rich is getting them to begin with.
He adds that narrowing them too much could leave out people who may have had a solid 2019, but then had devastating changes in 2020, since the payments are based on 2019 tax returns.
According to the Peter Peterson Foundation, the first payments provided a modest boost to the economy, but really only to certain industries, like grocery and household supplies.
People used them mostly for what they were intended for – food, covering rent or a mortgage, utilities and regular bills.
Critics have pointed out that higher income households that got payments saved the money or used it to pay down debt. But that doesn't bother Bivens at all.
“Looking at the personal savings rate going up a lot in 2020 and saying, ‘oh we've wasted all those checks,’ that's really short sighted,” said Bivens. “We know why the savings rate went up. It would be a great thing to enter an economic recovery with really strong household balance sheets, rather than the really weak ones we entered after the housing bubble crash.”
Bivens argues savings went up because there were fewer places to spend money last year. He also points out there should be other priorities over direct payments, like investing in beating and controlling the virus, unemployment insurance, food and low income rental assistance, local and state government aid, and safely opening schools.
Because these aid packages are one-time deals, he's not concerned about the cost.
“Doing it one time and doing it when the economy is so weak that inflation and interest rates are just sitting in the basement, I'm just not really worried at all about that,” he said. “I think we talked about major new permanent expansions like Medicare for all, then you need to start to talk about raising taxes to pay for it.”
