Earlier I wrote about the rapidly growing support for more stimulus checks.
In just a span of about one week, we’ve seen more lawmakers come out to support the stimulus checks and some are even threatening to resort to a government shut down if the checks are not included in the next relief bill.
If you are somebody who wants to see more checks go out, that is very encouraging.
But there is one big reason why more stimulus checks may not go out, despite the outpouring of support from lawmakers on both sides of the aisle.
The reason is efficiency.
There are a lot of economists out there who do not believe that stimulus checks are the most efficient way to provide relief.
It’s not that stimulus checks are not effective — it’s just that there are better alternatives in their eyes.
“They’re a decent stimulus. They’re far from the best stimulus out there,” said Marc Goldwein, head of policy at the Committee for a Responsible Federal Budget.
“A dollar spent on boosting unemployment benefits is going to be better stimulus than a dollar spent on checks.”
Why are unemployment benefits more effective?
Unemployment benefits offer more bang for the buck than stimulus checks because they target people who need aid the most.
“More of it goes to low-income folks, and it goes specifically toward people who are likely to spend it,” said Goldwein.
Individuals who have not had their income affected by the pandemic are more likely to simply just save the stimulus check that arrives in the mail.
I’ve seen reports on stimulus spending habits in the past and the percent of people who put their checks into savings is a small percentage overall. So one response to this argument is that stimulus checks may not be as efficient as unemployment benefits but they are still highly efficient all things considered.
“Although the data shows that UI benefits have a better effect on the economy than stimulus checks alone, that doesn’t mean that stimulus checks aren’t helpful. We know that providing money to people directly is one of the best ways to stimulate the economy and stimulate the demand,” Neil Sroka, communications director for the progressive political action committee Democracy for America said.
Efficiency is also not everything.
There’s something to be said about the popularity of stimulus checks.
The popularity is one reason why some politicians favor them over other benefits.
I also think that there is a widespread psychological effect on society when it feels like the government is helping to take care of them via something like stimulus checks. Simply put, it gives people hope.
If more checks could go out, they could help a lot of people on the brink of breaking down financially, physically, or mentally and with a few (very dark) months to go until we have widespread vaccination, that could be well worth it.
So I think there is an intangible benefit to stimulus checks that should somehow be involved in the discussion.
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Daniel Gillaspia is the Founder of UponArriving.com and the credit card app, WalletFlo. He is a former attorney turned travel expert covering destinations along with TSA, airline, and hotel policies. Since 2014, his content has been featured in publications such as National Geographic, Smithsonian Magazine, and CNBC. Read my bio.
