Study provides new fuel for the debate

WASHINGTON DC - APRIL 2, 2020: United States Treasury check with US currency. Illustrates IRS stimulus check.
Jason Raff / Shutterstock

Already, 80-plus members of Congress have put themselves out there in support of a fourth stimulus check, maybe more. Most recently, seven Democrats on the powerful House Ways and Means Committee wrote President Joe Biden that an additional two stimulus checks would keep 12 million more people out of poverty.

Democrats who want to provide more aid have new ammunition for their fight: A study of census survey data, done by the University of Michigan, shows the last two rounds of federal assistance helped keep Americans fed, housed and mentally healthy.

From January through April, households with children reporting food shortages, financial instability and depression dropped by between 20% and 42%, the researchers found.

"Cash aid offers families great flexibility to address their most pressing problems," H. Luke Shaefer, one of the professors responsible for the report, told The New York Times.

Other research, from the Federal Reserve Bank of New York, has found that about 13% of stimulus cash is now used for essential spending, including groceries and housing. But more of it is being devoted toward debt, put into savings, or used to invest in the high-flying stock market.

White House gives hope to backers of fourth 'stimmy'

It's not just policymakers and academics who see value in more stimulus checks. A Change.org petition calling for $2,000 checks for adults and $1,000 for children has collected close to 2.34 million signatures.

While Congress was away on recess, White House press secretary Jen Psaki kept hopes alive for a fourth stimulus check by saying President Biden would be "open" to the idea.

"He’s happy to hear from a range of ideas on what would be most effective and what’s most important to the economy moving forward," Psaki told reporters during a White House press briefing.

But Biden's spokeswoman also said the president has already proposed the things he believes will be most effective for putting people back to work, making the country more competitive and getting through the current "pivotal" period, as she called it.

Those proposals include the packages now in front of Congress: to spend trillions to fix America's woeful roads, bridges and other infrastructure; and to provide more benefits to U.S. families.

What Congress might do about a fourth check

United States Capitol Building at Washington D.C .US Capitol is located on Capitol Hill at the eastern end of the National Mall in Washington,D.C
Kevin Chen Images / Shutterstock

Congress' full return from its recess could mean one of two things where stimulus checks are concerned.

Scenario A: Congress does nothing

After spending $3.5 trillion keeping the economy alive for the past 15 months, many members of Congress — including some Democrats — oppose giving more direct aid to Americans, especially since many will soon start receiving mini stimulus checks through a temporary expansion of the child tax credit.

Getting a new round of federal aid through both houses of Congress would be difficult for the Democrats who are in charge, given the party's slim majorities. But things get a little more intriguing if you factor in a little congressional black magic.

Scenario B: Congress gets creative

The pandemic rescue bill Biden signed in March received zero support from Republicans. It survived because of an arcane process that allows certain bills to pass the Senate with a simple majority of 51 votes instead of 60.

Democrats have been given the green light to use this maneuver once more this year, so they could insert another batch of stimulus payments into a spending bill that combines both Biden's infrastructure and families plans. That way, no Republican support would be needed.

It’s a controversial strategy, considering Biden's stated desire for bipartisanship. But the president may feel he has no choice but to do another end run around the other party to get his new spending bills passed.

Washington not cutting you a check? Cut costs instead

Unhappy Family Sitting On Sofa Looking At Bills
Monkey Business Images / Shutterstock

Until congressional leaders provide more clarity, a fourth stimulus check is still up in the air. If your finances are under pressure, you have some ways to alleviate that now, without the government’s help.

If you own your home, you can still save a massive amount of money by refinancing. With mortgage rates still under 3%, mortgage data and technology provider Black Knight says 14.1 million homeowners can save an average $287 a month through a refi. Those are game-changing savings.

While you’re reducing the cost of homeownership, why stop at your mortgage? A little comparison shopping could help you save big on homeowners insurance. Shopping around might help you find a better deal on car insurance, too.

If you’ve had to lean on credit cards, personal loans or any other form of high-interest debt to get through the pandemic, the interest costs are probably making it tough to get back in the black. A single, lower-interest debt consolidation loan can help you slash your interest costs and pay off your debts faster.

While you pinch pennies, you can use a few to take a run at today’s red-hot stock market. There’s a wildly popular app that helps you invest in a diversified portfolio with just "spare change" from your everyday purchases.

About the Author

Clayton Jarvis

Clayton Jarvis

Reporter

Clayton Jarvis is a mortgage reporter at MoneyWise. Prior to joining the MoneyWise team, Clay wrote for and edited a variety of real estate publications, including Canadian Real Estate Wealth, Real Estate Professional, Mortgage Broker News, Canadian Mortgage Professional, and Mortgage Professional America.

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