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As cases of the coronavirus spike in Southern and Western states, economists worry the recovery—which already has a long way to go—could get derailed in its infancy.
That’s why a group of more than 150 economists signed a letter released by the Economic Security Project and the Justice Collaborative this week calling on Congress to issue “automatic triggers for cash stimulus payments.” These economists would like to see the federal government send additional stimulus checks to U.S. Families until the economy reaches a certain threshold of recovery.
“Congress absolutely has to send out more money,” said Claudia Sahm, director of macroeconomic policy at the Washington Center for Equitable Growth, told Coins2Day on Thursday. She was among the 156 signees, and she says her research finds direct cash payments—like the first round of stimulus checks—are one of the best tools for stimulating an economy.
The first round of stimulus checks, signed into law by the March CARES Act, were worth as much as $1,200 for individuals or $2,400 for married couples, plus $500 for each qualifying child. That amount decreased for adjusted gross income above $75,000 per individual or $150,000 per qualified couple. Individuals earning above $99,000 (or $198,000 per couple) weren’t eligible for the first round of checks.
Instead of doing just another one-time cash payment, Sahm says, Congress should pass a bill that includes automatic economic triggers for stimulus payments. She used an 8% unemployment rate as an example for a trigger. In that scenario, Congress would mail a second stimulus check now, and then if the jobless rate is above 8% in November it would mail a third round without having to pass another bill.
Sining into law an economic trigger for stimulus payments would help to prevent a changing political environment from stymieing another round of cash payments. Historically, she says, Congress is less likely to act after elections—especially if it’s a lame-duck party.
“Regular, lasting direct stimulus payments will boost consumer spending, driving the economic recovery and shortening the recession. Right now, most Americans are just trying to keep their heads above water,” the signees wrote.
On Monday, Senate Majority Leader Mitch McConnell opened the door for more stimulus. He suggested, however, that lawmakers might lower the income threshold this time, for instance sending checks only to those with incomes under $40,000.
Sahm says sending out fewer stimulus checks is a terrible idea, as it both leaves millions of jobless Americans without checks and lowers the overall amount of money pumped into the economy. She is hopeful that Congress will act before the end of July.