Capitol Report: Your next stimulus check may be the first of several

As the Biden administration looks to quickly pass a third major economic stimulus program, some of its allies on Capitol Hill and elsewhere are mulling mixing up the formula for payments to households, looking to make them recurring instead of the lump sums seen in the past.

Getting money to households is, for the government, a relatively easy task. Getting them to spend it, however, can be hard — those not in need of immediate help often squirrel away the extra cash or use it to pay down debt.

Recurring payments, in theory, might ease that concern somewhat, by allowing families to plan for better months ahead, advocates say.

“Families, small businesses and the overall economy are all pretty much the same on this issue,” said Greg Nasif, spokesman for Humanity Forward, the political arm of onetime Democratic presidential candidate Andrew Yang’s non-profit group.

“They need to plan their budgets. They do better, and they spend more, when they know what’s coming. That’s why recurring installments of direct payments are so important, whatever the scale and scope.”

Biden’s plan calls for $1,400 payments to eligible family members, which, in addition to the $600 payments approved by Congress in December, would total $2,000 in support. That would be in addition to the $1,200-per-individual payments sent out last spring.

In addition to Humanity Forward, some Democratic House members are pressing for recurring payments, but in much larger amounts instead of breaking up the $1,400 in the Biden plan.

Rep. Ro Khanna, a Democrat from California and first vice chair of the liberal Congressional Progressive Caucus, has said he wants recurring payments in the stimulus package, but in a far bigger amount: $2,000 a month.

“Even if we can’t get $2,000 in, you get some recurring monthly payments, at least until the summer, so that the Americans have some help,” he said last week. “Obviously, I’m going to want to support what’s going to get relief to people, but I think that that would be good to have.”

Rep. Tim Ryan, an Ohio Democrat, has also been in favor of bigger, recurring payments.

“In the next relief package, I will be continuing to fight to include my legislation that provides a $2,000 recurring payment to every American until employment returns to pre-COVID-19 levels,” he said in December, in announcing his support of the previous aid package.

But one prominent conservative economist said the recurring-payments idea probably won’t make much of a difference, and the payments in general aim at the wrong problem.

Douglas Holtz-Eakin, a former head of the Congressional Budget Office and president of the American Action Forum think tank, said people’s consumption patterns would likely not change depending on whether they got money in installments or a lump sum.

“It’s the same amount of spending in both cases,” he said.

The problem, Holtz-Eakin said, is not that incomes are down on average or that consumption has been constrained by lack of money. He said spending is being held back by by people’s reluctance to spend on things like dining and personal services because of the virus.

That’s a different kind of problem than usual recessions caused by people pulling back on overall spending because of lost jobs or worries about the economy. In those cases, Holtz-Eakin said, stimulus payments make sense because people spend, which preserves jobs, which keeps people spending.

“If they can’t spend it, that virtuous circle is gone,” he said.

He said the a smarter approach would be to target aid to those who have lost incomes, such as through more robust aid for the unemployed.

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January 27, 2021 at 11:58AM

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