Adam Ruben, director of the Economic Security Project, is proposing “automatic stabilizers” that would track unemployment levels and send out stimulus checks and unemployment payments automatically, The Sun reports.
Once enacted, those automatic stabilizers wouldn’t require approval from Congress. But in order to put them in place, Congress would need to agree on the parameters of the payments. And that may not be too likely in today’s political climate.
Did Stimulus Payments Fuel Inflation Surge?
There is a debate between conservative and progressive economists over whether stimulus payments triggered the spike in inflation that we’re seeing now. Many say it was a confluence of factors. Those range from supply chain strains to pent-up demand from pandemic lockdowns to stimulus checks.
Steven Saunders is a director and portfolio advisor with Round Table Wealth Management in New York City. He says it was a combination of global supply chain disruptions and stimulus payments that sent inflation soaring.
“At the same time as the global supply chain was experiencing large scale disruptions, stimulus payments resulted in many individuals with excess disposable income,” Saunders told Forbes. “Since much of the economy was shut down during that time period, individuals shifted their spending away from services such as eating out or travel to buying physical goods like TVs or materials for home improvement. Since fewer products were available, people had to pay up for these products. [That] result[ed] in increasing inflation.”
Meanwhile, Ancora Chief Investment Officer John P. Micklitsch told Forbes that government spending was a factor in the inflationary surge. But it was just one of several.
“It’s largely due to a perfect storm of supply chain disruption from Covid, government spending to fill the economic void and a synchronized global recovery driven by vaccine rollout and economies re-opening,” Micklitsch said.
Still, Micklitsch added that the pandemic also exposed more than a decade of underinvestment in the global commodity supply chain. The penchant for “just-in-time” inventories left suppliers vulnerable to this sort of supply jolt. And that’s something that they’ll need to address to prevent a recurrence in the future.
White House Has Yet to Propose Another Round
The Biden administration appears to be waiting to propose another round of stimulus payments. Of course, that could change any day now. But Biden’s priority this year is reportedly to get his Build Back Better bill through the Senate.
All that hinges on centrist Democrat Sen. Joe Manchin (D-WV). Manchin has pointed to estimates from the nonpartisan Congressional Budget Office (CBO) that the bill would cost upwards of $3 trillion if, as expected, lawmakers extend provisions like the child tax credit beyond one year. He says he’s worried about the national deficit.
Manchin has said he is a “no” on the legislation as it’s currently laid out. And after a war of words between Manchin and the White House late last year, the senator will require a lot of convincing before he’s likely to reconsider the bill.