money $2,000 stimulus checks would be a massive boost for America's poorest
America’s poorest families would see their incomes grow by more than quarter if the $2,000 stimulus check proposal that President-elect Joe Biden supports passes, according to a new analysis.
The 20% of households with the lowest incomes would see their annual income increase by 29% if Congress passes the provision under the CASH Act, the Institute on Taxation and Economic Policy (ITEP) found.
“That's going to be a significant boost in their income,” Steve Wamhoff, director of federal tax policy at ITEP, told Yahoo Money. “For people who work for Congress or people who work in policy, we can easily forget just how little money some people have.”
For comparison’s sake, the current $600 payment gives the same group just an 8% raise, while the $1,200 direct payments last spring lifted their incomes by 11% — the latter of which experts credited with keeping poor families afloat in the earliest parts of the pandemic.
The bottom 20% of households who make up to $21,300 would get the biggest benefit from the $2,000 stimulus checks with an average payment of $3,160. The second-lowest 20% would receive a 12% boost to their annual income with an average payment of $3,530.
The $2,000 stimulus check proposal, which had the backing of President Trump in December, passed the House with overwhelming support in December, but was blocked by the Republican-controlled Senate. The proposal is gaining steam again after Democrats won both of Georgia’s Senate seats, securing control of the Senate once they’re sworn in and Biden takes office.
Read more: Here's what to do if you haven't gotten your stimulus check
The personal income, savings, and spending rose in the spring and summer among low-income earners, largely because of the first round of stimulus checks and — to a smaller extent — the extra $600 in weekly unemployment benefits. Poverty even fell in May as the bulk of the stimulus was distributed, but then started increasing as government supports expired.
‘We need $2,000 stimulus checks’
The CASH Act legislation would increase the amount of the direct payments from $600 to $2,000 and expand eligibility for the dependent bonus to include dependents of any age. Currently, only parents and guardians of dependents under 17 receive the bonus.
“The $2,000 payment as it's written into the House bill is more generous even besides the fact that it's just more money,” Wamhoff said. “It’s also more generous because it's going to more people.”
The $2,000 stimulus check provision would cost around $464 billion, according to The Joint Committee on Taxation, versus $166 billion price tag for the $600 stimulus checks, according to the Committee for a Responsible Federal Budget. Replacing the $600 stimulus checks with $2,000 ones would mean an additional $300 billion in stimulus spending.
Biden has consistently supported the higher payment — before and after the Georgia Senate runoff. Biden said he would unveil an entire stimulus package on Thursday — that would include $2,000 stimulus checks — with the proposal worth “trillions of dollars.”
“$600 is simply not enough when you have to choose between paying rent or putting food on the table,” Biden said in a tweet on Sunday. “We need $2,000 stimulus checks.”
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.
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