KEY POINTS

  • The most recent round of $600 stimulus checks has highlighted a variety of systemic shortcomings
  • Sluggish distribution, outdated information, and poor targeting have all been criticised
  • The Biden administration has brought renewed hope, as an engaged executive could remedy many of the problems

The approval and distribution of COVID-19 relief checks has shaped the political landscape for weeks, but as they’re nearing arrival several glaring weaknesses have become apparent in the government’s program.

Criticisms that the checks are poorly targeted and inefficient have some merit, and while several drawbacks have easy fixes others are more fundamental. As further funding is considered by the incoming Biden administration, the debate is likely to only intensify.

Outdated Tax Returns

Both the first round of checks and the most recent use tax return information from 2019. With 2020’s tax season coming around, however, many are saying there’s no reason not to use data from after COVID-19 hit for the distribution of any new checks.

Sluggish Deployment

The actual distribution of checks has been slow, taking weeks since the measure was passed by Congress. That stands in sharp contrast to other first-world governments, which have been able to send out payments in just hours.

“We are light years behind, and the cost of our lack of progress is felt by those with the least,” Aaron Klein, senior fellow of economic studies with the Brookings Institution, told CNBC.

It doesn’t have to be this way: a bill in front of Congress could speed up the process without costing an extra cent, and the Federal Reserve could order the Department of the Treasury to move faster. Many are hoping the incoming Biden administration and Democratic control of Congress will see those options implemented.

Janet Yellen was the first female chair of the Federal Reserve, and if confirmed by the Senate, would be the first female US Treasury secretary
Janet Yellen was the first female chair of the Federal Reserve, and if confirmed by the Senate, would be the first female US Treasury secretary AFP / Brendan Smialowski

Generous Income Cutoffs

The average income for U.S. citizens is around $36,000. The cutoff for stimulus checks is well above that, with payments gradually reducing for those making over $75,000 until they dwindle to nothing at $115,000. That threshold marks roughly the upper third of U.S. income.

For some lawmakers, that’s far too generous. Conservatives have consistently called for either a lower cutoff or less generous rate of diminishment to ensure checks only go to those who are at real risk from the pandemic.

Checks, Not Unemployment

A hallmark of relief check debates is whether the money would be better spent simply increasing unemployment assistance. After all, if the checks are meant to help those who have lost their income in the pandemic what better way to find them than seeking those who are out of work?

The new spending package does have an extra $300 per week for those on unemployment benefits, but that’s only half of the original amount and does not account for the period when there was no additional funding.

The main obstacle to further funding of unemployment programs is Republicans in the Senate, meaning that it could be revisited when Democrats take the Senate and Biden holds the presidency.

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