The abrupt halt in stimulus check support from the federal government has pushed many low-income and middle-income families closer to an economic crisis. Inflation across the world is skyrocketing, and it has hit the US the hardest in over 4 decades.
The multiple schemes of the federal government were a lifeline, especially the expanded CTC payments that started in the third quarter of 2021 and continued through the year. The credit passed under the American Rescue Plan Act signed by President Biden in March last year moved ahead with the prevailing child tax credit that benefits many parents each year.
The Enhanced CTC Stimulus Check Came At The Right Time For Parents
– Advertisement –
The enhanced child stimulus check increased the money families received from $2,000 a child to $3,600 for children aged up to 6 years and $3,000 for children between 6 and 17 years.
The child tax credit stimulus check also extended eligibility, thus making it accessible for most parents, even those whose earnings were not enough to file income tax returns. So rather than being paid after the filing of taxes, as it did happen before the Rescue Plan was passed, 50% of the money reached beneficiaries starting July through December 2021 in equal stimulus checks every month on the 15th.
This policy directly benefitted families by sending them monthly stimulus checks between $250 and $300, and trusting them that they discerned what was best for them and their families. It came at just the right time for millions of families as the American economy was just recovering.
– Advertisement –
The economic bearing of the CTC stimulus check was significant. Research showed that it immediately helped 3M children stay out of scarcity since July 2021.
But the expanded CTC stimulus checks were approved by Congress only through the end of 2021. Supporters of the program expected that it would be stretched in 2022, mainly as part of President Biden’s greater environmental and social expenses proposal, the Build Back Better scheme.
Expansion Of Enhanced CTC Stimulus Check Policy Foiled By Republicans
But the efforts were stymied by Republican Senators because of its price label of $1.5T if the package were to last a decade. The negotiations fell apart, and the checks stopped immediately.
With the halt in the monthly stimulus checks under the expanded child tax credit program, the poverty level has increased within the next month by 41% after the payments expired in December 2021.
Families watched in dismay at Congress’s total lack of perseverance and earnestness about restarting it. When the expanded CTC stimulus check was introduced, it proved instantaneously that many children could be picked up out of insufficiency. Advocates for the stimulus check say that bipartisan support should be started to restore the expanded CTC.
A study showed that 50% of the families receiving it used it for food, while a third used it to pay for utilities.
Yet Not Resolution By President On Student Loan Debt Forgiveness
Even as president Biden claims that he is near a conclusion on student loan debt forgiveness, the administration carries on weighing the economic and political fallout of such a move. The interest rates of student loans have climbed to their maximum in years even as the president continues to assure people that he consider the issue soon.
Officials claim that Biden is expected to announce in July or August the steps he intends to take. It is close to the time when the pause in the federal loan payments is slated to lapse. The pause, in operation since March 2020, was extended earlier this year until 1 September 2022.
The delay will mean that around 40M citizens who owe around $1.6T in student loan debts will be forced to wait before they discover whether they get any support from the government in erasing their student loans in part or full.
Officials at the White House have declined to give any statement on internal issues and only revealed that the administration continues to evaluate options for elimination, but no firm decisions have been made.
The President has been wary of expending his executive power to expunge student loan debt. Officials say there is a chance of the move fueling inflation further. Biden is wary of making a move that could be seen as contributing to further inflation and price rise. Officials say that he has been more open to the notion recently as advocates for student loan debt forgiveness both outside and within the government made fervent pleas for action.
With the November midterm elections looming, the Democrats are faced with the chances of losses all around. The advisers to the president are evaluating the political lift such a move would have from forgiving student loans. But they are also wary of a backlash from the electorate who did attend college, paid off their loans, or did not avail of it. The Democrats are still divided on the political goodwill earned by the third stimulus check and other largesse granted under the American Rescue Plan Act signed by Biden.
World Bank Warms That Global Economy Faces 1970s Era Stagflation
The World Bank has warned that the global economy may be moving into a phase of rising prices and weak growth. This toxic combination could test the stability of many nations still struggling to recover from the after-effects of the pandemic.
This is the strongest challenge faced by the global economy since the 1970s when a double oil shock lifted prices and put a brake on economic growth. It gave rise to what is known as ‘stagflation.’
The bank has already slashed its annual forecast of global growth and pegged it at a measly 2.9%, down from the 4.1% predicted in January this year. They further warned that this subdued rate of growth is likely to persist throughout the decade as a result of weak investment in most countries, including industrialized nations.
The war in Europe has aggravated the slowdown and driven prices for many commodities, including gas, and has fuelled inflation. The predicted growth rate this year will be roughly half of the annualized rate for 2021 and is feared to show little progress in the next two years.
This will be the sharpest slump after an initial post-recession recovery suffered by the economy in over 8 decades, the Bank warned. It will be a period of fracture in global trade and financial networks and food prices will soar, sparking social unrest in importing nations such as the US.