US stocks closed at record highs on Monday after President Donald Trump signed a pandemic stimulus deal that includes $600 checks for Americans. There’s a chance that even bigger payments could be on the way.
The House of Representatives has passed a measure to increase the stimulus checks for people under a certain income level to $2,000. The bill now heads to the Senate, where it faces an uncertain future.
Trump has backed the idea of bigger checks, but some Republicans don’t think an increase is warranted given how much it would increase the overall price tag of the stimulus bill.
Rep. Kevin Brady, a Republican from Texas, laid out the rationale for opposing the larger payments in a post on Twitter. The checks, he argued, would “do nothing” to help local businesses and get people back to work.
“We can do better,” he said.
Not everyone agrees with Brady.
Federal Reserve Chair Jerome Powell, for example, has repeatedly commented on the necessity of combining central bank stimulus with spending ordered by Congress.
The Fed, he explained in November, is using its lending programs to an “unprecedented extent.” But loans aren’t helpful in every case.
“Many borrowers are benefiting from these [lending] programs, as is the overall economy. But for many others, getting a loan that may be difficult to repay may not be the answer,” Powell said during a press conference.
“Direct fiscal support may be needed. Elected officials have the power to tax and spend and to make decisions about where we as a society should direct our collective resources,” he added. “The fiscal policy actions that have been taken thus far have made a critical difference to families, businesses, and communities across the country.”
Stimulus facts: How do we know the way stimulus checks might be spent? The US Census Bureau conducted a survey in June with some answers on how the first round of payments were used.
The majority of adults in households that received a stimulus check from the federal government say they used it or planned to use most of it on household expenses. That means the money is going back into the economy.
Meanwhile, 15.7% used their stimulus check to pay off debt and 14.1% planned to mostly save it.
Of those who spent their checks, 80% reported using the money for food, while 77.9% used it to their rent mortgage and/or utilities including gas, electricity and internet. About a fifth reported spending the money on clothing.
According to the Census Bureau, 8.1% of respondents said they spent or would spend the stimulus on household goods like TVs, electronics, furniture, and appliances or recreational goods like fitness equipment, toys and games.
The upshot: Economists see direct payments as a way to help protect the fragile recovery and prevent people from falling into poverty as the pandemic continues to rage across the United States.
The latest news on the virus is dire. The number of patients hospitalized across the country with Covid-19 is the highest it’s ever been, and at this rate health experts warn they may have to ration nurses, respirators and care.