Introduction
Stimulus aid entails tax rebates and government incentives offered to Americans to reinvigorate the economy during the recess caused by COVID-19. In 2020, the government set aside $900 billion as pandemic relief aid for middle and low-class Americans. The aid has been distributed in three rounds so far and has revived the businesses and supported the unemployed significantly. However, although the stimulus aid has helped many Americans in many ways, the support does not last long.
Pros of Stimulus Aid
The stimulus aid is beneficial because it helps Americans to meet their daily expenses. The stimulus checks are offered to the unemployed and the most financially strained due to the effects of coronavirus. These people use the checks to pay rent, buy food and pay debts among other uses. In the three rounds, each family would receive at least $1200, $600, and $1400 respectively (Kaiser Health News). Thus, the funds feed the families of the unemployed and help them to avoid their evictions.
The stimulus checks given to business owners helped to boost their businesses. According to DeParle, most businesses received tax rebates especially those filing low income. The middle and low-class business owners received phase-outs, specifically for income more than $75, 000 as a single taxpayer, above $112, 500 tax filed by the family, and more than $150, 000 for married couples filing tax together (DeParle). These rebates helped the businesses to reinvest and produce more revenue thus boosting the general economy. The businesses would also create job opportunities for a few of the 14.7% who lost jobs during the COVID-19 period (DeParle). Thus, the tax rebates and the government incentives create a positive business environment for economic growth.
Stimulus aid also helped boost the economy in terms of increased spending, personal income, and savings. According to Peterson, the checks released in January 2021 saw to 3% increase in consumer spending and a 10% increase in personal incomes. Personal savings also increased from 13.5% to 20% between December 2020 and May 2021 (Peterson). To account for the savings, the report showed that the aid beneficiaries used the first time checks in expenses and saved most of the second and third round checks for future use. Therefore, even though savings do not boost the economy, they prevent people from engaging in debts.
Cons of Stimulus Aid
Stimulus aid was not a long-lasting solution for the economic recession in the United States. Many Americans may have received the stimulus checks but never used them for long. According to Holzhauer, most middle and low-class families received an average of $10, 000 for the three rounds of check distribution especially for couples without children. Statistics show that an average American family spends at least $1889 per month, meaning that the funds would only last for five months. Furthermore, the COVID-19 hardships have significantly increased the cost of living not only in the US but also in the rest of the world (Holzhauer). Consequently, the stimulus aid beneficiaries are forced to spend more than they used to in a month, hence reducing the time for spending the $10, 000 (Holzhauer). Therefore, these people only survived the economic hardships for a short time.
The pandemic relief aid was not a solution for those that lost jobs after the health crisis. The report shows at 14.7% of the American population lost their jobs following the eruption of Coronavirus (Holzhauer). The released relief funds were not enough to fully restore the lost jobs and or even boost the businesses. Some businesses that closed during the lockdown have not yet resumed the market. The aid distribution was targeting tax rebates for operating businesses and not the close ones. Therefore, the closed businesses have no government support to resume as well as the employees who lost their positions in the jobs (Holzhauer). This means that most citizens amongst the unemployed still have no active means of living. Henceforth, once the stimulus aid is finished, the economy will go back to recess again.
Source Analysis
An article by McDonald states that the stimulus money allocated to state and local governments will bridge budgetary gaps but the money has to be used wisely. The author provides the first benefit by saying that state and local governments will use the stimulus aid to revive the public services which had been cut due to COVID-19 (McDonald). McDonald supports the argument with external sources, which are mentioned with their links attached.
The article provides another benefit but this time did not link it with enough evidence. The author mention increased funding will ensure less customer friction in government facilities especially in less successful states. The argument is only supported with one source of evidence and the rest is the author’s explanation. He also would mention particular reports without giving evidence from the sources and never account for such explanations as flawed. The particular section of the second benefit also lacks most of the necessary statistics to prove the ideas.
McDonald gives one disadvantage for stimulus aid as increased chances of fraud. He adds that there has been an alarming rate of cyber-attacks in the past year and provides evidence with an article link. The author continues to link the attacks to increased government spending without any proof. McDonald heads on to speculate that the government identity verification process might be tampered with hence increasing fraud opportunities.
The last section of the article is another con of relief funding by saying that fraud may not be only from hackers but also from the beneficiaries. The article barely states how the beneficiaries tend to commit fraud as proof of possible fraud. This section lacks evidence or statistics for specification or proof of the written ideas. The author also does not state whether the information is flawed.
Another Article by Peter G. Peterson shows how the Americans spent their stimulus aid and its economic effect. The article provides many benefits of stimulus aid to the Americans by analyzing how the citizens used the money. Some of the benefits given include that the aid boosted economic growth by reviving businesses, beneficiaries increased spending, and also personal salaries went high. The article also compares the percentage growth of the economy as predicted and as of the time of writing.
The author consistently provides evidence for all used information without including his opinions. All the mentioned outside sources are also linked for better proof of the used ideas. Peterson’s article is also reliable because it has more details to the necessary information about this topic. Statistics are evenly used to show the figures of the beneficiaries, the rate of economic growth, and business growth (Peterson). The article also uses figures and charts credited to various authors as evidence.
The article systematically analyzes the topic by the use of charts, graphs, and figures. The visuals, either created by the author or from outside sources are well credited. For every visual used to show the particular distribution of data, there is a note at the bottom giving credit to the source of information. The visuals used to cover the use of stimulus in the three phases and discussed whether or not the aid helped the economy. The lack of individual opinion for this article is what makes it outstanding and credible.
Conclusion
Stimulus aid is more beneficial than threatening in the United States. I have learned that government funds distributed by the IRS helped Americans to feed their families, pay debts, and even save. The general economy of the country grew significantly although not as required. The limitation of the aid is that was short-lived and did not solve the state of unemployment in the country. More academic research needs to be done about the topic as there are few to no scholarly articles on the same.
Works Cited
DeParle, J. “Stimulus Checks Substantially Reduced Hardship, Study Shows.” 2021, Web.
Gale, William G., and Enda Grace. “Economic Relief and Stimulus: Good Progress but More Work to Do.”Brookings, 2021, Web.
Holzhauer, Brett. “Stimulus Packages Throw Money at Financial Crises. But Do They Actually Help The Economy?”Forbes Advisor, 2021, Web.
Kaiser Health News. “Viewpoints: Pros, Cons of COVID Relief Compromise; More Lessons on Unjust Mask Mandates.”Kaiser Health News, 2020, Web.
McDonald, Jonathan. “The Pros and Cons of Increasing Stimulus to State and Local Governments.” 2021, Web.
Peterson, Peter G. “How Did Americans Spend Their Stimulus Checks and How Did It Affect the Economy?” 2021, Web.