A few weeks ago, the government passed a two trillion-dollar stimulus package to try to help people through the COVID-19 pandemic. But the reality is that stimulus package isn’t enough. It doesn’t do enough to help see regular people through the most trying time we’ve ever experienced, and it definitely isn’t timely enough.
The Stimulus Package isn’t Enough (for Normal People)
I don’t fully understand what’s in the bill for businesses, so I’m not even going to try to say that the stimulus package isn’t enough for businesses. From what I understand, the majority of that two trillion is going to businesses, and normal people are getting the shaft (yet again). But hey, I might be wrong. It may be enough for big businesses and not small, or it may just suck for everyone.
But what I do know, is that the stimulus package isn’t enough for regular people. A one-time payment of $1200 isn’t enough for people who lost their jobs or who had their hours cut. The stimulus package fails normal Americans.
$1200 isn’t Enough
You’re absolutely correct. I’m arguing that a one-time payment of $1200 isn’t enough. Does that even cover the rent in most places? Actually, the answer is no. When I was doing my research for my post on how much life costs, I found that the average rent in the US is over $1400 a month. The stimulus check isn’t even enough to cover one month’s rent for most people.
The only saving grace of the stimulus package is that it includes money for dependents. Parents get an extra $500 per child, which will at least help them feed their children (if the money doesn’t all have to go to rent).
The Added Unemployment Protections are a Joke
When I first read about the stimulus package, I saw the added unemployment benefits, and I thought that maybe, for once, the government was doing something positive for the people affected the most. For the first time in history, unemployment would be expanded to cover people who worked the gig economy. Benefits were going to increase by $600 per week. $2400 a month might be enough to help most normal people. This, on to top of the $1200 one -time payment, might be enough to stave off financial ruin for millions of families.
But then I started reading the horror stories. Some states’ websites are crashing. Other states aren’t even letting people apply yet. People call into their state’s office and either get stuck on hold for infinity or disconnected. Others are applying and getting denied for unknown reasons. The benefits added to the unemployment program have been nothing but a joke so far.
Many people lost their jobs over two weeks ago, and still haven’t been able to even apply for these new benefits. In the meantime, rents are due, utilities are due, and kids have to eat. Which leads me to my next point.
The Stimulus Package isn’t Timely Enough
The stimulus package is failing the American people because it isn’t timely enough. Most people needed that $1200 check around mid-March, when their businesses were shuttered. They needed it by April 1st, when their rents were due.
The latest estimate is that the stimulus checks won’t arrive until April 9 -and that’s just for people who have their bank account information on file with the IRS. Guess who usually doesn’t have their bank account information on file with the IRS? If you guessed the poorest Americans, the ones who most likely already lost their jobs and desperately need the money, you’re probably right.
Due to our poverty trap, the poorest Americans are those least likely to have bank accounts. They will receive paper checks, which won’t even get mailed out until April 24. At least the IRS is prioritizing the checks by income. The poorest Americans will receive their checks first, but they probably won’t come until around May first, and by then, most people will be at least a month behind.
And It Uses the Wrong Metrics to Assess Need
I think it was a giant mistake to tie the stimulus checks to 2018 or 2019 income. I get that some people didn’t want high earners to get a check, and I can respect that. However, tying the stimulus to previous income completely screwed higher earners who lost their jobs due to the pandemic. There are tons of other people who are also being left out of the stimulus.
It’s true that the bill includes a contingency for high earners. The people in that scenario will get the money back when they file their 2020 taxes. Well, that doesn’t exactly help the people who need the money now, does it? Who thought getting these people some extra money a year from now was the ideal solution?
This is probably an unpopular opinion, but I don’t think the stimulus should have been means tested in any way. Means testing and arguing about who deserves a check is part of what slowed the whole process down in the first place. The government should have implemented it like a UBI – everyone gets one. That way no work needs to be done to figure out who “needs” one, and the process could’ve moved along a little faster. The people who don’t need it will still use it – they will pump it into their local economies or the stock market. That would be a win for everyone.
The Stimulus Package Isn’t Enough for Healthcare
The stimulus package isn’t enough for the millions of people who lost their employee sponsored healthcare when they lost their jobs. If we learn one lesson from this pandemic, I hope it’s that we need a better system of healthcare. Having people lose their jobs and their health insurance in the middle of a pandemic is a national embarrassment.
The stimulus package did include language that testing for the virus would be free, but it does nothing to address the exorbitant cost of treatment for the most severe cases. For the uninsured, treatment costs can skyrocket to over thirty thousand dollars.
Even those with insurance will see hefty bills if they are hospitalized. According to research, patients with insurance can expect to see bills of at least $1300 – and in many cases it will be higher.
This is a fundamental failure of policy. People have been arguing for years that our health care system is subpar and needs to change, but nothing has been done. And my biggest fear is that nothing will be done after this is all over either. It will go back to status quo, and millions of people will die because being sick is a privilege that they just don’t have.
What Would Be Enough?
I’m not going to pretend to have all the answers. I don’t know what would be enough to address this situation. However, I do think a single payer health care system and a UBI would be great starts. If we already had these two programs in place, we wouldn’t be seeing the huge amounts of financial insecurity and ruin that we’re seeing today. People would feel taken care of. They’d know they could seek medical treatment if they needed it without breaking the bank. They’d have a little something to fall back on if they lost their jobs, and more options for quitting their jobs to keep themselves safe.
Would that be enough to get people through this pandemic? I don’t know. But it would be better than what we have.
Melanie launched Partners in Fire in 2017 to document her quest for financial independence with a mix of finance, fun, and solving the world’s problems. She’s self educated in personal finance and passionate about fighting systematic problems that prevent others from achieving their own financial goals. She also loves travel, anthropology, gaming and her cats.
No answers here, either, my friend. Everyone keeps using the word “unprecedented” when they talk about this whole situation and they’re not wrong. While I don’t think that is enough to excuse inadequate policy, it is something I do try to keep in mind when I’m at my most frustrated. It feels like it’s being made up as we go because…in a lot of ways it is. But you’re definitely right in saying that $1,200 isn’t going to get you very far — especially when you take the whole health care system thing into consideration (as a Canadian, it always blows my mind when I remember that you pay for that in the States).
It blows my mind too! What really gets me is that about half the country wants to stick their heads in the sand and pretend we’re the best ever. It’s mind boggling! I do get that this situation is unprecedented, and I’d like to cut the decision makers a break, but while they’re trying to figure stuff out, real people are out there suffering. That’s what gets me.
It’s bizarre to me. I have a friend who grew up in Canada who moved to the US after getting married. I was curious to know how she felt about the whole health care thing, since she came from a place where it’s “free” (I use quotes because not all elements are free and even the parts that are are really paid by our taxes). I was surprised when she said she prefers the way it is in the US. Her big thing was the lower wait times. Which is likely true in comparison. But like…it’s true because the cost means many people can’t access the system to begin with…anyway. Crazy to me.
And yeah that’s totally fair re: decision makers. I think the hardest part of cutting them some slack comes down to the fact that the things they come up with (like, $1200 stimulus) is often not adequate for the needs. So then it’s like “that’s it? This is all you could come up with?” Of course, then I think “well, what would I do in this situation?” As much as I like to think (and hope) I’d get it right, I’m not always sure I would. Who knew this is something I’d spend any time thinking about in 2020?
I don’t see how much longer it could be. When I moved to PA, I tried to see a doctor,and I was put on a 6 month waiting list. It’s nearly impossible to find primary doctors who will even take new patients, and that’s with insurance. It’s insane.
Honestly, that was my thinking. In my experience, any time something is urgent, it’s dealt with urgently. I mean, I guess to be fair, when you’re not feeling well in any way everything feels urgent, so maybe that contributes to it? I don’t know. That said, it did take me a LONG time to find a family doctor. I think I was on a waitlist for something like four years? And only ended up finding one when I went to a walk-in clinic and he happened to be taking new patients. Of course, I think it helped that at the time, I was a relatively healthy, single woman. But even when I was going to walk-ins it was nice knowing that I wouldn’t be paying for the visit.
The means testing is kind of hit or miss. I’m a multimillionaire but because I only work for fun one day a week in retirement I squeak in at just under the $150K limit per joint filing couple adjusted gross income. Much of my retirement assets are in IRA’s so none of the dividends or growth shows up as income. Even in my taxable accounts growth doesn’t count until you sell something and I never withdraw money from my accounts, we just live on the work income. So even though I may not suffer a single dollar of loss out of this I’m still getting the maximum check. I’m fine with that, I’ve paid a boat load of taxes, still do, and this is a tiny rebate. But I’m guessing they didn’t really intend this to buy me some more index funds. I think you are right though, if they had tried to set up more complex rules it would have slowed things down, and probably they shouldn’t have had any rules at all.
I didn’t even consider people in your situation. But I agree, it would be way too cumbersome to try to sort through who needs it and who doesn’t – they should have just sent checks to everyone immediately. Those who don’t “need” it will still put it back in the economy, and those who do needed it weeks ago.