Next Round Of Economic Stimulus May Include More Targeted Relief

( As negotiations for another wave of coronavirus economic stimulus are on the horizon, it’s becoming clearer that all parties in Washington are realizing that everyday Americans need more help.

Exactly what that help will look like is uncertain at this point, but the Trump administration is at least initially hoping for a more limited approach to the direct payments roughly 160 million Americans received as part of the CARES Act.

House Democrats passed their version of another stimulus package a month ago, which called for another round of direct payments to Americans that would actually increase in the amount. Republicans said they are hesitant to do so, especially as May’s jobs report was much more promising than expected.

About a month from now, Washington lawmakers will most likely start debating the next phase of stimulus, and the Trump administration may prefer sending aid to a more limited number of people. As Larry Kudlow, a White House economic adviser, said earlier this week:

“There’s a lot of discussions going on. Probably, we would want to target those folks who lost their jobs and are most in need.”

Eligibility for the first round of stimulus payments was based almost entirely on income, with qualifying individuals receiving $1,200, and families receiving $2,400 plus $500 for each dependent child.

The program seemed to work, too, according to a report conducted by researchers at the University of Notre Dame and the University of Chicago. They found that these stimulus payments, combined with the federal boost to unemployment benefits, helped off-set the decline in earnings and actually led to a decline in poverty.

Some economists, though, say what would be most effective for the next round of stimulus is an approach that would be more targeted. John Friedman, a professor at Brown University, said the checks were “mismatched” with the actual need.

The first round of payments did increase spending, he said, but it came mostly from low-income households. It helped these families buy groceries and pay bills, but didn’t help them keep their jobs.

Friedman — who is also working with a Harvard team of researchers called Opportunity Insights to track the economic impact of the coronavirus — says the next round of stimulus payments should go to not only low-income households, but also to people who lost a lot of income as a result of the coronavirus pandemic.

As Stijn Van Nieuwerburgh, a professor at Columbia Business School, said:

“I’m not a fan of the $1,200 checks,” he said. “For some people, it was too little if they just lost their job. For other people, who kept their jobs, it wasn’t necessary.”

People like Van Nieuwerburgh urge Congress to be a little cautious with spending, especially as more than $3 trillion has already been spent in coronavirus-related economic stimulus. The federal government is already running a large deficit, and can’t really afford to add too much more in such a short period of time.

“The pandemic isn’t over yet,” he said. “We can’t shoot all our bullets in the first few months.”