Here’s How Stimulus Checks Helped Americans and Different Parts of the Economy
The pandemic triggered the largest flood of federal dollars into the American economy in the country’s history — $5 trillion in combined stimulus payments. The money poured into local governments, hospitals, small businesses, airlines, the healthcare system and directly into American households. According to The New York Times, most economists credit the stimulus with speeding up the economy’s recovery, helping countless businesses stay open and preventing millions of people from losing their credit ratings, being evicted and going hungry.
The combined stimulus packages represent one of the greatest transfers of wealth in world history, according to CNBC, and certainly the greatest transfer of dollars from the American government to its people.
According to the Times, $1.8 trillion in stimulus — the largest percentage of the combined $5 trillion — went straight into the pockets of people and families. The biggest chunk of the $1.8 trillion by far — $817 billion — was delivered in the form of direct-payment stimulus checks. Here’s how the rest was distributed:
- Expanded child tax credit: $93 billion
- SNAP and other food aid: $71 billion
- Delayed student loan payments: $39 billion
- Child care block grants: $28 billion
- Child care provider grants: $24 billion
The other $48 billion went to other tax breaks and adjustments to retirement plan rules. A University of Michigan report showed that the flood of money prevented millions of Americans from falling into poverty and increased household wealth nationwide — but many economists blame the sudden injection of cash into the economy for the inflation that followed.
Just behind the $1.8 trillion that flowed directly into America’s households was the $1.7 trillion that benefitted America’s businesses. The biggest chunk by far — $835 billion — went to the Paycheck Protection Program and the 9 million-plus small businesses that collected loans through it. Here’s how the rest was divvied up:
- Economic Injury Disaster Loan Program and loan advances: $376 billion
- Adjustments to limits on business losses: $193 billion
- Delay of employer payroll tax: $85 billion
- Support for Federal Reserve loans: $25 billion
- Employee retention payroll tax credit: $26 billion
- Interest deductions and other tax breaks: $22 billion
- Paid leave credit: $11 billion
Venues were given $13 billion to stay afloat, but two particularly hard-hit industries received outsized portions of the stimulus pie. Airlines received $80 billion and restaurants received $29 billion.
With so many people and businesses depending on federal aid to get by, the states and localities where they lived and worked saw revenues drying up while pandemic-induced expenses piled higher. To keep governments functioning and able to provide services, the stimulus packages provided $745 billion in state and local aid, including:
- American Rescue Plan Direct Aid: $244 billion
- Elementary and secondary education: $190 billion
- CARES Act direct aid: $149 billion
- Transit and transportation infrastructure: $79 billion
- Expanded Medicaid: $72 billion
The rest, roughly $11 billion more, went to non-public schools, education and workforce grants, and election security. The money helped governments manage the many costs of the pandemic without major budget cuts — many came out with surpluses.
Naturally, the Healthcare Industry Was in a Class by Itself
The industry that needed the most relief was not hospitality or the airlines. It was, of course, the healthcare industry, which received $482 billion in stimulus. The bulk of it, $156 billion, went to grants for healthcare providers. The rest broke down like this:
- Vaccines, treatments and supplies: $64 billion
- Medicaid coverage: $56 billion
- Testing, monitoring and research: $46 billion
- Development of vaccines and treatments: $45 billion
- Changes to Medicare: $38 billion
- Expanded A.C.A. subsidies: $22 billion
- COBRA coverage: $18 billion
The rest went to cost-sharing, health agency expenditures and other costs. The funds were critical in keeping healthcare centers and hospitals in operation as revenues evaporated when elective procedures were canceled and the masses postponed routine care.
People, businesses, state and local governments, and the healthcare industry received all but $288 billion of the $5 trillion in combined stimulus. Most of that remaining amount — $78 billion — went to disaster spending. The next-biggest chunk — $59 billion — went to colleges and universities in the form of grants. Another $39 billion went to housing programs, $41 billion was paid to farmers, $21 billion went to transportation programs and the rest went to the USPS, defense agencies and other government agencies.
During the Great Resignation and the labor shortage that surrounded it, many argued that the enhanced unemployment benefits were disincentivizing the jobless to go find jobs. Drawn sharply along political lines, roughly half the governors in the country withdrew from expanded federal unemployment programs and cut their state’s jobless benefits in June and July 2021, months before they were set to expire.
In April of this year, the Federal Reserve Bank of San Francisco released a report that vindicated those who argued that people were staying out of the job market not because enhanced benefits had made them lazy, but because of ongoing health risks and increased family care duties.
The states that cut off their unemployment benefits early did not experience any significant improvement in job growth, hiring activity or reduced unemployment. The states that kept the federal benefits flowing fared the same, but millions of unemployed people who lived in those states had $300 extra per week to get them through the summer that their counterparts in the cutoff states did not.
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