The Stimulus Check Problem: Were They Too Successful?

May 16, 2021 Topic: Stimulus Region: Americas Blog Brand: The Reboot Tags: GOPStimulus CheckStimulusMitch McConnellRepublican

The Stimulus Check Problem: Were They Too Successful?

GOP lawmakers are concerned that the pandemic bill’s benefits disincentivized people from returning back to work. 

 

Here’s What You Need to Remember: Senate Minority Leader Mitch McConnell (R-Ky.) recently blasted the White House’s rescue package, which sent millions of Americans $1,400 stimulus payments and extended unemployment insurance, arguing that the benefits are impeding on the nation’s economic recovery.

“We have flooded the zone with checks that I’m sure everybody loves to get, and also enhanced unemployment,” McConnell said. “And what I hear from business people, hospitals, educators, everybody across the state all week is, regretfully, it’s actually more lucrative for many Kentuckians and Americans to not work than work. So we have a workforce shortage, and we have rising inflation, both directly related to this recent bill that just passed.”

 

McConnell’s comments come as his Republican colleagues have also sounded the alarm on the issue, as GOP lawmakers are concerned that the pandemic bill’s benefits disincentivized people from returning back to work. 

Employers across a variety of industries, particularly those in the restaurant sector, have found difficulty in finding workers, even though the unemployment rate in the U.S. still stands at 6.1 percent—nearly double what it was before the coronavirus crisis.

But Democrats contend that the $1.9 trillion relief package provided struggling American families with immediate financial assistance, as the virus and economic downturn shocked the nation and nearly all sectors of the U.S. economy. They have argued that employers may be trying to lure workers back into the labor force with low wages or that some people who are parents can’t go back to work yet without proper child care, considering millions of schools across the country are still operating under remote instruction.

Deputy White House press secretary Karine Jean-Pierre also offered a fresh defense of President Joe Biden’s economic decisions on Thursday, insisting that the stimulus package pumped millions of dollars into the pockets of Americans and families who were struggling to make ends meet amid the economic crisis. She went on to say that there is “little evidence” that enhanced unemployment benefits “are currently affecting Americans’ willingness to work.”

Federal Reserve Chairman Jerome Powell also provided a rebuttal on the issue last week at a press conference. Powell said that a lack of adequate child care, fears of contracting the coronavirus and vast school closures could be main factors in contributing to the labor shortage.

“We don't see wages moving up yet. And presumably, we would see that in a really tight labor market,” Powell added. “And we may well start to see that.”

The White House’s relief bill passed in March, a measure that Republicans in Congress unanimously rejected due to the package’s trillion-dollar price tag, was squeezed through Congress by budget reconciliation, a legislative procedure that required only a simple majority.

The war of the stimulus and its potential effects reflect the first rifts among lawmakers over Biden’s first legislative victory, an argument that will likely continue until the economy fully recovers.

Rachel Bucchino is a reporter at the National Interest. Her work has appeared in The Washington Post, U.S. News & World Report and The Hill.

This article was first published earlier this month.

Image: Reuters