Coronavirus Aid, Relief, and Economic Security Act (2020)

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    Biden, Needing a Win, Enters a Sprint for His Economic Agenda

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    As his poll numbers slide, the president and his aides have mounted an aggressive pitch in Congress and around the country for his spending plans on infrastructure and more.WASHINGTON — President Biden, his aides and his allies in Congress face a September sprint to secure a legislative victory that could define his early presidency.Democrats are racing the clock after party leaders in the House struck a deal this week to advance the two-track approach that Mr. Biden hopes will deliver a $4 trillion overhaul of the federal government’s role in the economy. That agreement sets up a potentially perilous vote on one part of the agenda by Sept. 27: a bipartisan deal on roads, broadband, water pipes and other physical infrastructure. It also spurred House and Senate leaders to intensify efforts to complete a larger, Democrats-only bill to fight climate change, expand educational access and invest heavily in workers and families, inside that same window.If the party’s factions can bridge their differences in time, they could deliver a signature legislative achievement for Mr. Biden, on par with the New Deal or Great Society, and fund dozens of programs for Democratic candidates and the president to campaign on in the months to come.If they fail, Mr. Biden could find both halves of his economic agenda dashed, at a time when his popularity is slumping and few if any of his other top priorities have a chance to pass Congress.The president finds himself at a perilous moment seven months into his term. His withdrawal of American troops from Afghanistan has devolved into a chaotic race to evacuate tens of thousands of people from the country by the month’s end. After throwing a July 4 party at the White House to “declare independence” from the coronavirus pandemic, he has seen the Delta variant rampage through unvaccinated populations and send hospitalizations and death rates from the virus soaring in states like Florida.Mr. Biden’s approval ratings have dipped in recent months, even on an issue that has been an early strength of his tenure: the economy, where some recent polls show more voters disapproving of his performance than approving it.The country is enjoying what will most likely be its strongest year of economic growth in a quarter century. But consumer confidence has slumped in the face of rapidly rising prices for food, gasoline and used cars, along with shortages of home appliances, medical devices and other products stemming from pandemic-fueled disruptions in the global supply chain.While unemployment has fallen to 5.4 percent, workers have not flocked back to open jobs as quickly as many economists had hoped, creating long waits in restaurants and elsewhere. Private forecasters have marked down their expectations for growth in the back half of the year, citing supply constraints and the threat from the Delta variant.White House economists still expect strong job gains through the rest of the year and a headline growth rate that far exceeds what any forecasters expected at the start of 2021, before Mr. Biden steered a $1.9 trillion stimulus plan through Congress. But the White House economic team has lowered informal internal forecasts for growth this year, citing supply constraints and possible consumer response to the renewed spread of the virus, a senior administration official said this week.Mindful of that markdown, and of what White House economists estimate will be a hefty drag on economic growth next year as stimulus spending dries up, administration officials have mounted a multiweek blitz to pressure congressional moderates and progressives to pass the spending bills that officials say could help reinvigorate the recovery — and possibly change the narrative of the president’s difficult late summer.The importance of the package to Mr. Biden was clear on Tuesday, when he pre-empted a speech on evacuation efforts in Afghanistan to laud House passage of a measure that paves the way for a series of votes on his broader agenda.For the infrastructure bill to pass, Congress must balance the desires of progressives who see a generational chance to expand government to address inequality and curb climate change and moderates who have pushed for a smaller package.Stefani Reynolds for The New York Times“We’re a step closer to truly investing in the American people, positioning our economy for long-term growth, and building an America that outcompetes the rest of the world,” the president said.Many steps remain before Mr. Biden can sign both bills into law — but his party has given itself only a few weeks to complete them. The infrastructure bill is written. But the House and Senate must agree on the spending programs, revenue increases and overall cost of the larger bill, balancing the desires of progressives who see a generational chance to expand government to address inequality and curb climate change and moderates who have pushed for a smaller package and resisted some of the tax proposals to pay for it.It is a timeline reminiscent of what Republicans set for themselves in the fall of 2017, when they rushed a nearly $2 trillion package of tax cuts to President Donald J. Trump’s desk without a single Democratic vote.Sticking to it will require sustained support from administration officials both in and out of Washington. In the first three weeks of August, Mr. Biden dispatched cabinet members to 31 states to barnstorm for the infrastructure bill and his broader economic agenda, with events in the districts of moderate and progressive members of Congress, according to internal documents obtained by The New York Times. His secretaries of transportation, labor, interior, energy, commerce and agriculture sat for dozens of local television and radio interviews to promote the bills.Even with those efforts, the initial clash over advancing the budget this week was resolved with a flurry of calls from Mr. Biden, top White House officials and senior Democrats to the competing factions in the House.Congressional leaders say they have spent months laying the groundwork so that their party can move quickly toward consensus. Speaker Nancy Pelosi of California told colleagues in a letter on Wednesday that “we have long had an eye to having the infrastructure bill on the president’s desk by the Oct. 1,” the date when many provisions in the bipartisan package are slated to go into effect.Committee leaders have been instructed to finish their work by Sept. 15, and rank-and-file lawmakers have been told to make their concerns and priorities known quickly as they maneuver through substantive policy disagreements, including whether it should be as much as $3.5 trillion and the scope of Mr. Biden’s proposed tax increases.“I’m sure everybody’s going to try their best,” said Representative John Yarmuth of Kentucky, the House Budget Committee chairman. “Some committees will have it rougher than others.”Senator Ron Wyden of Oregon, the chairman of the Senate Finance Committee, has been releasing discussion drafts of proposals to fund the $3.5 trillion budget reconciliation spending — the larger bill that Democrats plan to move without any Republican support — including raising taxes on high earners and businesses. On Wednesday, he provided granular details of a plan to increase taxes on the profits that multinational companies earn and book overseas.“I’m encouraged by where we are,” Mr. Wyden said in an interview.Democratic leaders and the White House have pushed analyses of their proposals that speak to core liberal priorities; on Wednesday, Senator Chuck Schumer of New York, the majority leader, released a report suggesting the two bills combined would “put our country on the path to meet President Biden’s climate change goals of 80 percent clean electricity and 50 percent economywide carbon emission reduction by 2030.”White House economists released a detailed report this week claiming the spending Mr. Biden supports, like universal prekindergarten and subsidized child care, would expand the productive capacity of the economy and help reduce price pressures in the future.While Republicans are not expected to get on board with the larger spending bill, they are still making their concerns known, labeling the bill socialist and a spending spree and claiming it will stoke inflation and drive jobs overseas.Mr. Biden can pass the entire agenda now with only Democratic votes, but the party’s thin majorities — including no room for even a single defection in the Senate — complicates the task. Ms. Pelosi said on Wednesday that the House would “write a bill with the Senate, because there’s no use our doing a bill that is not going to pass the Senate, in the interest of getting things done.”As part of an agreement to secure the votes needed to approve the $3.5 trillion budget blueprint on Tuesday, Ms. Pelosi gave centrist and conservative Democrats a commitment that she would only take up a reconciliation package that had the support of all 50 Senate Democrats and cleared the strict Senate rules that govern the fast-track process.“I’m not here to pass messaging bills — I’m here to pass bills that will actually become law and help the American people,” said Representative Stephanie Murphy of Florida, one of the Democrats who initially announced that she would not support advancing the budget, but ultimately joined every Democrat in advancing it.For moderates, Ms. Pelosi’s commitment served to shield them from potentially tough votes on provisions that the Senate may reject. It also signaled the political realities that could shape the final legislation. No Democrat will want to vote on a large spending bill doomed for failure. It will be Mr. Biden’s job to lead his coalition to a bill that can pass muster with moderates and progressives alike — and to convince every holdout that failure is not an option. More

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    When Will Unemployment End? Biden Urges Some States to Extend Benefits

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    President Biden is encouraging states with stubbornly high jobless rates to use federal aid dollars to extend benefits for unemployed workers after they are set to expire in early September, administration officials said on Thursday, in an effort to cushion a potential shock to some local economies as the Delta variant of the coronavirus rattles the country.Enhanced benefits for unemployed workers will run through Sept. 6 under the $1.9 trillion economic aid bill enacted in March. Those benefits include a $300 weekly supplement for traditional benefits paid by states, additional weeks of benefits for the long-term unemployed and a special pandemic program meant to help so-called gig-economy workers who do not qualify for normal unemployment benefits. Those benefits are administered by states but paid for by the federal government. The bill also included $350 billion in relief funds for state, local and tribal governments.Mr. Biden still believes it is appropriate for the $300 benefit to expire on schedule, as it was “always intended to be temporary,” the secretaries of the Treasury and labor said in a letter to Democratic committee chairmen in the House and Senate on Thursday. But they also reiterated that the stimulus bill allows states to use their relief funds to prolong other parts of the expanded benefits, like the additional weeks for the long-term unemployed, and they called on states to do so if their economies still need the help.That group could include California, New York and Nevada, where unemployment rates remain well above the national average and governors have not moved to pare back benefits in response to concerns that they may be making it more difficult for businesses to hire.“Even as the economy continues to recover and robust job growth continues, there are some states where it may make sense for unemployed workers to continue receiving additional assistance for a longer period of time, allowing residents of those states more time to find a job in areas where unemployment remains high,” wrote Janet L. Yellen, the Treasury secretary, and Martin J. Walsh, the labor secretary. “The Delta variant may also pose short-term challenges to local economies and labor markets.”The additional unemployment benefits have helped boost consumer spending in the recovery from recession, even as the labor market remains millions of jobs short of its prepandemic levels. But business owners and Republican lawmakers have blamed the $300 supplement, in particular, for the difficulties that retailers, restaurants and other employers have faced in filling jobs this spring and summer.Two dozen states, mostly led by Republicans, have moved to end at least some of the benefits before their expiration date.In their letter to Congress, the administration officials said the Labor Department was announcing $47 million in new grants meant to help displaced workers connect with good jobs. They also reiterated Mr. Biden’s call for Congress to include a long-term fix for problems with the unemployment system in a large spending bill that Democrats are trying to move as part of their multipart economic agenda. More

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    Big Economic Challenges Await Biden and the Fed This Fall

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    Expiring unemployment benefits and the Delta variant add uncertainty to a recovery that has brought strong growth but an unusual labor market.WASHINGTON — The U.S. economy is heading toward an increasingly uncertain autumn as a surge in the Delta variant of the coronavirus coincides with the expiration of expanded unemployment benefits for millions of people, complicating what was supposed to be a return to normal as a wave of workers re-entered the labor market.That dynamic is creating an unexpected challenge for the Biden administration and the Federal Reserve in managing what has been a fairly swift recovery from a recession. For months, officials at the White House and the central bank have pointed toward the fall as a potential turning point for an economy that is struggling to fully shake off the effects of the pandemic — particularly in the job market, which remains millions of positions below prepandemic levels.The widespread availability of Covid-19 vaccines, the reopening of schools and the expiration of enhanced jobless benefits have been seen as a potent cocktail that should prod workers off the sidelines and into the millions of jobs that employers say they are having trouble filling.But that optimistic outlook might be imperiled by the resurgent virus and policymakers’ response to it. Big companies are already delaying return-to-office plans, an early and visible sign that life may not return to normal as rapidly as expected. At the same time, long-running federal supports for people hurt by the pandemic are going away, including a moratorium on evictions, which ended on Saturday, and an extra $300 per week for unemployed workers. That benefit expires on Sept. 6, and some states have moved to end it sooner.Federal lawmakers are also planning to repurpose more than $200 billion worth of Covid relief to help pay for a $1 trillion infrastructure plan. An infrastructure bill moving through the Senate would rescind previously allocated virus funds for colleges and universities along with unused unemployment benefits and airline aid. It would also claw back unspent funds from some expired small-business programs to help offset the plan’s $550 billion in new spending. Democratic leaders have been adamant that the Senate will vote on the infrastructure bill before leaving Washington for a scheduled August recess.White House economists have said they see no need yet to consider major new measures to bolster the recovery. After months of blockbuster economic growth, falling unemployment numbers, and complaints from business leaders and Republicans that government support is preventing workers from taking jobs, administration officials remain locked into their current policy stance despite renewed risks.Administration officials have said President Biden is not pushing to extend the extra $300 per week for jobless people. It’s unclear whether the administration will try to extend a program that expanded unemployment benefits to workers who would not typically qualify for them, including the self-employed, gig workers and part-timers.Officials say the $1.9 trillion economic aid package that Mr. Biden signed in March, and that caused forecasters to lift their estimates for growth this year, has given the economy enough cushion to endure another surge from the virus. Mr. Biden has also vowed that the virus will not lead to new “lockdowns, shutdowns, school closures and disruptions” like last year’s.“We are not going back to that,” he said last week.White House advisers say the most important thing the president can do for the economy is continue to make the case for more people to get vaccinated. On Thursday, Mr. Biden asked states to use money from the March stimulus package to pay $100 to every newly vaccinated person and said the government would reimburse employers who gave workers time off to be vaccinated or take others to get shots.“We have held the view from the beginning that addressing the pandemic and recovering the economy were inextricably linked. That continues to be true,” Brian Deese, who heads Mr. Biden’s National Economic Council, said in an interview. “But because of the progress that we have made in addressing the pandemic and in putting in place both historic and durable economic policy supports, we have a set of tools right now to address both of these challenges.”The Fed is taking an optimistic but wait-and-see approach. Central bankers voted at their July meeting to leave emergency support in place for now. They gave no precise date for when they may begin to reduce their help for the economy, though they are beginning to draw up a plan for paring back support.Much like their counterparts at the White House, officials at the Fed are counting on solid economic data this autumn. Jerome H. Powell, the Fed chair, said last week that he expected strong labor market progress in the months ahead, partly because virus fears and child care issues should subside.“There’s also been very generous unemployment benefits, which are now rolling off. They’ll be fully rolled off in a couple of months,” Mr. Powell said during a news conference after the Fed’s July meeting. “All of those factors should wane, and because of that we should see strong job creation moving forward.”Administration and Federal Reserve officials have expressed hope that children’s return to schools and fading fears of the virus will encourage more people to begin looking for work again.Whitney Curtis for The New York TimesMr. Biden told a CNN forum in Ohio on July 21 that he still sees no evidence that the supplemental benefits have had a “serious impact” on hiring. But even if they had, he said, they would soon run their course.“We’re ending all those things that are the things keeping people back from going back to work,” he said.That stance carries some risk. While the economy grew faster in the first half of this year than it had in decades, the job market is still missing 6.8 million positions from its February 2020 level, and while policymakers are optimistic, it is not clear how quickly those jobs will come back. The economy has never reopened from a pandemic before, and nobody knows to what degree unemployment insurance is dissuading workers.“Seven to nine million Americans should be working right now if the pandemic had never happened, so that’s a lot of Americans that we need to put back to work,” Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said on CBS’s “Face the Nation” on Sunday. “But is it six months, or is it two years? I’m not sure.”If it takes workers more time to go back into jobs, it could make for a much slower economic recovery than either the Fed or the White House is banking on. Workers stuck on the sidelines without enhanced benefits might pull back on spending, hurting demand and slowing the rapid rebound that has been underway in recent months.So far, administration economists remain heartened by the economic data. Officials said last week that they saw no evidence yet of the Delta variant’s hurting economic activity, and that they were hopeful that the more than 160 million Americans who were vaccinated would not pull back spending even if the variant continued to spread — making this wave of the virus less economically damaging than past ones.And as government spending support for the economy slows down, the Fed is still keeping money cheap to borrow, which should continue to pad economic growth.Shoppers in Los Angeles, where masks are required indoors. New public health guidelines could again chill some economic activity.Alex Welsh for The New York TimesFed officials have said they want to see more proof of the labor market’s healing before they slow their monthly bond purchases, which will be their first step toward a more normal policy setting.Mr. Powell said at his news conference last week that “we’re some way away from having had substantial further progress toward the maximum employment goal.”“I would want to see some strong job numbers,” he added.In the text of a speech on Friday, Lael Brainard, an influential Fed governor, said she wanted to see September economic data to assess whether the labor market was strong enough for the Fed to begin dialing back support, which suggests she would not favor signaling a start to the slowdown until later this fall. But her colleague Christopher J. Waller said in a CNBC interview on Monday that he would probably prefer to begin pulling back bond purchases quickly, if jobs data hold up, perhaps as soon as October.Increases in interest rates — the Fed’s more traditional, and more potent, tool — remain farther away. Most Fed officials in June projected that they would not lift their federal funds rate until 2023 at earliest, because they would like the labor market to return to full strength first.How rapidly the economy can achieve that goal is an open question. Employers regularly complain about the enhanced benefits, but even they have sent mixed messages on whether those are the main driver keeping labor at bay.“Many contacts were optimistic that labor availability would improve in the fall as schools restart and enhanced unemployment benefits end,” the Atlanta Fed’s qualitative report on business conditions found in June. “However, there were several who do not expect labor supply to improve for six to nine months.”Peter Ganong, an economist at the University of Chicago, said that if the pattern that he and his fellow researchers had seen in employment data held, he would not expect a wave of workers to jump back into jobs just because supplemental benefits expired.“So far, we see small employment differences even when vaccines are becoming available,” he said. Mr. Ganong and his co-authors compared the job-finding rates of people whose wages were more fully replaced by supplemental benefits and people whose wages were less fully replaced. They found small and relatively steady differences, even as the economy reopened.But Mr. Ganong cautioned that his research tracked the supplemental insurance. For many workers, unemployment benefits could come to an end altogether as extensions lapse, which may have a bigger effect.There is plenty of room for labor market progress. People in their prime working years are participating in the labor market by working or searching for jobs at much lower rates than before the pandemic — and that metric has made little progress in recent months.“Generally speaking, Americans want to work, and they’ll find their way into the jobs that they want,” Mr. Powell said last week. “It may take some time, though.”Alan Rappeport More

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    Covid Aid Programs Spur Record Drop in Poverty

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    WASHINGTON — The huge increase in government aid prompted by the coronavirus pandemic will cut poverty nearly in half this year from prepandemic levels and push the share of Americans in poverty to the lowest level on record, according to the most comprehensive analysis yet of a vast but temporary expansion of the safety net.The number of poor Americans is expected to fall by nearly 20 million from 2018 levels, a decline of almost 45 percent. The country has never cut poverty so much in such a short period of time, and the development is especially notable since it defies economic headwinds — the economy has nearly seven million fewer jobs than it did before the pandemic.The extraordinary reduction in poverty has come at extraordinary cost, with annual spending on major programs projected to rise fourfold to more than $1 trillion. Yet without further expensive new measures, millions of families may find the escape from poverty brief. The three programs that cut poverty most — stimulus checks, increased food stamps and expanded unemployment insurance — have ended or are scheduled to soon revert to their prepandemic size.While poverty has fallen most among children, its retreat is remarkably broad: It has dropped among Americans who are white, Black, Latino and Asian, and among Americans of every age group and residents of every state.Poverty Rates Have Fallen for Every Demographic Group More

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    The Pandemic Stimulus Was Front-Loaded. That Could Mean a Bumpy Year.

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    When government support fades away, there’s a risk that the affluent will sit on their cash rather than spend it.Waiting in line to file for unemployment benefits in Fort Smith, Ark., last April. Nick Oxford/ReutersThe U.S. economy is about to face a new challenge that has its roots in the arithmetic of growth: That which fiscal stimulus giveth, fiscal stimulus taketh away.The $1.9 trillion American Rescue Plan enacted in March, as well as a $900 billion pandemic aid package passed in December, are heavily front-loaded. They were set up to get money out the door fast. But one consequence of that strategy is that fiscal policy in the quarters ahead will subtract from economic growth.Economists mostly project that the economy, with strong momentum in the labor market and huge pools of pent-up savings by households, will be strong enough to keep growing despite the fading of the fiscal boost. To avoid an economic downturn, a huge handoff must occur from government-driven demand to the private sector.The mainstream view is that this will be successful. But there are aspects of this unusual economic moment that could make the road ahead bumpy.There is no modern precedent for such huge swings in sums the government is pumping into the economy. And there is a risk — recently acknowledged by a top Federal Reserve official — that if pandemic-era savings are disproportionately held by the affluent, they will sit on that cash rather than spend it.“We’re definitely going to see a huge drop-off in fiscal stimulus,” said Nancy Vanden Houten, lead economist at Oxford Economics. “The question then is how well positioned is the economy to deal with that, and we don’t really know for sure, which applies to so much about this period we’re going through.”Most Americans who were to receive stimulus checks of a combined $2,000 per person have already gotten them. The Treasury Department said this month that $395 billion of that cash is now shipped, which is slightly more than the payments in the American Rescue Plan were projected to cost when it was passed.While unemployment insurance payments remain elevated, that spending is also tapering as people return to work — and supplements to those payments are scheduled to expire in September. Much of the other spending was either near-term, focused on things like vaccine rollout, or will be spent very gradually, such as on an expanded child tax credit and grants to state and local governments.Overall, government spending added 8.5 percentage points to the economic growth rate in the first quarter, according to calculations by the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution. But that so-called fiscal impact is forecast to turn slightly negative in the second and third quarters — and then act as a meaningful drag on growth in the fourth quarter of 2021 and in 2022.By the second quarter of 2022, fiscal policy is on track to subtract 3.3 percentage points from the growth rate, considerably more than the 2.2-percentage-point subtraction in the third quarter of 2011, which was the most extreme quarter in the last post-stimulus hangover of the previous recession.That could change depending on where negotiations on infrastructure and family support policies lead, but those policies would be expected to influence fiscal policy over many years — they are backloaded rather than front-loaded — so they shouldn’t radically change the near-term future.The case for staying calm even as federal spending plummets rests on the rapid growth of the private sector in recent months.Employers are adding to their payrolls at a breakneck pace, so rising compensation ought to prop up consumer spending even as government support goes away. Businesses report being in an expansionary mood, which bodes well for investment spending. And overseas economies should start to surge ahead as other countries achieve more widespread vaccination, which would be good news for American exports.“I think the basic story is that the economy is reopening, so it can take the fact that this stimulus is coming off,” said Louise Sheiner, a senior fellow at Brookings.Moreover, Americans are sitting on a vast pool of savings from money they didn’t spend on things like travel and restaurants during the pandemic. Households have saved an average of $282 billion per month since March 2020, compared with $103 billion a month in 2019.So a big question for the economy in the second half of 2021 and 2022 is what happens to that cumulative additional savings of $2.5 trillion. Will it prop up near-term spending enough to keep growth on a strong track, or will Americans instead prefer the comfort of having a beefed-up balance sheet?That’s where the distributional concern arises. To the degree that money is held by people who are financially well-off, they may be less likely to spend it and help propel the economy.“Today’s fiscal tailwinds are projected to shift to headwinds next year,” said Lael Brainard, a Fed governor, in a speech this month. “So an important question is how much household spending will continue to support growth into next year, as opposed to settling back to prepandemic trends.”On the other hand, the rapidly shrinking fiscal surge could help moderate the inflation pressures that have been building in the economy. Whatever you think of the decision to send $2,000 to people, there won’t be any more checks that might push demand still higher and risk fueling a cycle of inflation.Ultimately, this is another example of the ways the pandemic-driven economy is an unusual one. The only real historical comparisons to the kinds of surges in government spending of the last five quarters involve the beginnings and ends of wars, which have their own economic dynamics.Which means it’s worth watching exactly what happens as the federal government pulls back, and whether American consumers and businesses and importers from around the world step up the way forecasters expect. More

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    Biden Administration Moves to Unkink Supply Chain Bottlenecks

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    A swath of recommendations calls for more investments, new supply chains and less reliance on other countries for crucial goods.WASHINGTON — The Biden administration on Tuesday planned to issue a swath of actions and recommendations meant to address supply chain disruptions caused by the coronavirus pandemic and decrease reliance on other countries for crucial goods by increasing domestic production capacity. More

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    Stimulus Checks Substantially Reduced Hardship, Study Shows

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    Researchers found that sharp declines in food shortages, financial instability and anxiety coincided with the two most recent rounds of payments.WASHINGTON — Julesa Webb resumed an old habit: serving her children three meals a day. Corrine Young paid the water bill and stopped bathing at her neighbor’s apartment. Chenetta Ray cried, thanked Jesus and rushed to spend the money on a medical test to treat her cancer.In offering most Americans two more rounds of stimulus checks in the past six months, totaling $2,000 a person, the federal government effectively conducted a huge experiment in safety net policy. Supporters said a quick, broad outpouring of cash would ease the economic hardships caused by the coronavirus pandemic. Skeptics called the policy wasteful and expensive.The aid followed an earlier round of stimulus checks, sent a year ago, and the results are being scrutinized for lessons on how to help the needy in less extraordinary times.A new analysis of Census Bureau surveys argues that the two latest rounds of aid significantly improved Americans’ ability to buy food and pay household bills and reduced anxiety and depression, with the largest benefits going to the poorest households and those with children. The analysis offers the fullest look at hardship reduction under the stimulus aid.Among households with children, reports of food shortages fell 42 percent from January through April. A broader gauge of financial instability fell 43 percent. Among all households, frequent anxiety and depression fell by more than 20 percent.While the economic rebound and other forms of aid no doubt also helped, the largest declines in measures of hardship coincided with the $600 checks that reached most people in January and the $1,400 checks mostly distributed in April.“We see an immediate decline among multiple lines of hardship concentrated among the most disadvantaged families,” said H. Luke Shaefer, a professor at the University of Michigan who co-authored the study with a colleague, Patrick Cooney.Given the scale of the stimulus aid — a total of $585 billion — a reduction in hardship may seem like a given, and there is no clear way to measure whether the benefits were worth the costs.The study does not address the critics’ main complaints, that the spending swelled the deficit, that much of the money went to economically stable families who did not really need it and that the checks were part of a pattern of aid over the last year that left some people with less incentive to find jobs. Some analysts say hardship would have fallen anyway as a result of job growth and other safety net programs.Still, the aggressive use of stimulus checks coincides with growing interest in broad cash payments as a tool in social policy, and the evidence that they can have an immediate effect on the economic strains afflicting many households could influence that debate.Starting in July, the government will mail up to $300 a month per child to all but the most affluent families in a yearlong expansion of the child tax credit that Democrats want to make permanent.Ms. Ray had to contribute $600 to the cost of a CT scan for her cancer diagnosis. The stimulus check in April allowed her to afford it.Callaghan O’Hare for The New York TimesWhile the ability of cash payments to reduce hardship might seem obvious, Mr. Shaefer pointed out that critics of such aid often warn that the needy might waste it. He argued that the size, speed and variety of the hardship reductions vindicated the use of broad cash relief. While other forms of pandemic aid have been better targeted, some have taken many months to distribute and can be used only for dedicated purposes like food or housing.“Cash aid offers families great flexibility to address their most pressing problems, and getting it out quickly is something the government knows how to do,” Mr. Shaefer said. Extrapolating from the survey data, he concluded that 5.2 million children had escaped food insufficiency since the start of the year, a figure he called dramatic.The experience of Ms. Ray, a warehouse worker at a recycling company in Houston, captures the hardships that the pandemic imposed and the varied ways that struggling families have used stimulus checks to address them. Earning $13 an hour, Ms. Ray had an unforgiving budget even before business closures reduced trash collection and cut her hours by a third.Her car insurance lapsed. Her lights were shut off. She skipped meals, even with food pantry aid, and re-wore dirty work clothes to save on laundromat costs. When her daughter discovered that they owed thousands in rent, she offered to quit high school and work, which Ms. Ray forbid. A stimulus payment in January — $1,200 for the two of them — let her pay small parts of multiple bills and restock the freezer.“It bridged a gap,” Ms. Ray said, while she waited for slower forms of assistance, like rental aid.Then she got cancer. To confirm the diagnosis and guide her treatment, she had to contribute $600 to the cost of a CT scan, which she did with the help of a payment in April totaling $2,800.In addition to providing for the test, Ms. Ray said, the checks brought hope. “I really got down and depressed,” she said. “Part of the benefit of the stimulus to me was God saying, ‘I got you.’ Spiritual and emotional reassurance. It took a lot of stress off me.”Scott Winship, who studies poverty at the American Enterprise Institute, questioned the reliability of the census data used in the University of Michigan study, noting that fewer than one in 10 of the households the government contacts answer the biweekly surveys.He also argued that hardship would have fallen anyway, since the last round of stimulus checks coincided with tax season, which sends large sums to low-wage workers through tax credits. Between the earned-income tax credit and the child tax credit, a single parent with two children can receive up to nearly $8,500 a year.Researchers at Columbia University estimate that poverty fell sharply in March, but Zachary Parolin, a member of the Columbia team, said that about half the decline would have occurred without the pandemic relief, primarily because of the tax credits.Noting that the stimulus checks allocated as much to households with incomes above $100,000 as they did to those below $30,000, Mr. Winship called them inefficient and a poor model for future policy. “It’s not sustainable to just give people enough cash to eliminate poverty,” he said. “And in the long run it can have negative consequences by reducing the incentives to work and marry.”Analysts have long debated the merits of cash versus targeted assistance like food stamps or housing subsidies. Cash is easy to send and flexible to use. But targeted benefits offer more assurance that the aid is used as intended, and they attract political support from related businesses like grocers and landlords.Throughout the pandemic, policymakers have employed both approaches. The first round of stimulus checks, $1200 per adult and $500 per child last year, started before the Census Bureau surveys began, so it is harder to gauge its effect.With full eligibility extending to families with incomes of up to $150,000, the stimulus checks could reach nearly 300 million Americans. While that greatly increased the cost, Mr. Shaefer said it reduced the resentment that could accompany aid to the chronically needy and noted that hardships have expanded up the income ladder.Even among households that had prepandemic incomes of $50,000 to $75,000, more than 11 percent of those with children sometimes or often lacked food at the start of the year — a figure that has since fallen in half, according to the Census data.Ms. Ray said she had skipped meals and reworn dirty work clothes to save on laundry costs during the economic downturn.Callaghan O’Hare for The New York TimesWhen some people heard the latest checks were coming, they considered the news too good to be true. Ms. Webb, a St. Louis nursing aide with three young children, lost about two-thirds of her earnings when the pandemic left fewer patients seeking in-home care. She found another job but lost it after catching Covid. Food was the first casualty.“We’d have breakfast a little later than normal, and then dinner — no lunch,” she said. “Sometimes the kids would have dry cereal because we didn’t have milk.”Despite her skepticism, Ms. Webb received $8,000 for her four-person family between the two rounds. She used the money to pay back family loans and reduce her overdue rent, and she started serving lunch and an afternoon snack “to make sure the kids were full-full.”“I was like, ‘Woo!’ This is the most money I ever seen in my bank account,” she said. “I’m still in a hole, but I’m starting to see more sunlight now.”Mr. Shaefer acknowledged that other aid and an improving economy might have helped reduce hardship, but he said the timing pointed toward the stimulus checks. Among families with children, nearly 90 percent of the improvement in food sufficiency this year occurred in the two weeks after each round of payments.The study cited another direct link between cash aid and hardship: after the government stopped supplementing jobless benefits last fall, food insufficiency among families with children rose nearly 25 percent.“Throughout the crisis, the level of hardship faced by U.S. households can be directly linked to the federal government’s response,” Mr. Shaefer and Mr. Cooney wrote.Low-income families often emphasize the stress that economic uncertainty brings, especially when it threatens needs as basic as shelter and food. At the start of this year, 73 percent of households with children reported spending at least several days a week feeling anxious. That figure has since fallen to 57 percent, according to the census data.“I really got down and depressed,” Ms. Ray said. “Part of the benefit of the stimulus to me was God saying, ‘I got you.’ Spiritual and emotional reassurance. It took a lot of stress off me.”Callaghan O’Hare for The New York TimesBut mental health might have improved for many reasons, Mr. Winship said, including increasing vaccinations, falling disease rates and the socialization that has accompanied the reopening of businesses and schools. “I would really question whether that’s the stimulus checks,” he said.Still, research in recent decades has emphasized the debilitating effect that stress can have on children raised in low-income households. And recipients of the stimulus payments often describe them as an emotional balm.For Ms. Young, 40, the problems of poverty and poor mental health are deeply entwined. A Chicago woman with schizophrenia, she is raising a teenager and a baby on food stamps and disability checks. Extra help from adult children lapsed during the pandemic when they lost work. The result was a disconnected water line and two weeks of toting jugs from her neighbor’s apartment.“It’s really depressing, having to worry about losing your lights and water,” Ms. Young said. “Very stressful. It was a very, very dark path.”She did not receive the stimulus payment that most people got at the start of the year, for reasons she does not understand. She checked her bank account in April, to see if she could buy a loaf a bread, when she found it swollen with a $1,400 stimulus check.Ms. Young bought the bread — two loaves — and paid down her utility bills to avoid more outages. “I did it that day,” she said. “You just don’t know — it was such a relief.” More