Income Inequality

More stories

  • 138 Shares149 Views

    in Economy

    Most Americans Are Expected to Save, Not Spend, Their $600 Check

    by

    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus PlanVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storySupported byContinue reading the main storyMost Americans Are Expected to Save, Not Spend, Their $600 CheckWhile lawmakers debate increasing the stimulus payments to $2,000, experts say it would make far more sense to give more money to the unemployed.Galen Gilbert, a 71-year old lawyer who lives in a Boston suburb, plans to deposit his stimulus check into savings. “I’m not really suffering financially,” he said.Credit…Katherine Taylor for The New York TimesNelson D. Schwartz and Dec. 30, 2020Updated 4:49 p.m. ETGalen Gilbert knows just what he will do with the check he gets from Washington as part of the pandemic relief package, whatever the amount: put it in the bank.“I’ve got more clients than I can handle right now and I’ve made more money than I usually do,” said Mr. Gilbert, a 71-year-old lawyer who lives in a Boston suburb. “So I’m not really suffering financially.”Cheryl K. Smith, an author and editor who lives in Low Pass, Ore., isn’t in a rush to spend the money, either. She plans to save a portion, too, while donating the rest to a local food bank. “I’m actually saving money right now,” Ms. Smith said.President Trump’s demand to increase the already-approved $600 individual payment to $2,000, with backing from congressional Democrats, has dominated events in Washington this week and redefined the debate for more stimulus during the pandemic. Mitch McConnell, the Senate majority leader, said on Wednesday he would not allow a vote on a standalone bill increasing the checks to $2,000, dooming the effort, at least for now.Whatever the amount, the reality is that most Americans right now are much more likely to save the money they receive.Of course, the money will be a lifesaver for the roughly 20 million people collecting unemployment benefits and others who are working reduced hours or earning less than they used to. Yet, for the majority of the estimated 160 million individuals and families who will receive it, spending the money is expected not to be a high priority.After an earlier round of $1,200 stimulus checks went out in the spring, the saving rate skyrocketed and remains at a nearly 40-year high. That largely reflects the lopsided nature of the pandemic recession that has put some Americans in dire straits while leaving many others untouched.Economists on the right and left of the political spectrum said that when otherwise financially secure people receive an unexpected windfall, they almost invariably save it. The free-market economist Milton Friedman highlighted this phenomenon decades ago.Many experts said a truly stimulative package would have earmarked the payments for those who need it most — the unemployed.“We know where the pockets of need are,” said Greg Daco, chief economist at Oxford Economics. “Putting it there would be a much more efficient use of the stimulus.”And because the money will immediately be put to work — the jobless don’t have the luxury of saving it — it would also have a much bigger impact on the overall economy, through what experts refer to as the multiplier effect. In essence, each dollar given to a person in need is likely to benefit the economy more because it would be used to pay for, say, groceries or rent.“Providing $2,400 to a family of four in the same financial situation as they were at the end of 2019 doesn’t do much to boost the overall economy right now,” Mr. Daco said. “It’s not whether it’s a positive or not. It’s their potency that’s in question.”Individuals with an adjusted gross income in 2019 of up to $75,000 will receive the $600 payment, and couples earning up to $150,000 a year will get twice that amount. There is also a $600 payment for each child in families that meet those income requirements. People making more than those limits will receive partial payments up to certain income thresholds.A more effective approach, experts say, would have raised unemployment insurance benefits to the jobless by $600 a week, matching the supplement under the stimulus package Congress passed last spring, rather than the $300 weekly subsidy the new legislation provides. Democrats had pushed for larger payments to the jobless and included it in legislation that passed the House, which they control. But the measure met stiff resistance from Republicans, who control the Senate, and was not included in the final compromise bill.The Coronavirus Outbreak More

  • 125 Shares99 Views

    in Economy

    Buried in Covid Relief Bill: Billions to Soothe the Richest

    by

    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus DealThe Latest Vaccine InformationF.A.Q.AdvertisementContinue reading the main storySupported byContinue reading the main storyBuried in Pandemic Aid Bill: Billions to Soothe the RichestThe voluminous coronavirus relief and spending bill that blasted through Congress on Monday includes provisions — good, bad and just plain strange — that few lawmakers got to read.Senator Joe Manchin III, Democrat of West Virginia, at the Capitol last week. He said leadership intentionally waited until the last minute to unveil final proposals to the spending bill.Credit…Anna Moneymaker for The New York TimesLuke Broadwater, Jesse Drucker and Dec. 22, 2020WASHINGTON — Tucked away in the 5,593-page spending bill that Congress rushed through on Monday night is a provision that some tax experts call a $200 billion giveaway to the rich.It involves the tens of thousands of businesses that received loans from the federal government this spring with the promise that the loans would be forgiven, tax free, if they agreed to keep employees on the payroll through the coronavirus pandemic.But for some businesses and their high-paid accountants, that was not enough. They went to Congress with another request: Not only should the forgiven loans not to be taxed as income, but the expenditures used with those loans should be tax deductible.“High-income business owners have had tax benefits and unprecedented government grants showered down upon then. And the scale is massive,” said Adam Looney, a fellow at the Brookings Institution and a former Treasury Department tax official in the Obama administration, who estimated that $120 billion of the $200 billion would flow to the top 1 percent of Americans.The new provision allows for a classic double dip into the Payroll Protection Program, as businesses get free money from the government, then get to deduct that largess from their taxes.And it is one of hundreds included in a huge spending package and a coronavirus stimulus bill that is supposed to help businesses and families struggling during the pandemic but, critics say, swerved far afield. President Trump on Tuesday night blasted it as a disgrace and demanded revisions.“Congress found plenty of money for foreign countries, lobbyists and special interests, while sending the bare minimum to the American people who need it,” he said in a video posted on Twitter that stopped just short of a veto threat.The measure includes serious policy changes beyond the much-needed $900 billion in coronavirus relief, like a simplification of federal financial aid forms, measures to address climate change and a provision to stop “surprise billing” from hospitals when patients unwittingly receive care from physicians out of their insurance networks.But there is also much grumbling over other provisions that lawmakers had not fully reviewed, and a process that left most of them and the public in the dark until after the bill was passed. The anger was bipartisan.“Members of Congress have not read this bill. It’s over 5000 pages, arrived at 2pm today, and we are told to expect a vote on it in 2 hours,” Representative Alexandria Ocasio-Cortez, Democrat of New York, tweeted on Monday. “This isn’t governance. It’s hostage-taking.”Senator Ted Cruz, Republican of Texas, agreed — the two do not agree on much.“It’s ABSURD to have a $2.5 trillion spending bill negotiated in secret and then—hours later—demand an up-or-down vote on a bill nobody has had time to read,” he tweeted on Monday.The items jammed into the bill are varied and at times bewildering. The bill would make it a felony to offer illegal streaming services. One provision requires the C.I.A. to report back to Congress on the activities of Eastern European oligarchs tied to President Vladimir V. Putin of Russia. The federal government would be required to set up a program aimed at eradicating the murder hornet and to crack down on online sales of e-cigarettes to minors.It authorizes 93 acres of federal lands to be used for the construction of the Teddy Roosevelt Presidential Library in North Dakota and creates an independent commission to oversee horse racing, a priority of Senator Mitch McConnell, Republican of Kentucky and the majority leader.Mr. McConnell inserted that item to get around the objections of a Democratic senator who wanted it amended, but he received agreement from other congressional leaders.Alexander M. Waldrop, the chief executive of the National Thoroughbred Racing Association, said on Tuesday that Mr. McConnell had “said many times he feared for the future of horse racing and the impact on the industry, which of course is critical to Kentucky.”The Coronavirus Outbreak More

  • 163 Shares119 Views

    in Economy

    Biden and His Economic Team Urge Quick Action on Stimulus as Risks Mount

    by

    #masthead-section-label, #masthead-bar-one { display: none }The Presidential TransitionliveLatest UpdatesFormal Transition BeginsBiden’s CabinetSecretary of StateElection ResultsAdvertisementContinue reading the main storySupported byContinue reading the main storyBiden and His Economic Team Urge Quick Action on Stimulus as Risks MountThe president-elect introduced key nominees in Delaware, while lawmakers exchanged new proposals with prospects for a deal still dim.President-elect Joseph R. Biden Jr. acknowledged that any stimulus agreement would necessarily fall far short of the trillions of dollars that Democratic leaders have insisted on for months.Credit…Kriston Jae Bethel for The New York TimesBy More