A Fourth Stimulus Check Could Spring 7.3 Million Americans Out of Poverty


It hasn’t yet been a full month since President Joe Biden signed the $1.9 trillion American Rescue Plan Act. This $1.9 trillion legislation authorized the delivery of a third coronavirus stimulus check.

Yet, while the IRS is working on getting the $1,400 stimulus payments into Americans’ bank accounts, there are already calls for a fourth stimulus payment.

If lawmakers were to authorize a fourth check, the impact could be profound. The Urban Institute analyzed the effect that more cash payments could have on individuals and families and found that another COVID-19 payment could substantially reduce poverty rates for 2021 and bring millions of Americans above the poverty threshold.

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A fourth stimulus check could help 7.3 million people escape poverty

According to the Urban Institute, there would have been an estimated 44 million people living in poverty in the U.S. in 2021. However, the American Rescue Plan Act likely reduced that number down to 28 million. As a result, it shrunk the overall poverty rate to 8.7%, considerably lower than the 13.7% rate originally projected.

If another $1,400 stimulus payment were authorized to follow the third check, poverty levels in 2021 would fall further, as low as 6.4% to 6.6%. The specific reduction in the poverty rate would depend whether the payments were extended to everyone in the U.S. or were restricted to citizens, as past payments have generally been.

This fourth payment, therefore, would theoretically lift an estimated 7.3 million people out of poverty if it was authorized. And if there were two additional stimulus checks instead of one, then the fourth and fifth checks combined would enable the total number of people living in poverty in 2021 to fall to as little as 11.2 to 12.2 million people.

This would certainly be a dramatic reduction in the number of individuals and families living below the poverty level. That’s not all that surprising, though. After all, giving people direct payments of thousands of dollars with no strings attached will naturally bring up their income.

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And the more direct payments the government provides, the more people will see their income brought above the threshold necessary to be considered “in poverty.”

Will another stimulus check happen?

Although millions of people currently in poverty could benefit, a fourth stimulus check is unlikely to be authorized.

The coronavirus relief bills weren’t described as an anti-poverty measure, but instead were intended to help many struggling American families (including those with incomes above the poverty line). With the number of coronavirus cases falling, vaccines becoming more widely available, and unified opposition to more stimulus money among Republicans, it’s very unlikely that a fourth payment will be provided.

Still, some progressives are pressuring President Biden to take action and provide a fourth stimulus check. If circumstances change and the administration were to decide to move forward with this policy initiative, millions of Americans could find themselves above the poverty line at least temporarily in 2021. This could make a big impact on their ability to build a more secure future.

View more information: https://www.fool.com/the-ascent/personal-finance/articles/a-fourth-stimulus-check-could-spring-73-million-americans-out-of-poverty/

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