What is a stimulus check? What should veterans, people in uniform, and their families know about economic stimulus packages and how they are paid?
Second Stimulus Check
$600 2nd stimulus checks have begun to reach American’s bank accounts and mostly follow the same eligibility formula as the first round (see below for details). This means active duty military, disabled veterans, pension and survivor benefits recipients, SSI and SSDI recipients and most other people who received stimulus payments in the Spring will be eligible again.
U.S. Treasury Department Statement:
“Today [Dec 19], the Treasury Department and the Internal Revenue Service will begin delivering a second round of Economic Impact Payments to millions of Americans as part of the implementation of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021. The initial direct deposit payments may begin arriving as early as tonight for some and will continue into next week. Paper checks will begin to be mailed tomorrow, Wednesday, December 30. This second round of payments will provide critical economic support to those who, through no fault of their own, have been adversely impacted by the COVID-19 pandemic.
The second round of payments was distributed automatically, with no action required for eligible individuals. If additional legislation is enacted to provide for an increased amount, Economic Impact Payments that have been issued will be topped up as quickly as possible.”
On Mon. Dec 21 the House and Senate passed the omnibus legislation and sent the relief package to the President’s desk for signature, which he signed on Dec. 27.
Stimulus payments are expected to be sent within weeks. It may take longer for the federal government to send out paper checks and debit cards. The IRS anticipates it will send out about 10 million per week, with the goal of sending all payments within several weeks.
The House also voted Mon. Dec. 28 to increase the second round of payments to $2,000 however the Senate passed on the House-passed CASH Act.
Aside from the $600 stimulus checks, the stimulus bill also includes an extra $300 a week in unemployment aid. That means that jobless workers will receive their regular state unemployment payments, plus $300 on top of that through March 14, 2021.
Proposed $900 Billion COVID Relief Package
- $600 stimulus checks: Most everyone eligible for stimulus checks last Spring will receive payments again plus these groups of people:
- Mixed-status Immigrant Families: U.S. citizens and green card holders will be able to receive stimulus payments, even if they filed a joint tax return with an undocumented spouse, as well as additional $600 checks per dependent child. Retroactively, mixed-status families will be eligible for the $1,200 per household and $500 per child checks allocated by the CARES Act. Undocumented Immigrants or other non-citizens who do not have Social Security numbers and file individual tax returns would still be ineligible for stimulus checks.
- Dependent children: Will receive the same $600, up from the $500 checks that children received earlier this year.
- High Income Phase-outs: Phase out completely for individuals who earn more than than $87,000 (previously $99,000) and couples who earn $174,000 (previously $199,000).
- An extension of boosted federal unemployment benefits at $300 a week through March 14, 2021 (16 weeks)
- Service members, Defense Department civilians and federal workers get an extension to pay back the 6.2% Social Security tax that has not been withheld from their paychecks since September.
- The bill extends the time frame for service members, Defense Department civilians and federal workers to pay back the 6.2% Social Security tax that has not been withheld from their paychecks since September, when President Donald Trump signed an executive order deferring the tax.
- $248 billion for the Paycheck Protection Program and other small-business relief
- $25 billion in rental assistance
- Financial assistance to agriculture and fisheries and transportation including the airline industry
- Money for schools and education
- Vaccine distribution and health care
- 1% federal pay raise
The relief package does not include controversial matters such as direct aid to states and localities and temporary liability protection from COVID-19 related lawsuits.
2nd Recovery Rebate Amounts:
- A maximum $600 for individual tax filers
- A maximum $600 for couples who make up to $150,000;
- Individuals who earn above $87,000 and couples above $174,000 are not eligible for the stimulus (see below);
- An additional $600 per each child (according to IRS rule).
The 2nd Stimulus Checks Phase-out at:
- $75,000 in adjusted gross income for singles.
- $112,500 for heads of household.
- $150,000 for married couples (when couples file joint tax returns).
- Payment is reduced by five percent or $5 of every dollar above that mark, or $50 for every $1,000 above $75,000.
- Completely phase out at $87,000 for singles and $174,000 for couples (with no children).
“Seniors, veterans, the unemployed and low-income Americans would be eligible too,” Senate Finance Committee Chairman Chuck Grassley.
- VA Benefits: Disabled Veteran, Pension, & Survivor Benefits Recipients: Veterans receiving benefits from the Department of Veterans Affairs for VA disability benefits, pensions, and survivors’ benefits will be treated the same as those receiving SS, SSDI, SSI benefits and do qualify for stimulus checks. For instance, a veteran whose only income is a veterans’ disability payment is eligible as long as they are not the dependent of another taxpayer. Action is NOT required for these veterans. “Veterans and their beneficiaries who receive Compensation and Pension (C&P) benefit payments from VA will receive a $1,200 Economic Impact Payment with no further action needed on their part.” IRS Press Release
- Medically Retired: Same as above.
- Active Duty Military: Service members that qualify according to the income guidelines listed above will receive a stimulus check. The includes all service branches: Army, Marine Corps, Navy, Air Force, Coast Guard, Space Force.
- Military Spouse with No SSN: One exception to the Social Security number requirement is that if a member of the military files a married tax return. The spouse isn’t required to have a SSN for them to get the stimulus payment.
- Social Security (SS) Recipients & Social Security Disability Insurance (SSDI): Senior citizens who receive social security and SSDI payments can receive a stimulus check. Individuals with $0 of income are eligible for a rebate so long as they are not the dependent of another taxpayer and have a work-eligible SSN. There is no qualifying income requirement. Payments will automatically deposited into their bank accounts, and DO NOT need to take any action. For those who have qualifying children, they can take an additional step to receive $500 per qualifying child.
- Supplemental Security Income (SSI) Recipients: SSI recipients and others whose income comes entirely from non-taxable benefits do qualify to receive HHS stimulus payments. SSI recipients will receive their payment automatically. The payments will come the same way you typically receive your benefit payments, either by direct deposit, a Direct Express debit card or paper check. Payments are expected to be made in early May.
- Social Security (or SSEB): Social Security (or SSEB) that do file taxes because they receive additional income through a pension or another source, will receive an economic impact payment based on their latest tax return.
- Railroad Retirement Beneficiaries: Will receive an Economic Impact Payment automatically deposited into their bank accounts, and DO NOT need to take any action. For those who have qualifying children, they can take an additional step to receive $500 per qualifying child.
- No 2018 or 2019 Tax Returns Filed: SS, SSDI and Railroad Retirement recipients DO NOT need to take any action. “The IRS urges anyone with a tax filing obligation who has not yet filed a tax return for 2018 or 2019 to file as soon as they can to receive an economic impact payment. Taxpayers should include direct deposit banking information on the return.” IRS Statement. File for free with an IRS Tax File Partner. See non-filer instructions below.
- Zero Income: Individuals with zero income are eligible for a rebate as long as they aren’t the dependent of another taxpayer and have a valid Social Security number. See non-filer instructions below.
- Non-Filers: If your income level does not require you to file a tax return, then you need to submit information to the IRS to receive an Economic Impact Payment. Get started here: https://www.irs.gov/coronavirus/economic-impact-payments
- Had gross income that did not exceed $12,200 ($24,400 for married couples) for 2019
- Were not otherwise required to file a federal income tax return for 2019, and didn’t plan to
- Non-Filer with Children who Qualify: Non-Filers with children do need to take an extra step to add $500 per child onto their automatic payment of $1,200 if they didn’t file a tax return in 2018 or 2019. Go to “IRS Non-Filers: Enter Payment Info.”
- College Students: Students NOT considered a dependent of their parents qualify. Generally, a full-time college student under the age of 24 is considered a dependent if their parent(s) provide more than half of their support. Separately college stimulus payments are available for those who qualify. See below for more details.
- Babies/Newborns: Parents who had a child in 2019 are eligible for the additional $500 per child. If a 2019 tax return has not been filed than they will get $500 per child added to their 2020 tax refund or subtracted from their 2020 income tax bill. Parents of children born in 2020 won’t get a payment for that child now. However, $500 will be added to their tax refund or subtracted from their income-tax bill when they file their 2020 tax returns in early 2021.
- Adopted Children with Adoption Taxpayer Identification Number (ATIN): A child under age 17, is if the child is adopted and has an “adoption taxpayer identification number” (ATIN) can be claimed for the purpose or receiving the $500 per child payment.
- Americans Living Abroad: Same income requirements apply and will still need a social security number.
- U.S. territories: In general, residents of American Samoa, Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico and the U.S. Virgin Islands will receive payments. The tax authorities in each territory will make payments and any questions should be directed to the local tax authority.
- Unemployed/Layoff/Furlough (Temporary Layoff): The unemployed workers and workers laid off will be eligible to receive a stimulus payment and may also be eligible for an additional $600 weekly benefit provided by the government. If your income is too high to qualify, you may once you file your 2020 taxes. The payment is technically an advance on a tax credit so it will depend on how much you earn in 2020.
- Self-Employed: As long as their AGI does not exceed the threshold, the self-employed will be eligible to receive a stimulus payment.
- Past Due Debt to a State or Federal Agency: The CARES Act turns off nearly all administrative offsets that ordinarily may reduce tax refunds for individuals who have past tax debts, including student loan payments.
- Delinquent Child Support Payments: Past due child support payments that the states have reported to the Treasury Department will be offset.
Income Determination and Taxes
- Income is determined by a person’s adjusted gross income, or AGI and the recovery rebate checks are non-taxable, not considered income.
- If your income is lower in 2020 than in 2019, any additional credit you are eligible for will be refunded or reduce your tax liability when you file your 2020 tax return next year. If the credit amount you qualify based on 2020 income is less than what you qualify for based on your 2019 tax return, it does not have to be paid back.
Proposed $2,000 Stimulus Check Update
The House of Representatives passed the CASH Act however efforts for a $2,000 second stimulus check are effectively dead. The Senate passed on the House-passed CASH Act which would have increased the second-round stimulus checks approved by the COVID-Related Tax Relief Act from $600 to $2,000. A new Congress will be sworn in on on Sun. Jan. 3 and could revive the legislation.
Past Proposed Stimulus Measures
- HEROES Act: On May 12 House Democrats unveiled a 3 trillion stimulus package and it passed the House on May 15. Negotiations with the House and Senate are next. Even if the HEROES Act is not passed, both parties will sit down to work out another bill that can garner cross-party support. Details of the stimulus package include:
- $1 trillion would go to state, local and tribal governments.
- $1,200 stimulus payments also would go out to most Americans under the plan, with a maximum of $6,000 per household.
- The $600 extra in weekly unemployment insurance through January.
- Student loan payments would be paused through September.
- $175 billion benefit to subsidize rent and mortgage payments.
- $200 billion fund for essential worker hazard pay.
- Back to Work Bonus: On June 25 Trump told reporters “We will be doing another stimulus package…It’ll be very good, it’ll be very generous.” The White House is considering a $450 weekly bonus to unemployed workers who return to work. This weekly bonus would be paid for a limited time and would be paid in addition to the worker’s wages. The White House is also considering reducing unemployment payments to $250 or $300 a week during the second half of the year.
- Monthly Economic Crisis Support Act: Senators Kamala Harris (D-CA), Bernie Sanders (I-VT) and Ed Markey (D-MA) introduced a bill where eligible individuals would receive $2,000 per month ($4,000 per month for married filing jointly), plus an additional $2,000 per month for each qualified dependent, up to a maximum of three dependents. Full draft can be read here.
- The Emergency Money for the People Act: Would provide a $2,000 monthly payment to every qualifying American over the age of 16 for up to 12 months.
- Rent and Mortgage Cancellation Act: would call for a nationwide cancellation of rents and home mortgage payments through the duration of the coronavirus pandemic, or up to one year.
- Heroes Fund: $25,000 premium pay increase for essential workers plus a $15,000 essential worker recruitment incentive to attract and secure workforce needed to fight public health crisis.
- Monthly Payments: 62 Congress members including Kamala Harris, Bernie Sanders and Alexandria Ocasio-Cortez wrote a letter urging Congress to make monthly payments.
- Getting America Back to Work Act: Provides payroll tax rebate that covers 80% of payroll expenses aimed at allowing businesses to easily hire and retain employees.
First Stimulus Checks – CARES Act
The most well-known piece of the bill, stimulus checks, provides a maximum non-taxable $1,200 for individual tax filers, up to $2,400 for couples plus $500 per child.
Recovery Rebate Amounts:
- A maximum $1,200 for individual tax filers
- Up to $2,400 for couples who make up to $150,000;
- Those who earn above $99,000 are not eligible for the stimulus (see below);
- An additional $500 per each child (according to IRS rule).
Use this Stimulus Check Calculator to see your rebate amount.
The Stimulus Checks Phase-out at:
- $75,000 in adjusted gross income for singles.
- $112,500 for heads of household.
- $150,000 for married couples (when couples file joint tax returns).
- Payment is reduced by five percent or $5 of every dollar above that mark, or $50 for every $1,000 above $75,000.
- Completely phase out at $99,000 for singles and $198,000 for couples (with no children).
“People, like low-income taxpayers and some veterans, who generally don’t file or are not required to file should wait. Social Security and Railroad Retirement beneficiaries will receive an Economic Impact Payment automatically deposited into their bank accounts, and DO NOT need to take any action. We will have more information for you soon. Check IRS.gov/coronavirus.” IRS Statement
Why Payment Amount Could Be Different Than Anticipated
- If a taxpayer has already filed for 2019, the agency will still use the 2018 return if the IRS has not finished processing the 2019 return.
- Claimed dependents are not eligible for an additional $500 payment
- Dependents are college students
- Claimed dependents are parents or relatives, age 17 or older
- Past-due child support was deducted from the payment
- Garnishments by creditors reduced the payment amount
What If The Payment Amount is Incorrect?
When taxpayers file their return next year, they can claim additional credits on their 2020 tax return if they are eligible for them. The IRS will provide details at a later date.
Can I check the status of my stimulus payment?
Yes, the IRS released a “Get My Payment” application where you can check your payments status.
Payment Status Features:
- Check your payment status
- Confirm your payment type: direct deposit or check
- Add direct deposit information if the IRS does not have and hasn’t already sent your payment
- Enter your bank account information for direct deposit if we don’t have your direct deposit information and we haven’t sent your payment yet
Information Required to Check Payment Status
- Date of Birth
- Street Address (City/Town or State not required)
- ZIP or Postal Code
IRS “Get My Payment” application.
The IRS also has Get Refund Status page that lets you check the status of your refund after you supply your social security number, filing status and refund amount.
Who will receive the Economic Impact Payment automatically without taking additional steps?
“The vast majority of people do not need to take any action. The IRS will calculate and automatically send the economic impact payment to those eligible.” IRS Press Release
Most eligible U.S. taxpayers will automatically receive their Economic Impact Payments including:
- Individuals who filed a federal income tax for 2018 or 2019
- Individuals who receive Social Security retirement, survivors, or Social Security Disability Insurance benefits
- Individuals who receive Railroad Retirement benefits
- VA Disability, VA Pension and VA Survivor Benefits Recipients.
When will Checks Be Mailed?
April 20-September 11: Paper checks were first sent out the week of April 20 and will be sent on a weekly basis thereafter at a rate of 5 million per week. Those with the lowest Adjusted Gross Increments (AGI) will receive their checks first and those with the highest AGI last. All paper checks are expected to be sent by September 11.
When will the Stimulus Payments be Direct Deposited?
End of April/Early May: Social Security retirement, disability benefits, Railroad Retirement benefits, Supplemental Security Income and VA benefits recipients will receive their payments if they receive their benefits via direct deposit.
Early May: Supplemental Security Income (SSI) recipients will receive their payments by early May, in the same way they receive their normal benefits.
When and How are Payments Made?
- You do not need to apply to receive a payment.
- Payments will be made via direct deposit “as rapidly as possible.” Most payments are expected to be deposited by mid-April and and no later than Dec. 31, 2020. Follow the #stimulusdeposit hashtag on Twitter for updates on people receiving their stimulus payments.
- The first electronic payments were deposited on April 11 and the first with paper checks will be sent starting on April 24. It is expected to take months to send paper checks with lower-income individuals prioritized first.
- For most Americans, no action is required to receive a rebate check since the IRS will use a taxpayer’s 2019 tax return if filed or their 2018 return if they haven’t filed their 2019 return.
- The check will be sent in the same method you received your IRS refund. If you are not set up for direct deposit, your check will be mailed using the address on your most recent tax return.
- People who do not receive Social Security or VA benefits and, also do not typically file taxes because their income is very low, will need to submit their information the IRS as non-filer in order to receive a stimulus check at https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here.
Direct Express Card Holders
The IRS will pay Economic Impact Payments automatically to the existing Direct Express card accounts of most eligible Social Security, SSI, Veterans, and Railroad Retirement Board recipients. Read further for more information about the Direct Express card and Economic Impact Payments.
Complete this free IRS online form so that the IRS can identify you and your dependents, and receive valid direct deposit and address information about you. Americans who have qualifying children under age 17 and do not file taxes will need to use the IRS tool to enter additional information for those payments.
VA Benefits Recipients Action is NOT Required: If you receive veterans disability compensation, a pension, or survivor benefits from the Department of Veterans Affairs you do NOT need to submit as a non-filer.
“Veterans and their beneficiaries who receive Compensation and Pension (C&P) benefit payments from VA will receive a $1,200 Economic Impact Payment with no further action needed on their part.” IRS Press Release
How To Get a Stimulus Check if You Didn’t File a 2018 or 2019 Tax Return
- For those on Social Security, the SSDI program or the Railroad Retirement pension they can have their Social Security Benefit Statement or Social Security Equivalent Benefit Statement used directly to claim the stimulus check (no tax return will be required, no need to apply).
- If you did not receive Social Security, VA benefits or other retirement benefits and are low-income like some veterans the IRS has stated you should file a 2019 tax return or file as a non-filer for free with the IRS: https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here
- For people showing zero income (e.g. disabled vets) or were not otherwise required to file a federal income tax return for 2019 the same should be done.
- Those with income of $69,000 and below can file a free tax return.
Free Stimulus Registration with TurboTax, FreeTax USA
In partnership with the IRS, TurboTax has created a free Stimulus Registration for those who don’t file tax returns in order to easily get their stimulus payment. The registration is designed to file a minimum tax return with the IRS, which has the information needed to determine their stimulus eligibility. Users simply answer a few questions and then choose to receive their payment via direct deposit or check. The IRS strongly recommends selecting direct deposit, so that taxpayers can get their stimulus payment as quickly as possible.
Complete the TurboTax Stimulus Registration here for free.
FreeTaxUSA is reported work to allow zero income people to file for free and is customized for people that just need to file a return in order to receive their economic impact (stimulus) payment.
Complete the FreeTaxUSA Stimulus Registration here for free.
What to do if Your Onfile IRS Address or Bank Information has Changed
- If you have moved since you last filed your taxes, submit a change of address form, which normally takes four to six weeks to process, in order to have the check sent to the correct residence.
- If you have filed a paper copy of your taxes or have closed the bank account used to receive previous tax refunds, the government will send a check in the mail.
Who Won’t Get a Stimulus Check
- High Wage Earners: Those whose AGI is above $99,000 or married couples earning more than $198,000.
- Parents cannot claim the $500 tax credit on children who are 17 or 18 years old at the end of the tax year. Qualification is based on the tax-code definition of “child” that states a “qualifying child … has not attained age 17.” The children will also not be able to collect a stimulus check on their own if they are claimed as dependents on their parents’ tax return.
- College students between the ages of 19 to 23 that can be claimed as dependents.
- Adults who are claimed as dependents.
- Nonresident aliens e.g. no green card.
“For the vast majority of Americans, no action on their part will be required to receive a rebate check since the IRS will use a taxpayer’s 2019 tax return if filed or their 2018 return if they haven’t filed their 2019 return.” Excerpt from Senator Chuck Grassley’s recovery check FAQ.
What are College Stimulus Payments for College Students?
$14 billion in federal funding was set aside for higher education and $6 billion goes directly to students. This is a separate part of the CARES Act from the $1,200 stimulus payments.
Each college is required to use these dollars to provide emergency grants and financial assistance to help students with any needed expenses due to the pandemic. Those expenses can include a wide range of costs, such as health care, child care, food, living expenses or computer equipment. Each college has the discretion to determine which students can access the funding and students should check with their college for details.
Students should inquire with their college for details.
How Do I Change My Address with the IRS?
If you have moved since you last filed, let the IRS know your new mailing address.
Do I Have to Have a Social Security Number to Get a Check?
Yes, you must have a Social Security number to receive stimulus check including anyone you’re claiming for a credit e.g. a child.
Will Receiving a Stimulus Check Affect VA Benefits? Other Government Benefits?
No, it will not affect your benefits.
Will My Bank Seize My Stimulus Check to Cover Existing Debts?
It depends on the bank. For example, military-focused USAA recently announced that for active member deposit accounts, they have paused the recovery of any negative account balance existing at the time their stimulus payment was deposited for a period of 90 days. Check with your bank on their policy.
Does The $484 Billion Bill Include Additional Stimulus Payments To Individuals?
Unfortunately, the $484 billion bill signed by President Trump does not include provisions for additional stimulus checks.
Here is how the $484 billion will be spent:
- Replenishing the Paycheck Protection Program (PPP): $310 billion
- Small Business Administration’s Disaster Relief Fund: $60 billion
- Hospitals: $75 billion
- Coronavirus Testing: $25 billion
Watch Out for Stimulus Check Scams
The IRS will NOT contact you via telephone, texts/SMS, email, mail or social media asking for any personal information. All stimulus check information will be automatically gathered by the IRS from your actual tax return data (see above for those without 2018 or 2019 returns).
The IRS will mail a letter about the economic impact payment to the taxpayer’s last known address within 15 days after the payment is paid. The letter will provide information on how the payment was made and how to report any failure to receive the payment.
- Do not give anyone your personal information to “sign-up” for your relief check.
- No one has early access to this money. Anyone that claims to is a scammer.
- Avoid any requests to login to websites or download software.
- Avoid any communication requesting processing or clearance fees to release the funds or anything that deviates from stated relief amounts.
- Do not click on any links in texts/SMS, email or social media unless you are 100 percent sure that the message is from a trusted source.
How Americans Are Used Their Stimulus Payments
- About 85.5% said they had received or expected someone in the household to receive an Economic Impact Payment or stimulus check.
- About 80% of respondents reported using it on food, and 77.9% on rent, mortgage and/or utilities, including gas, electricity, cable, internet and cellphone.
- More than half (58.2%) of such respondents reported spending stimulus payments on household supplies and personal care products.
- About a fifth (20.5%) reported spending the money on clothing.
- A smaller share (8.1%) said they spent or would spend the stimulus on household goods like TVs, electronics, furniture, and appliances or on recreational goods like fitness equipment, toys and games.
- Adults in households with incomes between $75,000 and $99,999 were more likely to use their stimulus payments to pay off debt or to add to savings, compared to households overall.
- In contrast, 87.6% of adults in households with incomes of $25,000 or less planned to use their stimulus payments to meet expenses.
Source: U.S. Census Bureau Pulse Survey
REAL ID Act Delay
The deadline to obtain a REAL ID Act-compliant drivers license or ID card was extended to October 2021. The REAL ID act requires citizens to carry identification meeting federal guidelines in order to enter federal property such as military bases, but also airports and other transportation options.
Most military bases have incorporated the REAL ID Act requirements into their Pass & ID regulations, vehicle registration procedures, etc. Prior to the coronavirus bailout, REAL ID Act requirements were due to be enforced starting October 1, 2020.
Student Loan Payback Suspended
Borrowers with student loans held by the Department of Education (e.g. direct loans but not most FFEL and Perkins loans) originally had suspended payments through September 30, 2020. President Trump subsequently extended that relief to December 31 through executive action. If Congress does not act by the end of the year millions of student loan borrowers will start getting billed in January for their student loans for the first time in nearly a year.
A federal government payment of $600 per week will be applied above and beyond the other unemployment benefits available to those affected by the outbreak. Payments will be paid to those who have been laid off, furloughed, and to those who are gig economy workers who are out of work.
What does the final version of the 2 trillion 2020 coronavirus economic stimulus look like?
- Cash payments (see above)
- $20 billion for veteran health care
- A $350 billion fund intended to help small businesses
- $240 billion in healthcare relief
- $75 billion for hospitals
- $20 billion for public transportation relief
- $10 billion earmarked for airport relief
- $4.5 billion for the Centers for Disease Control and Prevention
- Supplements to state unemployment insurance
- An inspector general for $500 billion of relief funding for industry
The Definition Of A Government Stimulus
The technical definition of a government stimulus, as described by Investopedia.com, includes the following:
“Economic stimulus consists of attempts by governments or government agencies to financially stimulate an economy.”
Such attempts can include alterations to federal fiscal policies, quantitative easing, which is defined by some as a form of investment the government makes in certain critical bond markets and/or other areas for a certain span of time to stabilize the economy.
There may also be direct payments to corporations or individuals designed to encourage spending, hiring, and generally grease the skids, so to speak, of the national economy.
Two Kinds Of Stimulus
There are two different types of stimulus: Fiscal stimulus is described as acts the government takes to prod the economy:
- Additional government consumption
- Increased government transfers
- Reduced taxes
These measures are designed to reduce public debt. The other type, known as monetary stimulus refers to:
- Reduced interest rates
- Quantitative easing
- Alternative means of making credit available
These measures can be used to stave off or mitigate a recession; an excellent example of how monetary stimulus was used in this way was the federal government’s quantitative easing strategy to deal with the mortgage crisis of 2008.
Government Stimulus Checks
A government stimulus program designed to help spur the economy could take many forms, but the one we’re most interested in here is the part of the plan where a government check gets mailed to you, the consumer.
We’re all more or less used to getting certain checks from federal sources; your tax refund is one such payment. Social Security checks are another. But a stimulus check is not the same as SSI payments or tax refunds; the stimulus is paid to consumers when the government decides economic conditions warrant it.
Stimulus is not intended to be a permanent part of the government’s fiscal plan. It is intended to offset temporary conditions that create economic instability. Don’t be fooled by the word “temporary”; that does not indicate that a particular economic crisis will only last a few weeks or months.
The stimulus program of 2008 lasted a long time; it wasn’t until 2013 that the Fed Chairman announced the first tapering of the program. You read that correctly–that particular stimulus program lasted for YEARS. But it did eventually come to an end.
For the record, stimulus checks were not mailed out to American citizens for five years–such payments are only one part of a larger recovery plan.
Investopedia lists the technical definition of a stimulus check as, “…a check sent to a taxpayer by the U.S. government,” and goes on to say more or less that such payments successfully help the economy when taxpayers spend that money to “boost consumption and drive revenues at retailers and manufacturers.”
Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News
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