Rumors and speculation about a fourth stimulus check are all over the place. To be fair, some Democrats are keeping this pipe dream alive by signing an open letter calling on President Biden to open the national coffers yet again — or, rather, more like fire up the money printing presses once more — to distribute what would be a fourth round of direct, emergency payments since the arrival of the coronavirus pandemic early last year.
But make no mistake: It. Is. Not. Happening. This is a prediction, of course, because our government’s actions have never been accused of following a straight line of logic for too long, no matter who’s in power, and here’s the basis upon which this prediction rests. By the way, you’ll need to have a little patience with the nuance that we’ll try to unspool, because we’d like to direct your attention to none other than … the fact that a new round of stimulus checks is set to begin arriving in mailboxes and bank accounts less than a month from now.
Wait a second, you might be saying to yourself. There won’t be a fourth stimulus check, yet we’re about to start receiving a new round of stimulus checks that, yes, technically, come after the third check we got — sounds like a fourth stimulus check to me!
Here’s what’s really going on.
Let’s back up to March of this year. President Biden signed a $1.9 trillion piece of legislation that was stuffed to the gills with pork (according to Republicans) and life-saving aid (according to Democrats). We need to zero in on two objective benefits that this legislation, which came to be known as the American Rescue Plan, provided:
- First, it provided funding for a third round of stimulus checks. The Trump administration had already sent out two stimulus check at that point — for $1,200, and then $600 — but the Biden administration came in strong, with $1,400 checks right out of the gate. Between March of this year and now, according to the IRS, more than 169 million of those Biden stimulus checks have either been mailed out or direct-deposited. Collectively, those checks add up to about $395 billion — roughly comparable to the 2019 GDP of Israel.
- That same legislation also provided funding for payments to families with children, payments that will go as high as $3,600 for each eligible child. This money, though, will be chopped up into six checks, and they’ll be spread out between July and the end of this year. Those six checks will be sent out once a month, starting July 15, but they’re not really a fourth stimulus check, not as such, even though they come sequentially after the third check.
These six new checks, plus a related tax break that the recipient families will also receive next year, combine to form one single entity — an expanded federal child tax credit, which is what was authorized in the legislation that we mentioned above, in the second bullet point.
If you’re eligible for this benefit, the IRS will determine how much you should receive — and then it will chop that in half, giving you part of that money next year in the form of a tax credit when you file your federal taxes, while the balance will be paid out over the six monthly checks that start next month.
This business about a fourth stimulus check starts to get confusing, because that 6-check series hasn’t even started yet, and here Democrats are already calling, loudly, for a fourth stimulus payment.
Which will not happen.
Let’s do some really, really, horribly oversimplified math to understand why.
After we briefly mention one thing:
Requirements: Among the important things to know, in order to receive these new child tax credit checks, is that there is an income threshold. Married couples can only earn $150,000 in total or less, while individuals are allowed to make up to $75,000 a year. They’ll get $250 for each child between the ages of 6 and 17 from July through December, for a total of $1,500 (6 months x $250). For each child under the age of 6, they’ll get $300 (or, $1,800 in total). As far as the remainder of the child tax credit that they’re entitled to, that will come next year as a credit when the family’s taxes are filed.
Now, for some estimates. Let’s take the very least that a family could receive from this child tax credit. Let’s say this hypothetical family only has 1 child. The child is older than age 6, so this family’s credit works out to $3,000, all together.
Now, let’s take the IRS’ estimate that more than 36 million American families qualify for one of these new payments.
If you use as a base assumption that all of those families receive the $3,000 credit, which is the low end — and which is nevertheless probably way off and doesn’t take into account all sorts of edge cases, let alone acknowledge the fact that many, many families will receive much more than this — that works out to $108 billion that the Biden administration is pushing out the door between now, and the end of this year (including the tax credits that have already been budgeted and will be added next year).
So, $395 billion that’s already been sent out and is already in Americans’ hands, via the third stimulus checks.
Plus $108 billion, via these child tax credit payments.
That’s more than half a trillion dollars — which, again, will end up being way, way low because of my base level estimate. Coupled with the fact that next year is a mid-term election year, when parties generally focus on survival and less on sticking their neck out to do hard things, that leaves you with 503 billion reasons why there’s no way even our normally profligate government is going to look at the size of these figures and think, you know what, we probably haven’t spent enough at this point during the pandemic. But don’t take my word for it.
Even President Biden himself thinks the economy is doing great (i.e., not exactly in need of another injection of monetary adrenaline at this point):
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Today, we’ve passed 300 million shots in 150 days.
When I took office, our nation was in crisis. Today, the virus is in retreat and our economy has smashed previous records for job growth.
That’s just four months, folks.
— President Biden (@POTUS) June 18, 2021