There’s a multi-billion-dollar plan to massively stimulate the economy during the COVID-19 epidemic — by sending checks to most American households. It could be a key part of the up to $1 trillion economic stimulus bill being negotiated by Congress and the White House.
Senators have floated numbers ranging from $1,000 to $2,000 per adult. Treasury Secretary Steven Mnuchin said he wants checks to go out “in the next two weeks.” So how would this all work?
Sending a bunch of money to American consumers isn’t all that complicated for the Treasury Department and IRS, according to Louise Sheiner, policy director for the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution.
“The government has everybody’s information from W-2s and tax returns and so they actually send out checks or deposit electronically into people’s bank accounts,” Sheiner said. “Whether or not it’s a certain amount per adult, per household, per child, however they decide to do it.”
But getting money into people’s hands right away could be a challenge, according to Douglas Holtz-Eakin, who served on President Bush’s Council of Economic Advisors and is currently president of the American Action Forum.
“We’ve done this twice before — in 2001 and 2008,” Holtz-Eakin said. “It’s not particularly fast. It’ll take six weeks at a minimum to get this set up and executed. It’s not particularly efficient — people don’t update their records, and there are a lot of checks that will not find their intended recipients.”
He said it might be hard for consumers to spend stimulus checks right now. But Sheiner said that’s OK — the money will boost the economy after the epidemic has passed.