It’s a reversal of where you’d expect them to be. So how can we explain it?
Until a week ago, it looked as though President Biden and Democrats were going to make good on the promise of $2,000 of pandemic relief, adding $1,400 checks to the $600 in a relief bill passed in December. Then a group of 10 Republican senators called on Democrats to make the checks smaller and more targeted: Instead of going to individuals with up to $75,000 in income and couples with up to $150,000, they argued, the income limits should be $50,000 and $100,000.
This was not because those Republicans are so deeply concerned about perpetuating income inequality. The best explanation for their proposal was that they just wanted the distribution to be smaller, in any way it could be. But then the president, in a spirit of bipartisan magnanimity, responded that while he would not entertain reducing the size of the checks, he would consider lowering the threshold. Which then made that a live issue.
And now we have liberals like Sen. Bernie Sanders (D-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) advocating for the higher threshold, while some conservative Democrats have embraced the Republican position. Consider this from Sen. Joe Manchin III (D-W.Va.):
The split within the party appeared to intensify over the weekend. Manchin told WV News last week that he supported the next round of payments not going to individuals earning more than $50,000 or couples earning more than $100,000.“An individual of $40,000 income or $50,000 income would receive it. … And a family who is making $80,000 or $100,000, not to exceed $100,000, would receive it," Manchin said. "Anything over that would not be eligible, because they are the people who really are hurting right now and need the help the most.”
From Manchin’s argument, you’d think we were talking about taking money away from lower-income people and giving it to higher-income people; he wouldn’t support that because the lower-income people are the ones who “need help the most.” But this isn’t a zero-sum game. A dollar given to someone earning $51,000 a year isn’t taken away from someone earning $49,000. Under the proposal, they’d both get it.
At the moment it’s uncertain how this will turn out. While Manchin could refuse to vote for the overall bill unless his demand is met, he could also give in, or some compromise between the two positions could be reached.
But one of the problems in sorting this out is that we have two separate goals with this bill in general and particularly with these checks, goals that sometimes get conflated and sometimes get separated when they’re interrelated.
The first goal is relief, to help the people who have been hurt by the pandemic and the economic crisis get through this difficult period. The second goal is stimulus, to pump money into the economy so it recovers more quickly and more fully.
If all you wanted was relief, the checks would seem like overkill. Many people who will get them are struggling and they’ll be a great help, but the checks will also go to people whose income hasn’t been affected by the pandemic and are doing okay.
On the other hand, if all you wanted was stimulus, you’d say that doesn’t matter; the point is just to get the money flowing. And you’d say that while it’s more important to give money to those with lower incomes — since they’re more likely to spend it quickly on immediate needs, which multiplies its effects as it circulates through the economy, rather than saving it — it isn’t a bad thing to give it to some upper-middle-class people too, since they’ll spend at least some of it, and every bit helps.
The truth is that we want both: to help those who have been hurt the most, and to goose the economy. We have other means of doing the former, especially enhanced unemployment benefits, but there are also people who haven’t become unemployed but could still really use the help.
So if I were Biden, this is the argument I’d make to Manchin:
- People like it when you give them money. A lot.
- The more people we give money to, the more people will be pleased with us.
- That will improve our chances of keeping control of Congress in 2022 and the presidency in 2024.
- If we keep control we’ll be able to do more of the things you want to do. If we lose control, we won’t be able to do anything. And we’ll be helping the economy in the process. What’s not to like?
There’s something else to note, which is that the $75,000/$150,000 threshold was used in the previous rounds of relief/stimulus, in the original Cares Act last spring and the smaller bill passed in December. If you didn’t get a check then, you probably aren’t expecting one now. But if you did get a check then and you don’t get one now after seeing a whole bunch of news coverage about this new round of checks, you’ll probably be pretty disappointed.
And there are millions of people who would fall into the gap that Manchin and Republicans want to open. If the political will is there to give them a gift they’ll be thankful for, and it’ll help the economy to boot, why wouldn’t you do it?