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Opinion: Federal stimulus checks may take longest to reach people who need aid most

Richard Rodems and H. Luke Shaefer

With the Coronavirus Aid, Relief and Economic Security (CARES) Act, the federal government is taking unprecedented action in providing direct relief to individuals in a time of crisis. While eligibility for these funds is nearly universal, we are concerned about both exclusions in the bill and administrative procedures which could end up denying or delaying stimulus checks to the most vulnerable Americans. 

Most people are eligible for relief and need not do anything to receive their stimulus check. If you are an individual earning less than $75,000, or married and filing jointly earning less than $150,000, you likely are eligible for full payments of $1,200 per adult plus $500 per child. Even those with no earnings are eligible.

House Small Business Committee Chair Nydia Velazquez, D-N.Y., center, accompanied by other legislators, watches as House Speaker Nancy Pelosi of Calif., right, lifts the Coronavirus Aid, Relief, and Economic Security (CARES) Act after signing it on Capitol Hill, Friday, March 27, 2020, in Washington.

Yet many economically vulnerable Americans will have trouble accessing these funds, specifically people who don’t file taxes, the unbanked, and recent movers. For most, stimulus checks will be directly deposited into the bank account provided on one’s most recent tax return or delivered via the Social Security system, if applicable. But what if you don’t file taxes? What if you don’t have a bank account? The IRS has created a new online portal for non-filers to submit their payment information, and the IRS plans to release another online tool that will allow people to submit their bank information rather than wait for a paper check. This assumes that everyone has internet access and banking information to provide, or that the unbanked have the resources to open an account.

If people aren’t able to submit banking information to the IRS, or haven’t filed taxes in recent years, it may be months before they receive their checks. A memo from the House Ways and Means Committee says while 60 million will begin receiving a direct deposit payments in mid-April, paper checks will be sent to everyone else at the rate of about 5 million checks per week, meaning it could take until August for some Americans to get relief — assuming the IRS has your current address. While the IRS plans to prioritize payments to the lowest income earners who have filed 2018 or 2019 returns, it is not until September that the IRS will begin sending checks to individuals for whom they do not have prior tax information. Active application on the part of some Americans may be required to receive the checks or deposits in a timely manner. 

How many are at risk of missing their payment or not getting one at all? To examine this, we analyzed national data from the Survey of Income and Program Participation and found that people who don’t file taxes and recent movers are disproportionately concentrated among the poor.

Among those in deep poverty — earning less than half the poverty line — 57% are at risk of a delayed or missing stimulus payment. This is true for 52% of all poor families, compared to just 20% for those above the poverty line.

Among households reporting some kind of hardship such as an inability to pay for housing or utilities, no health insurance or food insecurity, 36% are at risk of a delayed or missing payment compared to just 16% of households that are able to make ends meet. 

We do not have to live and die this way. To help bridge the gap here in Michigan, Poverty Solutions at the University of Michigan partnered with Civilla to launch a new 2020 Coronavirus Stimulus Payment website that walks people through a step-by-step process to ensure they’ve provided the IRS with the information necessary to receive their stimulus checks. Just across the border, Canadian families are receiving larger, timely payments without any loss in health insurance coverage. Across the Atlantic, other affluent democracies have been able to avoid mass unemployment through the direct socialization of wages, often creating entirely new social programs in the midst of the crisis. As Congress begins to consider another relief bill, it must include provisions to ensure the timely delivery of aid to the most economically vulnerable.

Richard Rodems is a post-doctoral scholar at Poverty Solutions at the University of Michigan. H. Luke Shaefer is the Hermann and Amalie Kohn Professor of Social Policy and director of Poverty Solutions at the University of Michigan.