The year 2021 is over. Over the past two years, the federal government in the United States of America launched various relief programs to help those most affected by the COVID-19 pandemic and stimulate the struggling economy in a time of unemployment and high inflation.
The most famous of these initiatives came in the form of economic stimulus checks – aimed at providing citizens and families in the United States of America an extra boost of income, and or tax rebates. This was done to help citizens afford necessities such as food, energy, and child costs.
However, with the current failure of President Joe Biden’s administration to get his Build Back Better Act legislated – stimulus checks, added unemployment benefits and the extended child tax credit may be a thing of the past. However, economists and other important role players in the United States of America are debating both for and against this decision.
Some argue that recurring payments rather than a batch of stimulus checks will last longer and be better used by citizens. This article will, briefly, discuss the various nuances surrounding these topics – and investigate the latest information regarding the hopes, pros, and cons of further stimulus checks. Read on if you are interested.
Motivation For More Stimulus Checks
According to an article on CBS News entitled: “What’s behind the push for a fourth stimulus check” by Aimee Picchi: “The IRS issued more than 169 million payments in the third round of direct stimulus aid, with the $1,400 checks reaching most American households”.
However, some lawmakers and advocates, according to CBS News, are pushing for a fourth stimulus check – despite the failure of President Joe Biden’s administration to get his Build Back Better Act legislated. They believe that the effects of the pandemic are not over, and many American families, citizens, and households might face economic difficulties and crises as a result of the recent outbreak of the Omicron variant.
CBS News makes it clear that over 250 thousand American households could not meet their basic living costs over the last week – leaving one to question – without any real prospect of a 4th stimulus check, are we headed for disaster?
Furthermore, according to Picchi’s article for CBS News, economists are very concerned over the effects that the highly contagious Omicron variant has already had in the United States of America by, for example, leading to the closing of Broadway shows and certain College Campuses.
Those Who Support The Cause
For these reasons, more than 3 million American’s according to CBS News have signed a petition for a recurring $2,000 stimulus check to be issued by the federal government. As the initial stimulus checks were not permanent – more than 30 million citizens of the United States of America might be left struggling this year without further aid.
Critics of such stimulus payments argue that the increase in demand leads to higher inflation and that unemployment is down since last recorded so it is not justified. However, the new idea of recurring stimulus payments is gaining popularity among many advocates as according to CBS News American Senators who wrote to President Biden stated: “Almost 6 in 10 people say the $1,400 payments set to be included in the rescue package will last them less than three months”
Besides this, in December last year, a group of almost 100 thousand senior citizens in the United States of America organized under the Senior Citizens League petitioned for an extra stimulus check of $1,400 to be issued to elderly citizens already hard hit by the pandemic as it would help them afford much-needed necessities like groceries, that is according to CBS News.
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The 10-Word Joe Biden Social Security Quote That Can Change Everything
In August, more than 48.1 million elderly Americans collected Social Security checks. For the vast majority of these recipients — 89%, according to an April poll by national pollster Gallup — their Social Security income is vital to making ends meet.
This reliance on Social Security benefits is also expected to be passed on to future generations. Gallup’s April poll found that 84% of non-retired people expect to rely on their monthly allowance as a “big” or “small” source of income during their golden years.
But despite the importance Social Security plays in the financial well-being of retirees, our country’s most successful retirement program is in serious trouble.
Based on the latest report from the Social Security Board of Trustees, the program expects a long-term cash shortfall of $20.4 trillion, defined as the next 75 years. In addition, the Old-Age and Survivors Trust (OASI), which is responsible for paying the aforementioned 48.1 million retired workers on a monthly basis, is expected to reduce its cash reserves (i.e., the excess money accumulated since its inception) by 2034. If and when the OASI’s cash reserves run out, an overall 23% cut in Social Security checks may be necessary to avoid additional payout cuts through 2096.
Changes need to be made to strengthen Social Security, and the American public is looking to President Joe Biden and lawmakers on Capitol Hill to make this happen.
Democrats and Republicans have approached a Social Security solution from opposite sides
The $64,000 question is: If Congress has known since 1985 that Social Security is not expected to have enough revenue in the long run to cover the current payout schedule, why haven’t lawmakers done anything to fix it?
The answer, to put it bluntly, is political hubris from both political parties.
Democrats are in favor of raising payroll taxes on high-paid workers to generate more income for Social Security. In 2022, all earned income (wages and salary, but not investment income) between $0.01 and $147,000 is subject to the 12.4% payroll tax. But for the 6% of workers earning more than $147,000, every dollar after this point is exempt from payroll taxes. This allows more than $1 trillion in income to escape payroll taxes annually.
Meanwhile, Republicans prefer to raise the full retirement age — the age at which an eligible employee can receive their full retirement benefits. In the 82 years that Social Security has been distributing a monthly benefit, the full retirement age has risen by just two years (65 to 67). By comparison, the average life expectancy in the U.S. has risen from about 63 in 1940 to 77 in 2020. Raising the full retirement age will force retirees to choose between an early claim that would permanently lower their monthly payout, or wait, which would eventually drop the amount of benefits received during their lifetime. In other words, it would reduce Social Security spending over time.
Both fundamental solutions work to strengthen social security, meaning neither side is incentivized to find common ground with their opposition. So the stalemate we have today.
This quote from Joe Biden leaves the door open for sweeping changes in Social Security
However, it is also worth noting that neither individual solution solves the long-term financing gap of Social Security.
Raising payroll taxes for high earners gives an immediate boost to revenue collection and has the potential to extend the solvency of the OASI by years or a few decades, depending on the source of the analysis. But simply raising taxes on the rich won’t bring in enough forecasted revenue to close the projected $20.4 trillion cash deficit through 2096.
Likewise, the GOP’s plan to raise the full retirement age has a flaw. While it would help reduce program spending, raising the retirement age would take decades to take effect. This does not help OASI avoid the potential depletion of its asset reserves and a 23% cut in social security checks by 2034.
But President Biden may have another solution in mind that could completely change Social Security and solidify its foundation.
In 2007, when then-Senator Biden ran for president on the 2008 ticket, he was asked a straightforward question about America’s “third track” by host Tim Russert on Meet the press. Said Russert, “Senator, we have a deficit, we have Social Security and health care lurking. Would you consider looking at those programs, the age at which you qualify, the cost of living, to put it all on the table.” to lay?”
Biden’s final ten-word response to Russert was, “You have to put everything on the table.”
What this response implies is a willingness to break with strict party views and open the discussion to compromise. While neither side’s solution will solve Social Security’s long-term funding gap on its own, a bipartisan proposal could do just that.
Keep in mind that Joe Biden played a part in the last major overhaul of Social Security, which took place in 1983 under President Ronald Reagan. This bipartisan piece of legislation that gradually increased payroll taxes and the full retirement age, and introduced taxes on Social Security benefits above certain income thresholds, was supported by 88 senators, including Biden.
Is President Biden still open to a two-pronged solution?
Of course, a lot has changed in the 15 years since Biden was willing to “put everything on the table”. Senator Biden is now President Biden, and his views on Social Security have evolved a bit.
While campaigning ahead of winning the 2020 election, Biden released a four-point plan to strengthen Social Security:
- Increase payroll taxes for high earners: As noted, any earned income between $0.01 and $147,000 is subject to payroll taxes. Biden’s plan creates a donut hole that exempts earned income between the maximum taxable income limit ($147,000) and $400,000, while reinstating payroll taxes on earned income above $400,000.
- Increased benefits for long-lived recipients: Expenditure for elderly beneficiaries tends to increase later in life. Biden proposed a 1% annual increase in the primary insurance amount (PIA) from ages 78 to 82. Ultimately, this 5% cumulative increase to the PIA would increase benefits for older recipients.
- Increase the special minimum benefit: In 2022, a lifetime low earner with 30 years of coverage will bring home $951 a month, which is well below the federal poverty level. Biden’s proposal would raise the special minimum benefit to 125% of the federal poverty level.
- Switch the Social Security inflationary chain to the CPI-E of CPI-W: Finally, Biden’s plan uses the consumer price index for the elderly (CPI-E) as an inflationary measure, rather than the consumer price index for urban wage earners and white-collar workers (CPI-W). The CPI-W has done a poor job of tracking the inflation that the program’s retirees face.
As you’ll notice, no aspect of Joe Biden’s latest Social Security proposal mentions raising the full retirement age.
Without a supermajority of 60 seats in the Senate, the only way to solve the Social Security funding gap is with votes from the opposition. While Senator Biden has been part of important bipartisan Social Security legislation before, it’s not clear whether he’s open to the idea of ”putting everything on the table” as president.
While Biden’s candor in his 2007 interview offers hope that real change is possible, it seems more likely that the deadlock in Capitol Hill will continue.
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Taxpayers Receive Notice CP80 From The IRS: Know Why
The Internal Revenue Service (IRS) has started processing 2021 tax returns. Taxpayers need to file their tax returns before April 18. IRS faces an enormous backlog of 2020 tax returns; several individuals have received CP80 notices despite submitting their tax returns.
Market Realist reports that IRS has 6 million unprocessed returns at present. The issuance of CP80 notes has created chaos amongst taxpayers, and they are worried about their refunds. IRS professionals will face severe difficulties due to the increased workload; taxpayers will likely witness a payment delay this year.
Several Taxpayers Will Have To Refile Their Tax Returns
Market Realist quoted an IRS statement; it said, “6 million unprocessed original individual returns (Forms 1040), 2.3 million unprocessed amended individual returns (Forms 1040-X), more than 2 million unprocessed employer’s quarterly tax returns (Forms 941 and 941-X), and about 5 million pieces of taxpayer correspondence.” The reports suggest a delay in 77 percent of the filed returns this year. The CP80 recipients will need to refile their tax returns. However, individuals with accurate tax returns need not worry as IRS will nullify those notices.
IRS Has A Long List Of Unprocessed Returns
Market Realist quoted IRS, “We credited payments and credits to your tax account for the tax period shown on your notice. However, we haven’t received your return.” The taxpayers need to check with IRS authorities to receive personal details and seek assistance. Most individuals with accurate tax returns will not need to refile but expect payment delays.
The IRS faces severe staff shortages amidst the pandemic. The situation worsened after winter’s Omicron wave. The taxpayers will need to provide accurate and updated tax information to receive eligible benefits without any unprecedented halt. Millions of families received stimulus checks and enhanced Child Tax Credit payments in 2021.
The remaining half of the enhanced CTC payments are due when beneficiaries file their tax returns. The IRS will verify personal information before processing the payments. Several eligible individuals missed out on eligible payments due to old or inaccurate data. Taxpayers need to read the letters carefully to know the complete details. The government officials will provide ample support to the US citizens amidst the difficult circumstances.
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Child Credit: $193 Billion Available To Eligible American Families Who File Returns
It is tax season in the United States of America once again. The deadline to file your tax returns is April 18, 2022. According to Lee Daily, families with children should be aware that they are eligible to receive tax credits of approximately $193 Billion. This is the estimated figure that is still left in the federal budget for the extended Child Tax Credit program.
Still $193 Billion Available
According to President Joe Biden’s extended Child Tax Credit program – eligible American families would who qualify for this Child Tax Credit received half of the program’s payments monthly by the end of last year. However, $193 Billion remains in the program’s budget for the last half of the payment this year. In this light, President Joe Biden’s administration has fears that many families who would benefit the most from this tax credit, could miss out on this last half of the program. If they don’t file their taxes correctly before April 15, 2022.
File Tax Returns Before Deadline
For this reason, Vice President Kamala Harris, Treasury Secretary Janet Yellen, and White House senior adviser Gene Sperling implored millions of U.S. citizens who earn such low income. He urged those that might not have filed a tax return last year, to do so with the Internal Revenue Service. This was done on Tuesday, via a virtual event. Harris further added: “the truth is that there are folks all across our country who work hard every day and still struggle to make ends meet, and it should not be this way in our society. You haven’t finished filing your taxes yet. That is the only way you will be able to collect the second half of what you are entitled to”.
To check eligibility for the extended Child Tax Credit program you can visit: visit the website childtaxcredit.gov. Remember the deadline for filing your tax returns is by April 18 – but it is recommended, in this case, you do so by April 15, 2022.
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