- Biden's stimulus helped pad state budgets across the country.
- Now, more are channeling booming budgets and issuing so-called "inflation relief" checks.
- Gov. DeSantis is using federal aid to issue one-time relief payments for the poorest Floridians.
It may not seem obvious at first glance, but President Joe Biden is still putting cash into people's pockets during a punishing stretch of inflation.
The $1.9 trillion stimulus law that Democrats enacted in March 2021 without Republican support is helping set the stage for another round of relief payments at the state level. At least 18 states including California and Florida have taken that step this year with Congress gridlocked on how to deal with the worst inflation in four decades.
The law set aside $350 billion in aid for state and local governments aimed at preventing layoffs or big cuts to public services. Few strings were attached to the money to guarantee flexibility and it largely amounted to a blank check for states and municipalities. But those fears of job losses and wrecked budgets never materialized, so states spent less than expected. In addition, a spring report from the National Association of State Budget Officers found nearly all states reported pulling in far more tax revenue than originally forecasted.
Now, as Ben Gitis, associate director of the economic program at the Bipartisan Policy Center, told Insider, states are "sitting on a bunch of extra cash" from budget surpluses. A growing number are channeling booming budgets into a fresh wave of checks to help middle and low-income families plug widening holes in their finances.
"We've seen that money flow through a couple of different channels to provide people with — one way or another — tax refunds to help them with rising costs," Adam Ruben, campaign director of the Economic Security Project, a group that advocates for cash payments, told Insider. "We've seen some states use them to do these kinds of direct checks."
"It demonstrates just how much pain inflation is causing today," Gitis said. "And there's a political necessity for all politicians to do something about it because of the costs it's having on the typical household."
Florida Gov. Ron DeSantis — a Republican widely considered to be eyeing a 2024 presidential bid — assailed the Biden stimulus law as "Washington at its worst" last year. Yet the state announced last week that it's using $36 million from the American Rescue Plan to issue a $450 check per-kid to the poorest 60,000 Floridian families. That's on top of $1,000 cash bonuses to first-responders using federal aid in the spring.
The source of Florida's next relief checks is $1 billion in extra funds through the Pandemic Emergency Assistance Program, an initiative within the Temporary Assistance for Needy Families (TANF) program. TANF is a federal safety net program operated at the state level that distributes cash aid to impoverished families.
The pot of money under the pandemic TANF program must be spent by Sept. 30 or else state governments must return it to the Treasury Department. It's possible that more may follow Florida's lead and distribute it as one-time payments to low-income families.
"It's to a state's advantage to get those funds out to families. Otherwise, they'll just lose it," Donna Pavetti, the vice president for Family Income Support Policy at the left-leaning Center on Budget and Policy Priorities, told Insider. "Those payments are providing relief to families at a time when their expenses are higher."
Some economists are wary of states providing relief payments, arguing that it'll only drive up inflation. It's a view shared by Jason Furman, a former top economist to President Barack Obama.
Gitis argues that any bump in inflation is likely to be minimal since states are generally targeting "inflation relief" payments to smaller portion of the public. It's a huge contrast from last year's $1,400 stimulus check program that the vast majority of Americans qualified for.
With supply chains further clogged up due to the war in Ukraine, it's likely inflation will remain stubbornly high. As Will Ragland, a political researcher for the liberal Center for American Progress, said, Biden's stimulus law seems poised to still assist people financially: "This bill is designed to deal with the economic impacts from the pandemic, period."