Congress has finally reached an agreement on the terms of an economic stimulus to mitigate the financial impact of the coronavirus outbreak. As part of this, $250 billion has been set aside to provide payments of up to $1,200 for each adult and $500 for each child.
It’s believed that those who opted for tax refunds to be issued by direct deposit will receive their funds electronically. While this covers an estimated 88% of tax filers, the remaining group that gets their IRS refunds via check will likely also be sent a physical check for these payments. There are several reasons why this could have a negative impact on some of the groups that need the funds the most:
The government has already moved away from paper checks in many areas of public assistance. In fact, many states use debit cards for unemployment benefits, disability and paid family leave. So there should be no reason why the federal government can’t issue plastic pre-funded debit cards for this stimulus, especially if ongoing stimulus will be provided to affected individuals. In addition to solving the three challenges listed above, it ensures that the money is spent - ideally in local businesses - not just added to the bank accounts of those who don’t need the money as much. With a considerable amount of purchases being made online during the current crisis, having a card number to make those purchases can also be an additional benefit to unbanked individuals. Last, should there need to be an additional round of stimulus payments to individuals, the government can just re-fund the cards electronically, instead of having to send out more checks.