California to curb rising inflation with one-time payment cards – Annenberg Media

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Americans have struggled to keep up with rising costs due to inflation. With prices up almost 10%, the California government is stepping in to close this financial gap and help families feeling the pressure.

Hanah Abualhaj has the story.

Over the past year, inflation has driven prices up 9.9% according to the US Bureau of Labor Statistics! This is the highest since the 1980s!

It’s no surprise that many families in the United States and especially in California have struggled to make ends meet in recent months. That’s why the California government has announced that it will send inflation relief debit cards to residents across the state.

The cards will contain a one-time payment, ranging from $400 to $1,050 for couples who jointly filed their 2020 state income tax returns and $200 to $700 for those who filed independently.

But are these one-time payments enough? Dario Laudati, a PhD student in economics at the University of Southern California, thinks not.

Dario Laudati: In the worst case, it makes the situation worse because it keeps more purchasing power by giving more purchasing power to families and it generates more demand. This pushes the supply even more, and therefore the prices increase even more. So potentially it’s self-destructive.

The debate over the effectiveness of one-time payments, however, is not settled. Juan Andres Espinosa Torres, another economics doctoral student at USC, believes that although risky, they could bring many benefits to Californians.

Juan Andres Espinosa Torres: This will try to align the California economy with long-term growth instead of overheating it with this spending. This could in principle create some short-term and very short-term inflation within 12 months. But then it will depend on how the aggregate that is in the United States as the country grows.

Ultimately, the recent rise in inflation and consumer prices has become an international issue. Supply chain issues, the pandemic and the war in Ukraine being among the main factors contributing to the price hike.

Laudati thinks that regardless of the one-time payments, inflation will be something Americans will have to endure for some time.

Dario Laudati: Of course, it’s not something that will disappear tomorrow. This is something that will most likely stick with us for some time, at least probably over a year. Now this is a problem because the check will only be sent once. And then you have to ask yourself, okay, this one time only, what relief can you get from this one-time control and at the same time, it’s expensive.

This does not mean that all hope is lost. There are still options for Americans to mitigate the effects of inflation, according to Espinosa Torres.

Juan Andres Espinosa Torres: Well, one thing that they can do that I think will make things better is not necessarily to provide relief in terms of, say, student loans or what aren’t tax credits. But trying to delay some things that the government collects in terms of money. That could give California some needed relief.

For now, if you are eligible for payment, the first cards will start sending out this week.

For Annenberg Media, I’m Hanah Abualhaj.

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Elaine R. Knight