Biden's COVID relief plan could send money to well-off Americans who won't spend it

President Biden has made a third stimulus check an integral part of his nearly $2 trillion coronavirus relief package, but recent analysis shows that the payments could go to well-off Americans who won't spend the money.

According to the JPMorgan Chase Institute, which examined 1.8 million of the bank's customer checking accounts and published the results in a December report, the lowest-income earners had the biggest gains in their accounts and also the fastest depletion.

But top earners, or individuals earning more than $68,795, held onto the money -- indicating that poorer Americans were more likely to spend their stimulus checks compared to their higher-earning counterparts.

“Targeting the next round of stimulus payments toward lower-income households would save substantial resources that could be used to support other programs, with minimal impact on economic activity.”

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A separate analysis by the Federal Reserve Bank of New York found that consumers stored away more than one-third of the first stimulus checks, sent to Americans last spring as part of the $2.2 trillion CARES Act that Congress passed in March. Only 29% of the payment was spent, while 36% was saved and 35% went toward paying down debt.

Consumers said they expected to spend an even smaller percentage of future stimulus payments, and use the money to pay down debts.

When the government sent out $600 checks at the end of 2020 and the beginning of 2021, part of the $900 billion relief package Congress passed in December, spending among households making less than $46,000 rose 7.9% from Jan. 6 to Jan. 19 compared to the year-ago period, according to researchers at Opportunity Insights.

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By comparison, spending inched up just 0.2% for households making more than $78,000.

“Targeting the next round of stimulus payments toward lower-income households would save substantial resources that could be used to support other programs, with minimal impact on economic activity," the researchers wrote.

Congress has already spent some $4 trillion on pandemic relief measures, including $900 billion approved at the end of December. Although lawmakers broadly agree that another round of emergency aid is needed, they disagree over the size and scope of it, with deficit-weary Republicans sounding the alarm about the price tag.

"The economy is on its way to recovering," Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said. "More funding is warranted to assist those out of work because of the pandemic, prevent state and local government layoffs, boost economic demand, prevent a decline in household incomes, and end this pandemic once and for all. But it shouldn’t take $1.9 trillion to fill a $400 billion or $800 billion hole."

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While still unclear what the framework for stimulus check eligibility looks like, if it followed a formula in House-passed legislation last year, the $1,400 stimulus checks would taper off for individuals who earn $75,000 more a year and families making $150,000 or more. But the phaseout level increases for families with more children, meaning that a family with multiple children earning more than $300,000 a year could theoretically receive some money, even if they have not suffered a financial setback during the pandemic.

Biden told reporters last week that he's open to negotiating the income limits for the money.

"There is legitimate reason for people to say, 'Do you have the lines drawn the exact right way? Should it go to anybody making over X number of dollars? I'm open to negotiate those things,'" Biden told journalists during an executive order signing last Monday.