Joe Biden's $1,400 Stimulus Checks Would Not Be Spent by High Earners, Research Shows

As negotiations continue over a third coronavirus relief package, new research has cast doubt as to whether America's high earners would spend President Joe Biden's proposed $1,400 stimulus checks.

The economic analysis was released last week amid a push by the GOP to limit eligibility for COVID stimulus checks.

The study by economists at Opportunity Insights—a Harvard think tank funded by the family foundations of Mark Zuckerberg, Bill Gates and Mike Bloomberg—suggests that middle-income Americans don't need any additional money in the form of a COVID relief payment as they failed to spend the $600 checks that Congress sent out in December.

The economists found that the $600 stimulus checks increased spending among lower-income households significantly, but had little impact on spending among higher-income households.

Joe Biden Stimulus Check
U.S. President Joe Biden speaks as he lays out his plan for combating the coronavirus and jump-starting the nation’s economy at the Queen theater January 14, 2021 in Wilmington, Delaware. Biden unveiled plans for a trillion-dollar stimulus package including a $1,400 direct payment to individuals who have been struggling with the economic turmoil caused by the COVID-19 pandemic. Alex Wong/Getty

"Over the first month after stimulus payments were received, our estimates imply that households with incomes above $78,000 will spend only $45 of the $600 payments they received," the report reads. "This is much less than the effect of the April stimulus payments on the spending of these higher-income households, which arrived at a time when unemployment was surging."

However, since then, the analysts claim that these households "have largely returned to work," and have "even accrued additional savings."

Based on the results obtained using real-time spending data from the Opportunity Insights Economic Tracker, the report estimates that households earning more than $78,000 will spend only $105 of the proposed $1,400 stimulus check they receive.

"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 report suggests.

The study defined low- and high-income households as those residing in zip codes with average household incomes below $46,000 and above $78,000 respectively.

The economists suggested that new COVID relief payments should be limited to individuals earning less than $50,000 and couples earning less than $75,000—a proposal that would make about half of all U.S. households ineligible for stimulus checks, according to census data.

The study has been favorably cited in news articles and opinion columns arguing that stimulus checks should be more limited.

Joe Biden stimulus plan
U.S. President Joe Biden and Vice President Kamala Harris meet with 10 Republican senators in the Oval Office on February 1, 2021. The senators requested a meeting with Biden to propose a scaled-back $618 billion stimulus plan in response to the $1.9 trillion coronavirus relief package Biden is currently pushing in Congress. Doug Mills-Pool/Getty

.@POTUS will build on the $600 down payment provided by Congress last year, sending an additional $1,400 to households across America, totaling direct payments to $2,000 per person.

— The Democrats (@TheDemocrats) January 30, 2021

Last month, President Joe Biden promised that $2,000 checks would "go out the door immediately" if Democrats managed to win the two Georgia senate runoff races and claim control of the Senate. After Democrats pulled off two victories in Georgia, Biden quickly narrowed his pledge to new $1,400 checks, asserting that the $600 checks authorized by Congress in December were a down payment on his plan.

However, a group of Republican senators is pushing to cut the size of the next round of COVID-19 relief checks and significantly limit who's eligible to receive the payments.

Ten moderate Republicans proposed new $1,000 checks instead as part of their own scaled-down coronavirus relief package. Under their proposal, stimulus checks would go to far fewer Americans than in previous relief bills—only to "families who need assistance the most," according to a letter they sent to the White House.

One Republican involved in the effort, Sen. Rob Portman of Ohio, told CNN on Sunday that direct payments should go only to individuals earning less than $50,000 and families earning less than $100,000.

In previous COVID relief bills, full rounds of stimulus checks have gone to individuals earning up to $75,000 and couples earning up to $150,000.

Biden met with the GOP lawmakers on Monday to discuss a framework they believe would muster bipartisan support, which includes cutting several aspects of Biden's proposals. They pitched a scaled-back proposal for a relief package—a $618 billion bill that is roughly one-third the size of what the president has put on the table.

Biden indicated last week that he would be open to further restricting who's eligible for stimulus checks by setting new income limits, and National Economic Council director Brian Deese reiterated on Sunday that the White House is open to changing the income caps.

However, Biden's economic adviser Jared Bernstein has publicly pushed back against the idea of further means=testing the checks. Bernstein said last week that the checks are "better targeted than I think most people realize," and explained that "it's not just people at the bottom who need the money."

Without enough Republican support to pass the plan, the Democrats could try to pass it using budget reconciliation rules, which require a simple majority.

Experts have predicted that a package, including the fresh $1,400 payments, will be signed off between mid-February and the end of March.

Talks are set to continue over the coming days.

Newsweek has contacted the White House and Opportunity Insights for comment.