California to curb rising inflation with one time payment cards

Americans have been scrambling to keep up with rising costs due to inflation. With prices up nearly 10%, the California government is stepping in to bridge this financial gap and help families who have been feeling the pressure.

Hanah Abualhaj has the story.

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

Its no surprise that a lot of families across the US and specially California have been struggling to make ends meet these past couple of months. This is why the California government has announced that they will be sending Inflation relief debit cards to people across the state.

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

But are these one time payments enough? Dario Laudati, a PhD candidate in Economics at the University of Southern California, thinks they are not.

Dario Laudati: Worst case scenario, this makes it worse because it keeps more purchasing power by giving more purchasing power to families and that generates more demand. It pushes on the supply even more, and therefore prices go up even more. So potentially, it’s self-defeating.

The debate over the effectiveness of one time payments, however, is not cut and dry. Juan Andres Espinosa Torres, another PhD candidate for Economics at USC, believes that although risky, they could bring a lot of benefits for Californians.

Juan Andres Espinosa Torres: This will try to align the Californian economy to the long term growth instead of overheating it with this expenditure. This could in principle create a little bit of short term inflation and very short term is within 12 months. But then it will depend on how will the aggregate that is in the United States as the country will go up.

Ultimately, the recent rise in inflation and consumer prices has been an international issue. With supply chain issues, the pandemic and the war in Ukraine being some of the main factors contributing to the hike in prices.

Laudati believes that regardless of the one time payments, inflation will be something Americans will have to endure for a while.

Dario Laudati: For sure, this is not something that is going to disappear tomorrow. It is something which most likely is going to stay with us for a while, at least probably more than a year. Now, that is a problem because the check is going to be sent is a one time only. And then you have to wonder, okay, this one time only, how much relief can you get from that one time check and at the same times these are expensive.

This doesn’t mean that all hope is lost. There are still options for Americans to ease the effects of inflation, according to Espinosa Torres.

Juan Andres Espinosa Torres: Well, one thing they can do which I think will make it better is not necessarily give relief in terms of, let’s say, student loans or what are not 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 a payment, the first cards will start being mailed this week.

For Annenberg Media, I’m Hanah Abualhaj.