Maine has begun sending eligible residents a one-time, $850 relief check to combat inflation, but critics of the effort say it is a “short-term trick” that will not help the Pine Tree State’s economy.
CBS 13 reported on Wednesday that the state would spend nearly $730 million from its surplus budget to send approximately 858,000 checks to residents across the state. The checks will be mailed beginning this month on a rolling basis, with the last round expected to be delivered in October 2022.
A statement from Maine Democratic Governor Janet Mills’ office noted that “Maine people are grappling with the increased costs as a result of pandemic-driven inflation, ranging from higher energy costs to increased prices of everyday goods.”
“While the Governor cannot control the impact of COVID-19 on global markets, she can make sure that we deliver to Maine people the resources they need to deal with these higher costs,” her office continues.
While Mills may blame what she decries as “pandemic-driven inflation,” experts have noted that federal government relief checks were a significant cause of the rising prices that Americans across the country are currently facing.
“The current bout of inflation stems from massive spending: in 2020 and 2021, the government spent the equivalent of 27% of GDP on ‘Covid relief’ and ‘stimulus,’ the second-largest fiscal response as a percentage of GDP of any industrialized nation,” Paige Terryberry Senior Analyst for Fiscal Policy with the John Locke Foundation wrote in January.
On Monday, The Daily Wire reported, “Prices for food at home increased 10.8%, the largest 12-month percentage increase since the period ending November 1980,” according to the Bureau of Labor Statistics’ Consumer Price Index report.
“Prices for meats, poultry, fish, and eggs increased 14.3%, the largest 12-month percentage increase since a 19.5%increase in May 1979,” BLS added. “Prices for other major grocery store food groups also rose over the past year, with increases ranging from 7.8 percent for fruits and vegetables to 11.0 percent for other food at home.”
In an email sent to The Daily Wire, Maine Policy Institute, a conservative think tank, remarked that it has offered several alternative solutions to combat inflation that would not increase government spending.
“Between last June, when the updated revenue projections came in, and this spring, when lawmakers were working out the supplemental budget, we advocated strongly for using the projected surplus for structural tax reform, including helping to draft a bill which would have reworked what’s known as the ‘revenue cascade’ to pare down income, sales, and fuel tax rates as greater revenues come in,” said Nick Murray, director of policy with Maine Policy. “We also proposed consolidating income tax brackets and cutting rates for all taxpayers, using about as much projected revenue as the “relief” checks will ultimately cost.
In December 2021, the organization spoke out against sending checks to Mainers, saying that the state “needs radical tax reform to drive long-term, structural economic growth.”
Likewise, the Maine Policy Institute has warned that the one-time payments would only provide temporary relief that might be used toward a bill but would not do anything to keep up with inflation in the long term.
“Many Mainers might see the direct payments as covering some of their yearly heating bills or some of the recent spikes in their power bills, but inflation is still accelerating in all parts of the economy, although some more than others,” the group wrote in March 2022. “The annual change in the Consumer Price Index (CPI) is up 8%, but energy prices are up over 25%. Gasoline prices remain at historic highs, though below the 2008 spike in real terms.”
“Precisely because the inflation we are experiencing is ongoing, and still accelerating, more cash in everyone’s pockets will not slow the growth of prices,” the group predicted.
Maine Policy has also said that “lawmakers should be wary of policy that uses short-term tricks versus spurring long-term growth. There is no substitute for a healthy economy, and no measure of giveaways can stimulate the real growth that requires saving, investment, and time to create significant value.”
“Citizens who want a growing economy instead of a stagnant one must constantly keep up the pressure on politicians who would rather look to easy gimmicks than transformational reform,” Maine Policy noted in June 2021 in reference to relief checks.
On the other hand, Governor Mills’ office insists, “These payments are meant to help in navigating rising costs due to global inflation and supply-chain impacts, and other global economic disruptions driven by the pandemic. The payments are a one-time infusion into Maine families and will position Maine’s economy for continued post-pandemic prosperity.”
Mainers must have filled out a 2021 tax return and meet specific salary requirements to be eligible.