CORONAVIRUS

Stimulus check: will there be a second round of payments in May 2020?

The first round of stimulus check payments were distributed by the Internal Revenue Services in April to help millions of Americans during the outbreak

Stimulus check: will there be a second round in May 2020?
MANDEL NGAN AFP

More than 80 million Americans have received their stimulus check payment of $1,200 from the Internal Revenue Services (IRS) to aid them financially through the coronavirus pandemic. This came after the government approved a $2 trillion relief package to counter the economic setbacks of the crisis.

$2 trillion aid package in first round

The IRS started sending the $1,200 payments as early as mid-April and now we find ourselves in May with not everyone who is eligible having received their check, and not everyone who has received a check knowing what it is for.

You might have heard the payment called a 'recovery rebate', instead of a stimulus check. That’s because it’s technically a tax credit that is set to appear on the return you'll file for the 2020 tax year.

While tax rebates usually take effect after you file your taxes, the government has brought forward the credit to curb the impact Covid-19 has inflicted on American businesses and incomes, meaning Americans get the cash in their hands now. These stimulus checks may help those who have lost their job - with some questioning their right to stay at home - or are struggling financially in the face of lockdown. 

Will there be a second round in May?

It has become a common question whether there will be a second round of stimulus checks in the month of May, with many arguing that $1,200 is unlikely to cover the expenses for people who have lost their jobs or have faced additional financial obstacles in the past weeks.

Financial technology firm SimplyWise found that 63% of Americans will require a second stimulus check within the next three months to pay bills. 

We could very well do a second round of direct payments,” President Donald Trump said while answering press questions earlier this month. “It is absolutely under serious consideration.” Recently however, Trump appears to have cooled on direct support for hard-working Americans, preferring to back other measures, such as payroll tax cuts. And the White House is said to be analysing a new $5,000 payment proposal with a difference.

Sixty-two members of Congress have signed a letter in favour of recurring monthly payments, seeing them as the most efficient mechanism for “delivering economic relief to those most at-risk in this crisis.” Many Republicans, however, are not keen on this idea, with one referring to it as ‘radical socialism’ - so discussions to find a solution continue.

Democrats are expected to set out their latest legislative proposals this week, which are likely to include a $2,000 stimulus check - possibly even a recurring monthly payment - but it is thought unlikely this would get through the Republican-controlled Senate. Dems are presumably hoping to push public support in favour of a second round of checks in the hope of persuading Republicans to accept some level of further direct support. 

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See also:

Policies applied in the US to mitigate the Covid-19 economic crisis

The Coronavirus Aid, Relief and Economic Security (CARES) Act has been the mainstay of the Federal government's economic aid plan - totaling $2.3 trillion.

The CARES Act provided for $367 billion in loans and grants for small businesses; expansion of unemployment benefits to furloughed individuals, gig workers and freelancers; direct stimulus check payments to individuals; over $130 billion for the health care system; $500 billion of loans to large corporates; $150 billion to state and local governments.

The following is an overview timeline of the actions taken in response to the coronavirus pandemic in the US:

March 3 and March 15 - The Fed cuts interest rates in two emergency meetings on March 3 and March 15 (50 and 100 basis points respectively), taking the federal funds rate to 0-0.25%. It also cut the discount window rate by 150 basis points.

March 18 - The Fed rolls out its third emergency credit program in two days.

March 23 - The Fed promises unlimited, spending response to the crisis open-ended QE, including purchases of to near $3 trillion. corporate and municipal bonds.

March 27 - CARES Act signed into law

March 31 - The Fed broadens access to dollars with repo agreements for foreign central banks.

April 9 - The Fed rolls out $2.3 trillion to backstop 'Main Street' local governments and small and mid-sized businesses.

April 27 - The Fed broadens its help for local governments, offering to buy bonds of up to three years' duration from counties with as few as 500,000 residents and cities with as few as 250,000 residents.