Second stimulus check update: is another payment on the way?
Amid the coronavirus crisis, Americans are waiting to find out whether there will be a second round of stimulus checks, officially known as Economic Impact Payments.
Will there be a second stimulus check? Although United States President Donald Trump last week seemed to offer cause for optimism that there will, it is a question whose answer remains very unclear.
Here is an overview of how things have played out so far:
CARES Act stimulus checks not enough for many
As part of the CARES Act, a $2.2tn coronavirus relief package passed in March, millions of eligible Americans have received a stimulus check of up to $1,200, with nearly $267 billion sent out in payments since April, according to the most recent figures provided by the Internal Revenue Service and US Treasury Department.
Individuals earning up to $75,000 a year have been given the full $1,200, with $2,400 going to joint tax filers whose combined income is $150,000 or below. Individuals on up to $99,000 and couples with shared earnings reaching a maximum of $198,000 have received a steadily decreasing amount, while households have also been able to claim an extra $500 per dependent under 17.
The CARES Act checks, officially known as Economic Impact Payments (EIPs), have had a significant effect on households’ financial welfare, according to recent research by Columbia University’s Center on Poverty and Social Policy. With unemployment in the US soaring as a result of the pandemic - it hit 14.7% in April - the CPSP found that poverty in the country could have risen from 12.5% to 16.3% without the checks.
However, it also warned: “If high unemployment rates persist beyond July 2020, additional income support will be needed" to stop a spike in the number of Americans experiencing economic hardship.
This ties in with the results of several polls conducted as the stimulus checks began to be sent out in mid-April. They showed that, for many people in the US, the EIP represented a cash injection that was unlikely to help tide them over for long: for example, 63% of respondents to a Simplywise survey said they would need another payment within three months to be able to cover their day-to-day expenses.
The CARES Act also featured a $600 weekly boost to unemployment benefits, but this scheme is due to end after July.
HEROES Act proposes second round of stimulus checks
With Americans calling for further financial assistance, the HEROES Act, a $3tn coronavirus aid package approved by the House of Representatives in May, proposed a second round of stimulus checks. Under the terms of the HEROES Act, qualifying Americans would again get up to $1,200, but the bill also sought to broaden eligibility for the check and raise the amount households could claim per dependent.
The HEROES Act proposed giving families $1,200 each for up to three dependents, including those over the age of 16. It also made immigrants without a Social Security number eligible for a check - after they had been left out of the first round of EIPs - and intended to retroactively change the terms of the CARES Act to get them that payment too.
The bill additionally proposed extending the $600 benefits boost until 31 January 2021.
However, the HEROES Act must pass the Senate and be signed off by the president before becoming law, and both the White House and Republicans in the GOP-controlled upper chamber have balked at the bill's overall spend, describing it as "dead on arrival" in the Senate. It was branded an “unserious product” by Senate Majority Leader Mitch McConnell, who has reportedly insisted to Trump that there must be a $1tn cap on a future relief package.
Trump, Mnuchin express support, but focused on jobs
Having already said in May that the US government would be "getting some money" for Americans, President Trump seemed to confirm his support for a second EIP in an interview with Scripps' Joe St George on Monday, saying “we are, we are” when asked whether he is going to get people another check. Last week, he also spoke of a “very dramatic, very good” package in response to questions about another check.
Meanwhile, US Treasury Secretary Steve Mnuchin told a Senate hearing this month that the government was open to distributing another stimulus check, saying: "I think we're going to seriously look at whether we want to do more direct money to stimulate the economy.”
However, it is thought that Trump may in fact have been referring to a future stimulus package as a whole in his interview with St George, rather than specifically to the inclusion of a check. And as the specialist financial publication Forbes explains, the president looks to be prioritising “stimulating the economy through job growth” over sending out direct financial aid to Americans. “This includes a focus on manufacturing jobs, infrastructure spending, a payroll tax credit, a return-to-work bonus and other related incentives,” Forbes says.
Speaking at a Republican lunch event on Tuesday, Mnuchin echoed that employment-first assessment, saying: "We’re talking about a bunch of different ideas that we may need to do in another bill, and we want to take our time and make sure we’re thoughtful. So whatever we do, it’ll be much more targeted, much more focused on jobs, bringing back jobs and making sure we take care of our kids."
Republican senators propose return-to-work bonus
“I think we need to move from rescue and assistance to more long-term economic growth incentives,” White House adviser Larry Kudlow concurred in an interview with Fox Business this month. “For example, the president mentioned payroll tax holidays for the workforce, he talked about capital gains [tax rebates], he talked about tax breaks for restaurants, entertainment, sports contests, he’s talked about tax breaks for tourism.”
Kudlow has told CNN there "will be a return-to-work benefit", amid Republican concern that Americans are being disincentivised from getting back into jobs. Rob Portman, a Republican senator from Ohio, has proposed a $450 payment for those returning to employment, while Senator Kevin Brady (R-Texas) has suggested giving people two weeks of the $600 benefits boost if they accept a job. However, it should be noted that these two proposed schemes would only run until 31 July.
As Kudlow referred to in his remarks above, another incentive put forward is a travel tax credit, which would bid to kick-start the US tourism industry by allowing Americans to deduct money spent on domestic travel from their tax bills. The idea was floated by Trump at a White House round table in May, with the US Travel Association (USTA) suggesting giving people 50% of their travel costs back, up to a maximum of $4,000, until the end of 2021.
In the wake of the suggestion, Arizona Senator Martha McSally has tabled the American TRIP Act, which goes further than the USTA proposal. Under the Trip Act, Americans could reclaim travel expenses incurred up to 31 December 2022 - $4,000 for individuals and $8,000 for joint filers - and, whereas the tax credit outlined by the USTA would only apply to 50% of travel expenses, McSally’s bill would allow people to recoup 100% of such costs.
Unemployment, coronavirus cases key stimulus check factors
How the US’ unemployment figures continue to evolve looks like having a significant role to play in the final decision on the second stimulus check. After all, the jobless rate actually fell by 1.4% in May, leading one White House adviser to even suggest that there might no longer be any need for another relief bill, let alone a further round of Economic Impact Payments.
"It takes a lot of the wind out of the sails of any Phase 4," Stephen Moore was quoted as saying by the Washington Post at the start of June. "We don't need it now. There's no reason to have a major spending bill. The sense of urgent crisis is very greatly dissipated by the report." June’s unemployment figures are released on 2 July.
The case for a second round of stimulus checks may grow, though, if a continued uptick in US infections and deaths curbs the country’s economic recovery, as states such as Texas, Arizona and Florida find themselves forced to put the brakes on the reopening of their economies amid a renewed surge in their coronavirus figures.
Moore’s comments were contradicted by another presidential adviser, Kevin Hassett, who declared that there “definitely will be another relief package”, and in his interview with Scripps last Monday, meanwhile, Trump even ventured that a stimulus bill could be announced “over the next couple of weeks”.
Other indications, however, are that a future stimulus package - which McConnell has said would be the "final" one - won’t come about quite so quickly, particularly given that the Senate takes a two-week recess from 3 to 17 July. Forbes has reported that nothing will get passed before the end of July, an assessment that Republican Senator Roy Blunt agrees with. "My personal belief is we will do something before the August break - that's about the right timing,” he has said.
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