Coronavirus USA

Stimulus check: what income limits will apply to second payment?

The HEROES Act makes considerably more generous provisions for US citizens but the Republicans are looking at a targeted approach.

Stimulus check: what income limits will apply to second payment?
Stefani Reynolds AFP

The US Senate is due to reconvene on 20 July when Republicans and Democrats will discuss the eagerly awaited fifth coronavirus response bill. Expected to be included in whatever economic relief package the two sides of the floor settle on as the US tackles the coronavirus pandemic is a second round of stimulus checks to US citizens who have hit in the pocket by the Covid-19 crisis.

Senate Majority Leader Mitch McConnell has been pushing for a $1 trillion bill to be aimed at the ailing US economy while the HEROES Act, which was championed by Democratic House Speaker Nancy Pelosi and passed by the House of Representatives in May, proposes a $3 trillion package including a second round of stimulus checks for US tax payers.

The CARES Act, which was signed into law in March, laid out a $2 trillion package that provided a first round of stimulus checks for US citizens of $1,200 per individual.

Under the HEROES Act, individuals on under $75,000 and couples on less than $150,000 would again get $1,200 and $2,400, respectively, with households also receiving $1,200 each for up to three dependents, including those over the age of 16.

Furthermore, the bill would not only include immigrants without a Social Security number - a group who were not eligible for the first check - but would also retroactively change the terms of the CARES Act to get them that payment too.

Republicans and Democrats divided on HEROES Act

Donald Trump speaks during a news conference in the Rose Garden at the White House in Washington, U.S., July 14, 2020.

The HEROES Act is expected to face fierce opposition from Republicans in the Senate and it is broadly anticipated that a consensus deal will be reached that falls somewhere between McConnell’s figure and that of the Democratic lower house proposal, with the Republicans favouring a more targeted approach that would focus more on lower-income households

Despite a slightly brighter outlook on the unemployment front in June, tens of millions of Americans have filed jobless claims since the crisis began in March with many workers saying the first round of stimulus checks has not been sufficient and a $600 weekly unemployment benefit boost initiative  - the Federal Pandemic Unemployment Compensation (FPUC) scheme - is scheduled to end in July. 

Republicans hint at $40,000 stimulus check cap

McConnell has been quoted as stating that Americans who earn $40,000 or less have been “the hardest hit” by the coronavirus pandemic and this number has been seen as significant by several observers.

Multiple sources say McConnell didn’t just throw out $40,000 as a cut-off haphazardly—consensus within GOP is moving that direction, which would sharply limit eligibility,” The Washington Post’s White House economics reporter said on social media.

A $40,000 cap on a second round of stimulus payments would go some way to reducing the bill for the US Treasury in line with Republican designs: in the first round of checks the Internal Revenue Service (IRS) issued some 159 million payments to US citizens, to the tune of around $267 billion.