Third stimulus check: summary and news on Tuesday 2 February 2021

Stimulus based on out-of-date numbers

The first two rounds of stimulus checks sent out were based on taxpayers 2018 or 2019 tax filing. They were an advanced payment for a tax rebate on income tax filings for the 2020 fiscal year. the IRS will start collecting and processing those 2020 tax filings on 12 February.

But a lot has changed for some people since they last filed their annual earnings with the IRS. Negotiations focused on tightening the upper limit on earnings for who should qualify to get a third round of stimulus are ongoing.

“This is not targeting. It is the illusion of targeting, an illusion that will end up hurting tens of millions of people who are currently in need but weren’t in 2019.” Matt Bruenig, founder of the People’s Policy Project.

Stimulus plan heading for reconciliation 

Democrats are moving now to fast-track a coronavirus relief package and if Republicans want to come along, great. Nothing will stop GOP Senators from voting on the plan even if the Democrats use reconciliation. 

If Republicans don't like the plan, they can keep talking to the White House, but the underlying takeaway from the meeting on Monday night is the President is only willing to negotiate so much. The Republicans proposal which lacked state and local funding is not going to cut it. 

The Democrats are calculating that they aren't doing anything Republicans haven't done. They pushed their Tax Reform through with reconciliation and tried to repeal Obamacare with the same procedural process. Biden now has a chance to pass a $1.9 trillion relief package with just Democratic votes now that Joe Manchin has signaled that he is a Yes. 

They also feel that their plan is going to be popular with voters and no one is going to care how they got there. Unlike when the Republicans tried to repeal Obamacare the Democrats will be providing the American public with something, not trying to take something away. 

Democrats in the Senate will consult with the Senate parliamentarian to make sure their plans are actually allowed under the rules that govern reconciliation while drafting the legislation.

American Rescue Plan explained

The American Rescue plan is President Biden's $1.9 trillion proposal to tackle the covid-19 pandemic and the economic fallout that has ensued. 

CORONAVIRUS STIMULUS CHECKS

Third stimulus check: how does the $600 billion GOP plan compare with the previous relief proposals?

How does the GOP coronavirus stimulus plan compare? 

Several proposals have been put forward to deal with the pandemic-induced economic crisis, a third one is in the works with details being hammered out. 

Read the full story:

Can everyone be convinced to get vaccinated? 

Biden has made getting the nation vaccinated one of his top priorities in his stimulus plan. In order to get back to business as usual and for the economy to recover the nation needs to reach herd immunity. If vaccinations pick up pace the nation could get there by summer. 

Unfortunately there is still some doubt among certain sectors of society about taking the covid-19 vaccine. On the bright side a pew research survey in December showed that more people were willing to take the vaccine rising from 51 to 60 percent. However there were still 39 percent that said they definitely or probably won’t take the vaccine, 

Over the weekend member of anti-vaccine and far-right groups temporarily shut down a mass covid-19 vaccination site at Dodger Stadium for nearly an hour.

Student loans are crushing Americans 

President Joe Biden has been steadfast with his plan to forgive $10,000 in student loan debt although it didn’t make it into his American Rescue Plan. He did sign an executive order extending a freeze on student loan payments and interest.  

Student loan debt has ballooned in the US over the past decade with some former students having to delay milestones in life to keep a handle on the payments. Ed Helms produced a short movie to show how the student debt crisis and political corruption are intertwined with a call to act.

Joe Manchin is onboard for Reconciliation

Biden wants to pass his stimulus bill with bipartisan support meeting with 10 GOP Senators on Monday to discuss their parred down counter-offer. Their proposal in his view doesn't go far enough and the White House has said that they are willing to move forward without the Republicans to pass the stimulus bill quickly.

He would need their votes to pass his coronavirus relief package without using "reconciliation" a tool which would let the Senate pass budgetary items with a simple majority. With the Senate split evenly 50-50 the Democrats need every vote from their caucus.

One possible bump in the road was Senator Joe Manchin, who Democrats need to get to 50 votes, with Kamala Harris casting the tie-breaking 51st vote. Manchin has now signaled that he is open to using reconciliation to move the bill forward.

Biden plan on minimum wage could save US money 

The main argument against raising the minimum wage is that it is bad for the economy and that there will be job losses. However, economists are pointing out that that is just not the fact such as a study from the National Bureau of Economic Research stating “By exploiting 172 prominent minimum wages between 1979 and 2019 we find that there is a very clear increase in average wages of workers in these groups following a minimum wage increase, while there is little evidence of employment loss.” 

One of the arguments for raising the minimum wage is that it will pull more people out of poverty, a person working full-time year-round on the current minimum wage of $7.25 per hour earns just over $15,000 a year, barely over the US poverty line. Furthermore, those households require government assistance to get by. 

The economic Policy Institute estimates that Biden’s proposal to raise the minimum wage would decrease spending on major public assistance programs between $13.4 billion and $31.0 billion. It would also have the added benefit of increasing FICA revenue by between $7.0 billion and $13.9 billion.

Biden pushing his American Rescue Plan

President Biden on Twitter at 2 p.m. ET. The $1.9 trillion American Rescue plan includes the $1,400 stimulus check, but also a whole raft of other measures, including the minimum wage proposals. Businesses are in favour of a lot of the plan's proposals, but some have said the $15 minimum wage could hurt them. The US Chamber of Commerce has publicly stated its opposition to the hike. 

The data would suggest that raising the minimum wage nationwide would not lead to job losses. Economist Ben Zipperer of the Economic Policy Institute: "Those kinds of scare stories are theoretically possible, but they don't actually play out in the data. When there has been historically in the United States minimum wage increases ... the legislation tends to do what it's intended to do, that it raises wages and earnings for low-wage workers, without any sizable downside."

The great thing about raising minimum wage is that the people earning that money will almost certainly spend most of it, increasing economic output yet further. 

Senate Republicans' plans

The group of 10 Senate Republicans who met with Biden yesterday want:

- Stimulus checks of only $1,000
- Only going to those making $40,000 or less (and married couples making $80,000 or less)
- Eligible families would get $500 per dependent 

Stimulus for stocks

One of the stories gripping the country over the past week has been the rise in the value of GameStop shares, as small investors ploughed cash into the stock, causing it to shoot up in value, losing hedge funds who had shorted the stock billions in the process. 

A fair amount of that money poured into the stock was likely second stimulus check cash, with the IRS paying out the $600 second stimulus amount as of 29 December. After the first check was approved, back in spring, trading stocks was one of the most common uses for the funds for people who didn't need it cover basic needs. Back then people earning between $35k and $70k traded stocks about 90% more than the week prior to receiving the stimulus check, and there was a surge in new online broker accounts. 

Right now the latest rush is into silver (though it is entirely unclear who is actually behind that, with some on the Reddit site behind the GameStop surge disavowing any connection with the metal's rally) - what's going to be fascinating to see is the effect another $1,200 stimulus check could have on the market. Even a small percentage of stimulus check recipients ploughing their funds into one stock could have a fairly major impact. 

CORONAVIRUS STIMULUS CHECKS

Third stimulus check: How much of the $600 billion package will go directly to the people?

GOP proposal would see stimulus check provision reduced

On Monday evening a group of ten moderate Republican senators met with President Biden in the Oval Office to discuss the future of the covid-19 economic relief bill that he hopes to pass in the coming days.

The meeting was the result of a letter, sent by the group’s leader Senator Susan Collins of Maine, informing Biden of a counter-proposal being drafted. Unlike Biden’s $1.9 trillion American Rescue Plan, the GOP package includes around $600 billion of federal funding and reduces the stimulus check provision considerably.

Nearly 30m could miss out on stimulus checks under GOP proposal

On Monday evening a group of ten moderate Republicans met with President Biden in the Oval Office to discuss the new covid-19 economic relief bill. Biden's American Rescue Plan is set to be tabled in Congress this week but GOP lawmakers believe the $1.9trn package is too large. 

CNN reports that in Biden's proposal: "People earning less than $75,000 and couples earning less than $150,000 would receive the full amount under Biden's plan and payments would gradually phase out."

The GOP package would lower these threshold so fewer people would be able to recieve them. It is thought that around 29 million Americans will miss out under the Republican proposal. 

Leading economist calls for Biden to "go big" on stimulus checks

A study has found that recipients earning less than around $75,000 were most likely to spend their stimulus checks almost immediately. This is based on data for the second round of stimulus checks; the $600 payments distributed in early Janaury. After months without direct support, many will have needed that money urgently to pay off debts or rent back payments. 

As such Havard economist Raj Chetty believes that the stimulus checks should be focused on those earning less, making the package more targeted. This group are most likely to spend the money so would stimulate the encomy more than those who would choose to save it.

Biden is reportedly open to tightening the eligibility requirements slightly to reduce the upper thresholds. Doing so would see some people miss out on the payments, but they are likely to be more able to support themselves without it. 

Over 100m stimulus checks distributed in just seven hours

The first round of stimulus checks was hampered by administrative delays that meant many Americans were waiting weeks or even months for their payment to be received. However the second round of payments went much more smoothly and a new post from the US Treasury has confirmed that the IRS were able to send 113 million stimulus checks in just seven hours. 

This bodes well for the third round of payments which are still being discussed at the moment. President Biden's proposal would see eligibility requirements opened up slightly to allow household to claim on behalf of adult dependents. They could even be entitled to stimulus checks worth $2,000, to include backpayment for the round of $600 checks that they were omitted from. 

'He [Biden] will not slow down work on this urgent crisis response, and will not settle for a package that fails to meet the moment.'

House Democrats ready first step toward $1.9 trillion relief bill

The Democratic-led US House of Representatives prepared to take the first step forward on President Joe Biden's $1.9 trillion covid-19 relief package today, with a key vote expected to fast-track the measure through Congress.

A fiscal 2021 budget measure, with coronavirus-related spending instructions for congressional committees, headed for a House vote that would help unlock a legislative tool needed for Democrats to enact Biden's package swiftly in the face of Republican opposition.

As we've told you, though, Republicans have pushed back on the $1.9 trillion price tag of Biden's proposal, which comes on top of $4 trillion in covid-19 aid last year.

Jared Bernstein, a member of the White House Council of Economic Advisers, said on Tuesday that the Republican proposal fell far short in a number of areas, including funding to reopen schools.

CORONAVIRUS STIMULUS CHECKS

$2000 third stimulus check: what did Biden say originally about it?

What did Biden say originally about a $2000 stimulus check?

The size of the third round of stimulus checks has been a contentious issue for weeks, after a round of payments worth just $600 was agreed in December. President Biden originally put his support behind the smaller payment to get something out the door before the close of the year, but called it a “down payment” with plans to enact further stimulus once he was in office.

Since then he has propsoed a round of $1,400 stimulus checks, to 'top up' the previous payment to $2,000. However some are annoyed that he is not looking to provide an additional $2,000 as part of his $1.9 trillion American Rescue Plan. 

Goldman Sachs predicts final stimulus bill will be less than proposed

Financial analysts Goldman Sachs have said that they now expect the new covid-19 economic relief bill to be bigger than the $1.1 trillion that they had previously expected but doubt that all of Biden's American Rescue plan will be included in the final package. Biden's proposal costs $1.9 trillion but has faced criticism from Republicans in recent days who deem it too expensive. 

One of the areas where he may have to reduce spending is stimulus checks, with GOP lawmakers making a counter-proposal with checks worth $1,000. Biden seems unlikely to lower the maximum allowance, but may decide to tighten eligibilty requirements. The Republican proposal would see around 80 million fewer Americans entitled to this round of payments than Biden's offer. 

Comparisons made to 2009 stimulus spending

Talks between Democrats and Republicans are ongoing over the size of the new covid-19 economic relief bill and, for now at least, the two sides are some way apart. In response to President Biden's $1.9 trillion proposal, a group of Republican lawmakers has drafted an alternative worth just $600 billion. 

As discussed on MSNBC, the situation is simular to the post-recession picture in America over a decade ago. Again, a Democrat President had just taken office but some of Obama's more expansive plans were blocked by Senate Republicans who preferred a less costly alternative. It is thought that failure to inject the neccessary stimulus at that stage cost the US more because it did not fully address the struggling economy. 

Trump's former economic advisor unhappy with stimulus check spending

A former White House economic advisor and new Fox News business analyst Larry Kudlow has suggested that stimulus checks need to be more targeted in the aftermath of the GameStop share price surges of recent weeks. 

He blamed the distribution of stimulus checks for the Reddit-led trading frenzy that saw so-called 'meme stocks' boosted to new heights by private investors. 

Kudlow said: “I’m not OK with spending stimulus checks, sending out and spending stimulus checks on one penny or two penny stocks, which is what’s been happening with this incredible story of GameStop and some of these penny stocks. That’s so silly."

American Rescue Plan vs GOP proposal: how do they compare?

A group of ten Republican senators met with President Biden on Monday evening to discuss the the fate of the next covid-19 economic relief bill, which the President hopes to pass in the coming weeks. The two sides are currently miles apart in their estimations of what is required, with the Republicans suggesting a bill around a third the size of Biden's.

As this graphic shows, the GOP proposal includes stimulus checks worth just $1,000 per person, which would also be available to fewer Americans than previous rounds. It is thought that the Biden proposal would see around 80 million more people entitled to the direct payments. 

Republican Governor calls for greater stimulus spending

GOP senators met with President BIden yesterday in an attempt to persuade him to decrease the size of the proposed covid-19 relief bill that is expected to be tabled in Congress this week. Biden's $1.9 trillion package was deemed to expensive but many in the GOP, and a group of ten lawmakers proposed a $600 billion counter-offer. The new bill would only include stimulus checks worth $1,000 per person. 

But speaking to CNN, Republican Gov. Jim Justice gave his support for a large-scale stimulus package of the type Biden has proposed, saying: "We have really got to move and get people taken care of".

What is in the Republicans’ stimulus package?

On Monday evening a group of ten GOP senators met with President Biden to discuss the future of a covid-19 stimulus bill which he hopes to pass in the coming days. Republican lawmakers have argued that his proposal is excessive and proposed a far smaller counter-offer.

Here you can see the stark differences between the two package, with the GOP version coming in at around a third of the cost of Biden’s. One element to take a hit were stimulus checks, where the amount is decreased from $1,400 to $1,000 per person. New eligibility restrictions mean that around 80 million fewer Americans will be able to receive the support.

Democrats appear willing to use a Senate mechanism known as reconciliation to pass the bill without Republican support, but Biden has maintained that he will look for a bipartisan solution wherever possible. 

American Rescue Plan would provide economic stimulus

White House Press Secretary Jen Pskai has cited a report by the Brookings Institute which predicts a 4% GDP boost from Biden’s stimulus proposal. The $1.9 trillion package had been criticised by Republican lawmakers for being excessive but Biden argued that the additional funding is vital to mitigate against the economic consequences of the pandemic.

The package includes a third round of stimulus checks, this time worth $1,400 per person, which are hoped to help reinvigorate the economy by putting money directly into peoples’ pockets.

UNITED STATES

Third stimulus check: how targeted were first two covid-19 payments?

Republicans call for more targeted approach to stimulus checks

On Monday US President Joe Biden held talks with a group of 10 Republican senators over their $600bn coronavirus relief proposal - a plan that includes a stimulus check of up to $1,000. They were concerned about the amount of federal spending included in Biden's bill and looked for a more targeted approach. 

The offer tabled by the GOP senators is less than a third the size of Biden’s $1.9tn American Rescue Plan (ARP), and significantly reduces the maximum stimulus check eligible Americans would receive. In the president’s economic-aid proposal, the third round of checks would see people get up to $1,400.

Republican Mayors back Biden’s stimulus package

Bipartisan discussions continue over the fate of the next covid-19 economic relief bill but it appears that the Democrats intend to pass Biden’s American Rescue Plan regardless of the outcome. This may well annoy Senate Republicans but plenty of GOP Mayors have come out in support of the proposal which would see $1.9 trillion of federal funding put towards to effort.

A letter signed by over 200 Mayors reads: "The $350 billion in direct relief to state and local governments included in President Biden’s American Rescue Plan would allow cities to preserve critical public sector jobs and help drive our economic recovery".

"Providing direct, flexible aid to cities is the most efficient and immediate way to help families and their communities who have been suffering for far too long."

US NEWS

Third stimulus relief bill: what’s in the Republicans’ $600bn proposal?

What do we know the Republicans' stimulus bill counter-proposal?

A group of ten Republican Senators have met with President Biden after sending a letter to the White House informing him of a $600 billion covid-19 economic relief package currently being drafted by GOP lawmakers. The package is a counter-proposal to the $1.9 trillion American Rescue Plan which Biden first announced in January.

Amongst the omissions from the Republican proposal are funding for schools and local government, while the provision for stimulus checks and unemployment benefits has also been slashed. 

Biden meets with GOP senators for stimulus talks

President Joe Biden has met with the group of ten Republican lawmakers to discuss the counter-proposal made to his American Rescue Plan. Many in the GOP felt that Biden’s $1.9trillion package went too far and are calling for a considerably cheaper bill. The package would see stimulus checks decreased to $1,000 per person, with around 80 million fewer people entitled to the support. 

After the meeting, White House Press Secretary Jen Psaki said that while there were areas of agreement, “the president also reiterated his view that Congress must respond boldly and urgently, and noted many areas which the Republican senators’ proposal does not address.”

CORONAVIRUS STIMULUS CHECKS

$2000 third stimulus check: what did Biden say originally about it?

What has Biden said about $2,000 stimulus checks in the past?

President Joe Biden has met with 10 GOP lawmakers to discuss an alternative covid-19 relief plan they authored with a parred down stimulus check. This comes after the White House received a proposal from House progressives calling on him to prioritize recurring payments over a one-time payment for those most in need.

Biden’s $1.9 trillion covid-19 relief plan, called the American Rescue Plan, calls for a new round of direct payments of $1400 among other items. This measure would fulfill a campaign promise he made to voters in Georgia if they could deliver him a Democrat-controled Senate. However he is receiving blowback for not pushing for the whole $2000 amount.

Biden unwilling to move on stimulus check payments

Following Monday night’s White House meeting, it is thought that President Biden will not agree to Republican request to decrease the size of stimulus checks sent out as part of the new covid-19 relief bill.

Biden is aiming to provide a round of $1,400 stimulus checks with a wider eligibility entitlement than previous payments. In response GOP lawmakers were willing to spend about half as much on stimulus checks.

"Yes, Biden is trying to reach out, he’s trying to live up to his bipartisan promises, but at the same time the White House is making it clear that $600bn is not anywhere near enough, and I think that eventually the figure that Biden will have to settle on - and will probably have to do it with Democratic votes - is going to be much closer to his $1.9tn first offer," CNN’s Stephen Collinson said on Tuesday.