How did the $2,000 third stimulus check proposal end up as $1,400?
President Joe Biden came into office early January with a clear pledge to provide Americans with $2,000 payments, but all the talk quickly moved to a lower value.
It all started with promises of a $2,000 stimulus check. This was to follow the $1,200 issued early in the covid-19 pandemic - as part of the CARES Act last March - and the $600 check that was one of Donald Trump's final acts in office.
As President Joe Biden got down to work, however, despite a flurry of executive orders being signed off, the talk of the stimulus check value changed to $1,400. For many, this was a disappointment. For others it was seen as the first broken promise. So how did we get here?
Stimulus checks: when $2,000 became $1,400
Following the run-off elections for the Senate - where Jon Ossoff and Raphael Warnock both won and gave the Democrats the edge in the upper chamber - the push from the left was to have $2,000 checks issued to all Americans.
'$600 is simply not enough when you have to choose between paying rent or putting food on the table,' Biden tweeted, adding, 'We need $2,000 stimulus checks.'
The new leader had also said in the lead up to the runoffs that by voters ensuring a 50:50 split in the Senate, and VP Kamala Harris having the deciding call, it would help get $2,000 checks 'out the door immediately to help people in real trouble.' As we know, this has not happened.
The problem of getting anything through quickly was as per before: bipartisan support for the increased amount, at least enough support, was not forthcoming. Instead it has been a case of something rather than nothing but the push continues to bump up the amount and the number of recurring payments.
Third stimulus checks: what now?
As part of the American Rescue Plan (ARP), a $1.9tn stimulus proposal, Biden has pledged to distribute stimulus checks of up to $1,400 - an amount that represents the difference between the $600 check in December’s $900bn relief bill and the $2,000 figure Democrats unsuccessfully sought to raise this to.
"Even for those who have kept their jobs, these checks are really important […]. $2,000 is going to go a long way to ease that pain," Biden said as he unveiled the ARP this month.
Eligibility for the proposed third stimulus check could be narrowed to include a smaller portion of the US population, amid pushback from lawmakers over the cost of sending out another round of direct payments.
Biden's revised stimulus check of up to $1,400
Bipartisan group of lawmakers signals desire to cut cost of stimulus checks
But Republican legislators and some more moderate Democratic congressionals have raised concerns over the expense of such a scheme, telling top White House economic adviser Brian Deese in a call on Sunday that the number of Americans who qualify for a payment needs to be reduced.
They see this cost-cutting measure as one way of bringing down the $1.9tn overall spend of the ARP so soon after a near-$1tn outlay on economic aid. "There seemed to be a lot of agreement […] that those [direct] payments need to be more targeted," Susan Collins, a Republican senator from Maine who was among the lawmakers who spoke to Deese, told Politico.
For example, Joe Manchin (D-WV), who was also on the call with Deese, says it is important to "target where the money goes" in a third round of stimulus checks. "Sending checks to people that basically already have a check and aren't going to be able to spend that or are not going to spend it, usually are putting it in their savings account right now, that's not who we are,” he told CNN this month. “We have done an awful lot of that."
Reduced stimulus-check eligibility could be good for economy
Sent out as part of the CARES Act, a $2.2tn relief bill passed last March, the first round of stimulus checks, whose maximum amount of $1,200 was slightly lower than the payment proposed in the ARP, cost a total of around $270bn, according to figures released by the US’ Internal Revenue Service.
Individuals with an annual income of up to $75,000 and married couples on under $150,000 received the top figure, with higher earners getting a gradually smaller amount up to a final cap of $99,000/$198,000. The second stimulus check came with the same initial income thresholds, but lower final phase-out limits of $87,000 and $174,000.
And recent research by the non-profit organization Opportunity Insights suggests that limiting eligibility for the third stimulus check to fewer, low-earning Americans could work in the US’ favor. According to the study, households with a yearly income of over $78,000 would on average spend just $105 of their $1,400 stimulus check, saving the rest. As a result, Opportunity Insights says, only a small percentage of the funding invested in the scheme would actually be put back into the economy.
"Targeting the next round of stimulus payments toward lower-income households would save substantial resources that could be used to support other programs, with minimal impact on economic activity,” the body says in its report.
Biden "open" to revising stimulus-check eligibility requirements
President Biden has said he is willing to be flexible over the eligibility requirements for a third stimulus check, telling reporters on Monday: "There's legitimate reason for people to say, 'Do you have the lines drawn the exact right way? Should it go to anybody making over X number of dollars or Y?’ I’m open to negotiate those things."
Deese echoed Biden’s words the following day, saying to CNBC: "Certainly, if there are ways to make that provision, and other provisions, more effective, that’s something we’re open to."
Third stimulus check: live updates
You can stay up to date with all the latest information on the proposed third stimulus check with our dedicated live blog.