Fourth stimulus check summary: 7 June 2021
US stimulus checks news: Monday 7 June 2021
Plenty stimulus cash still unspent
As CEO of one of America's biggest banks, Bank of America's Brian Moynihan has unique insight into the health of the country's economy. And right now, what he's seeing is positive.
What's happening: In an interview on CBS' "Face the Nation" on Sunday, Moynihan said that consumer spending has jumped above $1 trillion this year, a 20% increase over 2019 levels.
And Americans are still sitting on a lot of extra cash.
Full story below.
If financial markets are already in the summer doldrum mode, that could mean gold prices could steadily rally over the next couple of months
Stimulus plans see gold hold
Gold held gains as investors awaited a key US inflation report due later this week for clues on when the Federal Reserve may begin to talk about tapering its asset purchases.
Bullion steadied on Tuesday after rising 1.5% over the past two days as traders assessed a smaller-than-expected gain in US payrolls as well as comments from Treasury Secretary Janet Yellen saying that higher interest rates would be a “plus” for America and the Fed, which weighed on the dollar.
Gold is still holding close to $1,900 an ounce amid rising price pressures and speculation that central banks may eventually pare back stimulus as the global economy recovers from the pandemic. Thursday will bring the European Central Bank’s decision, as well as the US CPI report which will be one of the last major economic indicators before the Fed’s next policy meeting 15-16 June.
Full story below:
Did you know: a plus-up payment is simply money owed to you if you didn't get the right amount in the last stimulus payment.
Here's a piece we did on it a while back explaining what you need to know.
A picture of US stimulus spending
The US government approved $5.3 trillion worth of fiscal pandemic-aid packages over the past 14 months to shore up the US economy and American households. The scope is nearly unfathomable but MarketWatch provides a quick look at the COVID-19 aid to date from Mizuho Securities.
The IRS will be reaching out to families eligible for 2021 Child Tax Credit
Normally families would have to claim the Child Tax Credit when they file a tax return, however this year all families need to do is file a 2020 tax return. The IRS urges parents that missed Tax Day, it was 17 May, to file a tax return, even if you have no income, so that they will be automatically signed up for the enhanced Child Tax Credit for the 2021 fiscal year included in the American Rescue Plan.
Eligible parents will get a tax credit for up to $3,600 for children 5 and under and up to $3,000 for children ages 6 to 17. If the IRS determines that you may qualify, the agency will be sending you a letter.
In March Florida Governor Ron DeSantis proposed a one-time relief payment of $1,000 to Florida’s first responders and educators for their sacrifices and stepping up to meet the challenges of the pandemic.
On Wednesday, Governor Ron DeSantis signed Florida’s $101.5 billion budget which includes over $400 million for those $1,000 direct payments for first responders and educators.
The American Rescue Plan provided a complete overhaul of the Child Tax Credit programme, which had previously provided a single end-of-year credit worth up to $2,000 per child. The new system is not only more generous, but will also distribute the money in the form of monthly direct payments.
The new system of monthly payments is expected to halve the number of children in poverty but some would prefer to have the funds as a single annual payment.
Restaurateurs see uptick in job applicants with “Return to Work” bonus
Enhanced unemployment benefits are due to expire 19 June in New Hampshire, but the state is also offering residents who get off unemployment benefits and hold a job a bonus. Governor Sununu announced the summer stipend program in May, it is on a first-come, first-served basis and will give $500 or $1,000 bonuses if they keep the job for at least eight weeks.
Although restaurant owners recognize that there are many factors keeping people from re-entering the job market, such as fear of covid-19 and child care issues, one has seen more applicants in the last two weeks than the last two months.
Psaki lays out three paths forward on Infrastructure spending
President Biden has been meeting with Senator Shelley Moore Capito (W.Va.), the top Republican negotiator in the Senate to reach a compromise on infrastructure spending, the next part of his stimulus spending for the US. President Biden has brought his $2.2 trillion proposal down by one trillion dollars, but sees the latest offer by the GOP as underwhelming, raising their proposal just a tenth of what the President has cut from his.
White House press secretary Jen Psaki said on Monday that there are three paths forward. One a negotiated deal with Capito, but the President will not let negotiation drag on forever. "The time is not unlimited here … nor is the president's willingness to compromise," Psaki said. Two a deal between GOP and Democratic lawmakers in Congress. And three putting the full weight of the White House behind The INVEST in America Act, a bill being marked up this week by the House Transportation and Infrastructure Committee.
Myriad of challenges for IRS as it processes tax refunds
The Internal Revenue Service already had its hands full and was understaffed when covid-19 hit. Since then, the agency has had to deal with a backlog that built up due to the closure of offices around the country to keep its workers safe. Actions by lawmakers in Washington, although helpful in helping get Americans through the pandemic put even more work on the agency causing delays that tax preparers are saying is the worst they’ve seen during their careers.
Biden proposes stimulus for Social Security Administration
President Joe Biden is calling for a nearly 10 percent increase in funding to the Social Security Administration. The money would basically help the agency with customer services and help with administrative backlogs as it regroups from the pandemic. The White House is proposing giving the agency a $1.3 billion boost in funding.
The funding could help the agency reduce the average wait time for its 800 number to 12 minutes from 16. It could also help reduce the hearings backlog, bringing the annual average processing time for a decision down to 270 days from 386 days, as well as process 720,000 more initial disability claims.
One of the measures included in the American Rescue Plan was an enhancement to the Child Tax Credit. Parents and guardians with children seventeen or younger in their care who make under a certain income are eligible.
The IRS has announced that payments for the Child Tax Credit will begin 15 July, but what actions are needed to receive it?
The IRS announced last week that more than 3.1 million recently-processed tax returns are newly eligible for the unemployment benefits tax exemption. This has led to around 2.8 million tax refunds going out in the last few days, with plenty more to come.
In total, the tax authority estimate that there are around 13 million people who could qualify for the unemployment tax refund. It remains to be seen how long it will take for those payments to be made, but if you think you may be eligible here's everything you need to know to work out how much you could be getting...
Optimism about the introduction of the new-look Child Tax Credit
The new-look Child Tax Credit will provide monthly payments worth up to $300 per child when it goes live from 15 July, but many households are unaware of the new programme. In the past the support was only available in the form of a single tax credit, worth a maximum of $2,000, to be claimed at the end of each tax year.
There are hopes that the new monthly payments will make it easily for families to budget, and is expected to halve the number of children in poverty over the next 12 months.
How have the stimulus checks been spent?
More than one year since the first round of stimulus check payments landed in the bank accounts of eligible Americans, we can now see some clear patterns in how they spent the money. This report from Forbes states that Americans have received over $850 billion in the form of these direct payments since March 2020, but there are still calls for a fourth stimulus check to be added to the upcoming relief legislation.
Biden praises the impact of stimulus checks
For now, the White House appears unwilling to include a fourth stimulus check in the next relief bill but President Biden has spoken of his pride at having passed the third round in March. The $1,400 direct payments were the largest to date and studies have shown that they had a positive impact on food poverty, mental wellbeing and financial instability.
The IRS has confirmed that from 15 July it will begin sending direct payments to parents for each eligible child, much like they did with the stimulus checks that gave families a financial boost through the pandemic. These payments were included in the American Rescue Plan as part of other measures to reduce childhood poverty and help parents with the cost of raising a child.
Families can opt to receive any money they are due from the credit next year when they file their 2021 tax return instead of receiving the direct payments, but without further action the additional money will be a short-lived affair.
How to check the status of your IRS tax refund
The tax authority is in the process of sending out millions of payments for unemployment benefits recipients who overpaid in their taxes for 2020. The American Rescue Plan, signed into law in March, made the first $10,200 of jobless benefits received tax-free but many had already filed their returns by then.
As such the IRS is now working overtime to send out the tax refunds to eligible Americans. To check on the status of your tax refund, check out the IRS' handy online tool.
Who will get the new Child Tax Credit?
The American Rescue Plan provided a complete overhaul of the Child Tax Credit programme, introducing a monthly direct payment to tens of millions of American families. The first round of payments is expected to be sent out from 15 July and there is funding for at least 12 months of support.
Calls for a fourth stimulus check have been boosted by a recent study which found that the previous rounds of direct payment have been extremely beneficial. No new stimulus check proposal was included in the new relief bills but many Democrats in Congress are calling for one.
The Household Pulse Survey began in April 2020 and the results cover a two week period with a two day gap between releases. The survey asks millions of US residents the same set of questions relating to their access to food and healthcare, depression and anxiety, ability to make rent and mortgage payments, and more.
Stimulus checks increased Chinese exports to the US
Tom Hancock, China economy reporter at Bloomberg Business, has suggested that the third stimulus check payments have had a notable effect on US imports this year. Consumer spending has been down during the pandemic but the $1,400 direct payments appear to have boosted the size of the Chinese export market to the US.
Sanders calls for reconciliation to be used to pass further stimulus spending
In a Twitter post last night, independent Sen. Bernie Sanders has suggested that Biden passes his upcoming relief bills using reconciliation if the Republicans do not support the proposals. This was also used to pass the American Rescue Plan after the $1.9 trillion package, which included stimulus checks and a reformed Child Tax Credit, failed to garner a single vote from the GOP.
Sanders points out the the Senate filibuster usually prevents legislation passing without a 60-seat supermajority, making it easy for the minority party to sideline the government's agenda.
Stimulus checks provided boost for ailing travel industry
The last 18 months have been a tough time for almost all industries but the travel sector has been particularly hit by the pandemic, with travel restrictions in place for much of that time. However there is evidence that the third round of stimulus checks, along with the easing restrictions, is encouraging American to book that once-in-lifetime trip.
Adit Damodaran, an economist at travel deals app Hopper, said recently: “When the stimulus checks came out last March, we saw an increase in booking volume as well as search demand. The stimulus impact has definitely shown up on our end."
There have been growing calls from Democrats in Congress for another round of stimulus checks, and various groups have issued pubic letters addressed to President Biden in support of the payments.
At a recent White House press conference, Jen Psaki was asked whether the President was considering introducing a fourth stimulus check. Studies suggest that the payments are effective but the White House appears to be concentrating on other priorities.
IRS issues a wave of tax refund payments
Millions of Americans who overpaid tax for 2020 will be getting their tax refunds in the coming days after the IRS confirmed that a huge round of payments had gone out over the weekend. A late addition to the American Rescue Plan saw unemployment benefits recipients exempted from paying tax on federal support received last year, but many had already filed their tax return by that point.
The Internal Revenue Service has identified 13 million tax returns from individuals who may qualify for the $10,200 tax waiver on unemployment claimed in 2020.
There have so far been three rounds of federal stimulus checks in the US since the coronavirus pandemic began just over a year ago - two under former President Donald Trump in 2020, and one under his successor, Joe Biden, in 2021.
As some states announce the removal of the $300 federal supplementary unemployment benefits, they are introducing a cash incentive to return to the workplace.
The IRS has distributed over 167 million stimulus checks as part of the third round of direct payments, and will continue to make supplementary ‘plus-up’ payments for the rest of 2021 as they work through a backlog of tax returns.
It has been two and a half months since the third round of stimulus checks was signed into law when the American Rescue Plan was passed and attention is turning to the prospect of a fourth check.
Many Democrats in Congress are pushing for further direct payments to be passed but Republicans appear unwilling to countenance another round of stimulus spending at the moment. With this in mind, how long have previous negotiations taken?
Starting 15 July, the IRS will begin sending direct payments to parents for each eligible child as part of the expanded Child Tax Credit, which was included in President Biden's $1.9tn American Rescue Plan.
The new CTC allows qualifying households to claim up to $3,600 per child over a 12-month period.
The ARP only authorized the tax credit per child for 2021, but Biden has called for it to be extended until 2025 as part of his American Families Plan, while congressional Democrats would like to make both permanent.
See also: What to know about the CTC
Struggling households across American hoping for another stimulus check to cover expenses were told it’s probably not in the cards for now when Jen Psaki downplayed the likelihood of a fourth stimulus check in the near future. However, those that own a home and have fallen behind on their mortgage or utilities might be able to access funds from the stimulus bill passed in March.
Following the release of the Bureau of Labor Statistics' jobs report for the month of May, we take a look at what the BLS' numbers say about the possibility of a fourth stimulus check being approved.
Speaking to reporters last week, White House Press Secretary Jen Psaki indicated that President Biden is focusing on other legislative priorities, rather than pushing for more stimulus checks.
Stimulus checks live updates: welcome
Hello and welcome to our daily blog on stimulus checks for Monday 7 June 2021. You'll find updates on a possible fourth stimulus check, plus information on the third round of checks, which has seen the IRS send out $391bn in direct payments since March. We'll also provide info on schemes such as the expanded Child Tax Credit, which enables qualifying families to claim up to $3,600 per child per year.