There is little doubt that 2020 has tested Americans’ resolve more than any previous year. The 2019 coronavirus disease pandemic (COVID-19) has taken an incredible financial and physical toll, with nearly 135,000 Americans dead, as of Saturday, July 11, and more than 20 million expelled from the workforce.
As work continues on the research front as the best way to combat the COVID-19 pandemic, lawmakers felt the best solution to counteract the financial difficulties associated with the coronavirus was to approve the most expensive aid package in history. .
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The CARES Act simply has not done enough for most Americans
On March 27, lawmakers officially approved, and President Trump signed, the Coronavirus Aid, Relief and Economic Security Act (CARES). This $ 2.2 trillion package provided funds for hospitals to combat COVID-19, allocated $ 500 billion for struggling industries, distributed nearly $ 350 billion for loans to small businesses, and expanded the unemployment benefit program by increasing weekly payments at $ 600, until July 31, 2020.
But the indelible mark left by the CARES Law is the $ 300 billion destined for direct stimulus payments. According to recent figures from the Internal Revenue Service, more than 160 million Economic Impact Payments have been sent to US workers and seniors, totaling approximately $ 270 billion.
At most, these stimulus payments could total $ 1,200 for an individual or $ 2,400 for a couple filing a joint return, with a parent or household who also qualifies for a $ 500 hit for each 16-year-old dependent or less. To achieve this maximum payment, a single, head of household or married taxpayer simply needed a respective adjusted gross income below $ 75,000, $ 112,500 and $ 150,000.
Throwing a lot of money into a never-before-seen problem seemed like a great idea at the time. But in retrospect, these stimulus controls did not do enough for most Americans. A Money / Morning Consult survey in April found that almost half of the 2,200 respondents had spent their stimulus money in less than two weeks, and 74% are expected to have used all of their stimulus in four weeks, or less.
With the pace of economic recovery much slower than anticipated, and the US unemployment rate still above 11%, another round of stimulus certainly seems warranted.
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Expect this big change with the next stimulus deal
The question until recently had been: will a second stimulus agreement be finalized? The answer now seems to be a resounding yes.
In mid-May, the House of Representatives, led by Democrats, passed the $ 3 trillion HEROES Act, which, among other things, calls for another round of direct stimulus payments to workers and seniors. While the maximum payments remain the same: $ 1,200 for an individual and $ 2,400 for couples, the additional payment for dependents (limit three) increases to $ 1,200 from $ 500. In other words, Democrats are on board with another stimulus round.
However, recent comments from key Republicans suggest they are on board, too. President Trump, Senate Majority Leader Mitch McConnell (R-Ky.), And Treasury Secretary Steven Mnuchin expressed interest in seeing Americans receive another round of direct stimulus payments.
But make no mistake about it: The next stimulus agreement will present a very big change.
In an interview last week with CNBC, Treasury Secretary Mnuchin made it clear that the next proposal would include an adjustment to improve unemployment benefits. Approved unemployed beneficiaries will no longer automatically be eligible to receive an additional $ 600 per week in benefits. According to Mnuchin, unemployment payments will not total more than 100% of what a worker would generally bring home, if employed. Making the enhanced unemployment benefits dynamic for a typical worker’s salary will ensure that there is an incentive for the unemployed to return to work.
It is unclear whether Democrats will accept these terms, but the Republican Party appears to be adamant that it has no intention of extending the improved unemployment benefits, in their current form, beyond July 31.
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Three additional points of conflict for a second stimulus agreement
There is a good chance that once lawmakers have an agreement on what to do with the improved unemployment benefits, other disagreements will be easier to address. However, there are three additional friction points that must be resolved.
First, it is unclear whether the income thresholds that qualify for another round of stimulus payments could be altered. The HEROES Act passed in the Chamber left the thresholds for qualified income unchanged from the CARES Act. However, recent remarks by Mitch McConnell at an event in his home state may suggest that Republicans are seeking to lower income thresholds where payments disappear. This would mean that fewer people would qualify for stimulus money.
Second, there will surely be a lot of debate about who will qualify as a dependent and which dependents they will add to each household or parent. Democrats want to see all dependents, regardless of age, qualify under the next stimulus agreement. Meanwhile, Republicans are likely to reject a significant expansion in dependent payments or even the number of qualified dependents.
Third and lastly, both parties will have to decide what additional measures will be included in the next stimulus package, if any, beyond direct payments. For example, will we see additional funds allocated for small business loans? Could hospitals receive more capital to fight COVID-19? Are states online to receive financial assistance from the federal government? These are all questions that hopefully should be answered in the next two weeks.
