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The new stimulus package could be unveiled next week and could look like this.
This is what you need to know.
New stimulus
Senate Majority Leader Mitch McConnell (R-KY) is expected to present a stimulus bill next week when Congress returns from recess. Senate Republicans, with input from the White House, wrote the stimulus proposal. Since Republicans control only 53 seats in the US Senate, McConnell will need bipartisan support for his stimulus proposal. Given this bipartisan construction, the new stimulus is likely to contain “wish list” elements from both of them Republicans and Democrats, particularly on issues of mutual importance.
New stimulus: what is probably included
What does the new stimulus include? While there is no guarantee what problems make the final cut, here is a likely scenario of what is included in the new bipartisan overlap-based stimulus:
Second stimulus controls
Second stimulus checks or some form of direct payment will likely be included in the next stimulus bill. Members of both parties and the president support the second stimulus checks. However the quantity and eligibility criteria are up for debate. How big is the second stimulus test? How many people will qualify for a second stimulus check? There are countless proposals for second stimulus checks, including keeping the same one-time stimulus check from $ 1,200 per second to $ 2,000 per month. If there is a second stimulus check, it will not be a recurring payment. McConnell also suggested that second stimulus checks only be available to Americans earning up to $ 40,000 a year. However, McConnell has not clarified whether this is the actual eligibility criteria to receive a second stimulus check, or whether it is the criterion to receive the full amount of the second stimulus check. It is also possible that $ 40,000 is not the limit for the second stimulus controls. By comparison, to receive the first full $ 1,200 stimulus check, a recipient had to have an adjusted gross income of up to $ 75,000. Above $ 75,000, individual beneficiaries could receive less than $ 1,200 up to $ 99,000 of adjusted gross income. It is also possible that the second stimulus controls are less than $ 1,200.
State and local aid
Both parties in Congress understand that state and local governments have been adversely affected by the Covid-19 pandemic. Without federal support, some cities and states will face extreme financial circumstances, budget cuts, and possible bankruptcy. Congress is likely to approve state and local aid, although dollar amounts may differ between parties. State and local aid will also include financial support to schools, colleges and universities to ensure they can safely open this fall (if they open). Republicans want $ 30 billion to open schools, while Democrats target $ 430 billion (although these numbers may change).
Lower unemployment benefits / return to work bonus
Most Democrats want to extend unemployment benefits of $ 600 per week due to high unemployment and the increase in the number of Coronavirus cases. Many Republicans believe that the $ 600 per week unemployment benefit is too generous and creates a disincentive for beneficiaries to return to work. While extended unemployment benefits and a return-to-work bonus are functionally different and can create different incentives, they both provide a financial benefit to people who have lost or been suspended. Senate and White House Republicans have gathered around Senator Rob Portman (R-OH), who proposed a $ 450 per week cash bonus to return to work. If Congress agrees to extend these unemployment benefits, Congress could reduce the amount from $ 600 to $ 450 (or less).
Civil liability protections for companies.
Liability protection for businesses, hospitals and schools is a must-have provision for McConnell. It has made liability protection a centerpiece of the new stimulus, and wants five-year retroactive protection from 2019 to 2024.
New stimulus: what is probably not included
These issues are unlikely to have bipartisan support and, given other financial priorities, may not be included in the next stimulus:
Payroll tax reduction
President Donald Trump has championed a payroll tax cut as a pro-growth plan to help stimulate the economy.
Student Loan Forgiveness
House Democrats passed a weakened student loan forgiveness plan in the Heroes Act that would provide $ 10,000 of student loan forgiveness only for borrowers who are “struggling financially.” While the Heroes Act provides for an extension of these benefits, Senate Republicans (or Senate Democrats) have not made student loans a major topic of the upcoming stimulus.
Infrastructure plan
Trump and Senate Democrats agree on the need for a new infrastructure plan. However, given the cost and other financial initiatives, the new stimulus is unlikely to include a large-scale comprehensive infrastructure plan.
$ 4,000 travel bonus
This proposal would give each individual a $ 4,000 tax credit to take vacations at least 50 miles from home.
Final thoughts
Senate Republicans are targeting the new stimulus closer to $ 1.3 trillion in total spending. House Democrats proposed $ 3 billion for the Heroes Act (which has not passed the Senate). While the numbers are likely to change, the final stimulus package could be in the range of $ 1.5 – $ 2.0 trillion. Congress stops for the summer recess on August 7, which means the new stimulus could end later this month or early August.
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