I hope you have not made any plans to spend the intended second round of incentive payments. As each week passes in this long summer, the chance of receiving these payments becomes increasingly doubtful.
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As a frequent writer on this particular topic, I must admit that I am just as confused as anyone else on this issue. Back on July 10, I wrote in this space that Congress had no choice but to pass a second incentive bill. The Cares Act – which included the $ 600 per week federal unemployment subsidy, as well as the original round of $ 1,200 individual incentive payments – was set to expire on July 31. Meanwhile, Election Day (November 3) was no longer a distant, on-the-horizon event.
With the HEROES law of the Democratic House, which had been sitting in the Senate for almost two months, passage of a new – if abbreviated – version of that bill looked certain at the end of the month. It seemed like political suicide to do otherwise.
But I was wrong – or at least I’ve been so far. July 31 came and went, and no new act has arrived from Congress, related to both a second round of incentive payments and an extension of federal unemployment benefits.
That missed call strikes me just as much as it did other writers, political analysts and various fortune-tellers, who also saw the passage of a second bill as inevitable. But where Stimulus Round Two goes from here is entirely up to Congress.
At the very least, this outcome now seems so uncertain that it’s time to consider the possibility that it might not happen at all.
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The reasons for passing a second bill on incentives are as strong as ever
This is where the plot gets thicker. None of the circumstances that drove the first incentive package as conversation generated from a second round have disappeared.
Examples include:
Unemployment
Despite steady improvement in the number of new unemployment claims since its peak in April, the job market began to cool in July. In the most recent statistics released for the week ending August 15, the number of new unemployment claims unexpectedly peaks at 1.1 million, up from 963,000 the previous week. Clearly, the unemployment situation remains in crisis.
The current level of new claims is more than four times the average of 250,000 per week prior to the termination of pandemic. And the number of people dependent on government benefits related to unemployment remains surprisingly high.
“28 million,” reports Forbes Staff Writer Sarah Hansen. ‘That’s how many people are receiving some form of unemployment benefit, according to the Department of Labor. That number has not changed from two weeks ago. ”
Despite the statistical evidence of an improvement in the unemployment situation since the height of the pandemic, it is obvious that we are not out of the woods yet – or even close.
Housing
With the continuing effects of the Covid-19 economic fallout, many millions of American households are facing the threat of dismissal or eviction.
While it is true that millions of American homeowners have put their mortgages in proportion, this is not necessarily a get-out-of-jail-free card. Payments not made during repayment are added to the principal balance of a mortgage. This means that the homeowner will be more indebted to the mortgage relative than before. This not only removes the debt from the account, but it also works to reduce the equity.
Many households have been in the middle since the crisis began in March. And with Covid-19 cases continuing to increase in many Sunbelt states, the situation is growing rapidly. Satisfaction has not fixed the Covid-19 housing crisis, but postponed it most to a future date.
But the situation is even more pronounced for tenants.
“Even though White House economic adviser Larry Kudlow has indicated an extension, the expiration of the facility has allowed landlords to issue notices, even though they can not support people out of their homes for at least another 30 days,” he wrote. Forbes Employee, Niall McCarthy, at the end of July. “Combined with the cut in unemployment benefits, it’s likely to create the perfect storm for U.S. tenants. “Crisis 19, with just under 12 million for eviction alone in the next four months. About 17 million are likely to be affected by the whole pandemic.”
The crisis among tenants could trigger a domino effect. Even if the White House succeeds in extending restrictions on filing occupant eviction notices against tenants, small landlords will have the increasing risk of losing these properties to negligence or simply due to ongoing financial losses.
Covid-19 cases continue to spread rapidly in some states
Since Covid-19 is the source of the current economic crisis, the continuing proliferation obviously keeps concerns about the economic recovery.
So far, the virus has proven both unpredictable and inconsistent. Over the whole number of new infections have moderated in recent weeks, but the pattern is at least odd. According to CDC data, large Sunbelt states, particularly California, Texas and Florida, continue to see large numbers of new infections. Meanwhile, other states, which contain the virus, are seeing at least moderate increases in new cases. This includes New York, New Jersey, and Massachusetts, the former suppliers of Covid-19 in the US.
It is reasonable to conclude that until Covid-19 is in full retreat, the U.S. economy will remain vulnerable. Congress may not be able to eradicate the virus, but expanding unemployment benefits and issuing new incentive payments will at least minimize the economic impact.
The half measures in the executive order of the president
To get his credit, Trump stepped down from the White House when the House of Representatives failed to act on extending the provisions of the Cares Act. On August 8, the president signed an executive order to extend the benefits of federal unemployment by up to $ 400 a week. But on closer analysis, the benefit is not quite as generated as promised.
“Last week, after weeks of failure of a stimulus agreement, President Donald Trump issued an executive order that would have provided $ 400 a week in additional unemployment benefits,” reported Forbes employee Zach Friedman. “The $ 400 benefit, however, depended on states financing 25%, or $ 100. Later, the U.S. Department of Labor said states could apply their current state unemployment benefits to the 25% share, effectively reducing the weekly unemployment benefit to $ 300 instead of $ 400. So far, no state government has agreed to fund the $ 100. extra. ”
Translation: the federal extension of unemployment is just $ 300, and will only take effect until August 29th. This means that not only did former benefit recipients see their weekly checks in half, but they also went several weeks with no federal benefit.
And the much-promised $ 1,200 incentive payments? They are not part of the President’s Executive Order. No First Chamber approval of such an incentive payment plan, no incentive checks!
Is it time to give up hope of a second round of stimulating payments?
The most immediate concern is that the U.S. Senate has pushed for recession in August. They are not scheduled to return until September 8, the day after Labor Day. That not only means July 31 will come and go without becoming a new incentive act, but apparently that will also be August 31.
Despite the economic pressures facing millions of Americans – combined with the forthcoming elections in November – there does not seem to be much incentive in the First Chamber to act on a new incentive package, or at least to do it quickly.
One theory is that members of the Senate will return with more motivation after the recession than they had before. But it is equally possible that we will see an inconvenience over the same issues that have plagued the new bill since May.
It is now possible that weeks can be changed into months, relegating a new incentive package to be passed with checks released just before election day.
Or not. After all, the First Chamber has surprised many by not acting up to this point.
Final thoughts
None of this is categorically explained by the fact that a second round of incentive payments will not happen as an extension of federal unemployment benefits. But it is to be noted that the indecision has dragged on much longer than most would have expected in July, as the end of the Cares Act came and went.
The point is, it’s too early to make plans to receive a second incentive check.
At this point, no stimulus checks will be issued in August. There is a small chance that they will go out in September. Most likely, an account will be released sometime in September, with checks to be issued in October. Whether the timing – just before the election – is intentional or coincidental – will be the subject of future debate.
One fact, however, seems fairly certain: if a second incentive package is not passed and checks issued in October, the next best hope will be 2021.
But do not hold your breath when that happens.
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