Trump, Congress floats a second round of stimulus payments. This is how they could look

Instead, the Trump administration is pushing for a more limited approach. He is more likely to win Republican support in Congress, where lawmakers are expected to consider another economic spending bill in late July.

“There are a lot of discussions going on. Probably, we would like to focus on those people who lost their jobs and need it the most,” White House economic adviser Larry Kudlow said in an interview with Fox Business on Tuesday.

Congress included the first round of stimulus payments in the $ 2 trillion broad economic response to the pandemic approved in March. It provided direct payments of up to $ 1,200 for individuals and $ 2,4000 for families. Eligibility was largely based on income and excluded people earning more than $ 99,000, and childless married couples earning more than $ 198,000, for example.

The Treasury Department and the Internal Revenue Service worked to send the money through direct deposit, or as a check and debit cards mailed. They started dating in mid-April and have been disbursed to nearly 160 million people totaling $ 267 billion.

The program quickly put money in people’s hands as unemployment skyrocketed. Combined with an increased unemployment insurance benefit, the federal economic response more than made up for declining earnings, and indeed led to decreased poverty, according to a report by researchers from the University of Chicago and the University of Notre Give to me.

But some economists say that a targeted approach would be more effective.

The problem with stimulus controls was that the aid “didn’t match” the need, said John Friedman, a professor at Brown University who is tracking the economic impacts of the coronavirus with a team of Harvard-based researchers called Opportunity Insights.
While the first round of payments increased spending, most of the jump was from low-income households. That helped those families pay bills and buy groceries. But it didn’t help them keep their jobs because the wealthy, on the other hand, cut back. That, in turn, hurt low-wage workers whose jobs are in wealthy zip codes, according to their research.

Giving the upper class more money is not going to solve that problem if there is still a public health crisis and some people are not comfortable going out to eat and shop.

So Friedman argues that the new stimulus money should target both low-income households and people who saw a large loss of income.

“I’m not a fan of $ 1,200 checks. For some people, it was very little if they just lost their job. For other people, who kept their jobs, it was not necessary,” said Stijn Van Nieuwerburgh, professor. at Columbia Business School.

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There are a couple of reasons, he argues, that Congress should consider how it is spending more money. One is that the federal government has already spent more than $ 3 trillion on its economic response and is experiencing a massive deficit. Second, a second wave of the virus may well shut cities and states again in the fall.

“The pandemic is not yet over. We cannot fire all of our bullets in the first few months,” said Nieuwerburgh.

Both economists aim to extend unemployment insurance benefits in some way as a way of targeting those who need it most.

Congress increased unemployment checks by $ 600 per week and added 13 weeks of pay, beyond what the states offer. The additional money will expire on July 31 without congressional action, but the 13-week extension will remain in effect until the end of the year.

Extending unemployment benefits could be something else Congress considers in July, along with additional support for small businesses and financing for states and cities.

There is now broad agreement that something needs to be done, but there is a divide between Republicans, who control the Senate, on how that should be, and are not unified on whether it should include more direct stimulus payments.

“I don’t think it’s a good idea right now,” Senator Pat Toomey of Pennsylvania told CNN.

CNN’s Phil Mattingly and Jason Hoffman contributed to this report.