Can the U.S. Expect a Second Round Stimulus?

Core Financial PartnersEconomy, Individuals

Economic Stimulus Round 2
Four months after the first Coronavirus stimulus package passed and America conformed to the “new normal” of Stay-at-Home, the U.S. government is once again debating the economic state of the country and the need for more stimulus.

Early the week of July 20, 2020, a second stimulus check was officially endorsed by Senate Majority Leader, Mitch McConnell, who emphasized the need for direct payments to American families in his announcement.

The draft GOP proposal did not, however, include the dollar amount of the stimulus checks nor if there would be an income cap for those eligible to receive the checks. Senator John Randolph Thune, a Republican representing South Dakota, stated that the more the second stimulus mirrors the first, the more quickly the government will be able to distribute checks to Americans.

The GOP will be working with The White House on details of the proposal in the hopes of presenting it to the Senate on Monday, July 27. The White House had asked for a payroll tax cut to be included in the package, which would put the amount and cap rate of the checks in jeopardy. Democrats are not in favor of this tax cut and neither are Republicans. On Friday, July 24, The White House appeared to have dropped this request in favor of lowering the additional unemployment benefits from the GOP’s proposed $200 per week to $100 per week.

Democrats in Congress were pushing for an extension of the additional $600 per week for unemployment benefit recipients (which officially ends July 31), citing the money is being used by Americans for necessities such as food and that it will additionally fuel demand and thus employment. Republicans in Congress, however, are not united on the issue. Some members believe the additional $600 deters unemployed Americans from returning to work, while other members are willing to negotiate a compromise. Additionally, the Democratic Party has expressed a distaste for a proposal which would protect companies from Covid-19 related lawsuits filed by either workers or the public.

As Republicans work with The White House on refining their response to the Democrats’ $3 trillion plan, Democrats warn that time is running out for Americans who are facing unemployment rates of 11% (higher than the Great Recession of 2007-2009) and a death toll of 145,000.

For Americans to receive any approved Stimulus checks in August, a bill will have to be passed by August 7 (when the Senate recesses). If a bill is not passed by the deadline, negotiations will not begin again until the following session begins on September 8. More pressing for many Americans who are out of work is the deadline for the extension of the additional $600 per week unemployment benefits which end on July 31. If Congress has not passed a bill by the end of the September session (September 25), there will be only one more opportunity (September 30 – October 9) prior to the Presidential election on November 3.

Sources:
Ziv, Shahar. “Second Stimulus Check Confirmed In GOP Proposal, But Not $1,200 Amount Or $75,000 Income Cap.” Forbes, July 24, 2020.

Walker, James. “Second Stimulus Check, Payroll Tax Cut: Republicans and Democrats Draw Red Lines for Relief Deal.” Newsweek, July 17, 2020.

Mulvihill, Geoff; Pritchard, Justin; Kolpack, Dave. “Second stimulus check updates: Coronavirus aid package in flux as White House floats cutting unemployment boost to as little as $100.” Associated Press, July 24, 2020.

Colby, Clifford. “Cares Act 2: When Would the IRS Send the Second Stimulus Check?” c|net Personal Finance, July 24, 2020.