Second stimulus check is coming. When?

Stimulus check

Senate Majority Leader Mitch McConnell said Tuesday that Americans will receive another stimulus check as part of the next round of COVID-19 relief package. Unfortunately, it seems that Republicans are not on the same page about the details of another proposal to help individuals and struggling businesses survive these hard times. Toss Democrats in the mix and you have a negotiating mess. And the clock is ticking.

How did we get here?

In a rarely seen moment of unity, the Government of the USA reacted extremely fast in providing help for both individuals and businesses once the pandemic hit the country hard.  It passed the CARES Act (The Coronavirus Aid, Relief, and Economic Security Act) worth 2,2 trillion dollars, signed by President Trump on March 27, 2020.

A couple of big things happened:

  • People who lost their jobs were able to receive an extra $600 every week in unemployment benefits, in addition to the amount they could claim from a state. This benefit is set to expire at the end of this month.
  • More than 160 million Americans received a one-time stimulus check, up to $1,200 per individual, or $2,400 per married couple. Parents of kids under age 17 got an extra $500 per child.
  • $669 billion PPP Paycheck Protection Program was created. Businesses, small and large, applied for funds to keep their employees on the payroll.
  • Students with federal student loans didn’t have to worry about making payments or interest on them until September 2020.
  • 10% penalty tax was waived for early distribution from retirement accounts, etc.

It was not perfect. It needed some updates and changes. But, for the most part, it was helpful. Millions of Americans avoided the worst-case scenario: losing their homes and going to bed hungry. Many businesses stayed open. Still, the situation is pretty grim. 

On Thursday, the Labor Department announced more than 1,4 million Americans applied for the unemployment benefits, 100,000 more than the previous two weeks. The largest increases in initial claims, not surprisingly, come from states with a surge of new COVID cases like Florida, Georgia, and California.

It is painfully clear that more help is needed. Congress is aware of that. It seems that this time around they are not going to be united. And probably not as fast as the first time.

Who is proposing what?

For months many Republicans were saying that enhanced unemployment benefits people are getting just discourages them to go back to work. Very vocal and determined not to continue such a generous payout, they struggle to find the way to come up with a reasonable replacement amount.

According to the New York Times, Treasury Secretary Steven Mnuchin and Mark Meadows, the White House chief of staff, suggested a limit to the benefits to 70% of the wages workers had been receiving before the loss of a job. Translated into real money, it’s about $200 per week, down from $600.

Democrats, on the other hand, insist on staying the course. House of Representatives passed a whopping $3 trillion (how many zeros is that?) Heroes Act back in May. It includes among other things:

  • $875 billion for state and local Governments,
  • more money for testing,
  • student loan forgiveness up to $10,000 per borrower,
  • expansion of unemployment compensation and PPP program,
  • mortgage relief and many more.

The reality is, of course, that this Act, as it is, is never going to become a real deal. What Democrats are going for is the old one: “When you want a nickel, ask for a dime”.  Or: “Let’s meet in the middle”. In this instance, the middle might be $1 trillion, because that’s the package Republicans are ready to support. For now.

What about the second stimulus check?

Everyone agrees: it’s about time for a second stimulus check for low and middle-income individuals.

Democrats want more people to receive an additional $1,200 payment. That means that the income threshold will be more than the previous $75,000/year. Mr. McConnell, on the other hand, signaled that this time only people making less than $40,000 will be eligible for a check. How fat the check would be is still unknown. The final details are coming Monday. 

Be patient

The good news is that all three sides are finally working together: The White House, Republicans, and Democrats. A newborn sense of urgency is here again.

The bad news: the negotiations are going to be rough.

The ugly: a special request Republicans have might be very hard to sell. Majority Lider Mitch McConnell and Republican John Cornyn of Texas proposed a liability shield for businesses, universities, and hospitals. The proposal promises to shield employers when customers and workers are exposed to coronavirus by moving lawsuits to federal court and limiting legal liability to acts of “gross negligence or intentional misconduct,” according to Los Angeles Times.Tough. I know.

Back to the good news: no matter what happens, more help is on the way.

Stay tuned.

 

 

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