After a virus pandemic battle that has lasted for the better part of three months, the U.S. is just now starting to open up the economy. It will be months, maybe years before anyone will be able to properly assess the economic damage that the Covid-19 virus has caused to American lives.
It’s hard to fathom as time goes by so quickly, but it was just under two months ago the U.S. Congress passed the first Coronavirus stimulus bill, The Cares Act. The passing of the bill was the government’s way of trying to offset some of the economic damage the pandemic was inflicting on Americans and American business owners. After all, the government had some obligation to do something after mandating lockdowns.Read More »
Looking at a Second Stimulus Payment to U.S. Citizens
After reaching a high of 14.7% during May, the employment rate dropped to 13.3% as of the first week of June. Americans going back to work is good news. Unfortunately, a lot of businesses will not be reopening, which is going to negatively impact millions of people. There’s also an overriding concern related to the great number of citizens who are still financially behind the eightball because the first stimulus check barely made a dent. Hence, the calls for a second stimulus payment have gone out, which is under serious consideration.
It seems clear that both houses of Congress and President Donald Trump are in favor of more stimulus. However, the devil is going to be in the details. To be clear, both the House and Senate have been working for a month on what they believe is the best stimulus option for America. Of course, the House is controlled by the Democrats, and the Senate is controlled by the Republicans. Every stimulus option is vastly different, which means negotiations for a final bill could take time.
It’s worth noting that the negotiation process is going slowly. Some members of Congress are still trying to work from home because of social distancing, which makes face to face conversations very difficult to manage. The fact the country is also having to deal with a racial crisis is not helping the process.
What’s on the Table
We must all remember that any stimulus that comes out of Congress will be addressing many issues. They will be attempting to allocate more monies for small business loans and support of economically struggling states and cities. Yes, some members of Congress will attempt to get other things done. With all of that said, most American residents and citizens are focused on a stimulus payment at the individual level.
To address questions for the general public, here are a few things that seem to be one the table.
In the House’s proposal, which is the only bill approved to date, qualifying U.S. residents would get a second check for $1,200 per adult, plus $500 per dependent up to a total stimulus of $6,000 per family. There is even a provision calling for payments going to nonresidents. The problem with the House bill is Senate Republicans have made clear it is “dead on arrival.”
For what it is worth, there are still factions who are looking a something more substantial in the way of payments to Americans. Rumors are still floating around about a one time $10,000 payment as well as conversations about multiple monthly payments for as much as $2,000 a month. Realistically, these more aggressive options would seem very unlikely with the economy starting to reopen.
To be clear, it’s not the individual mandate to which Republicans are objecting. Their concerns seem to center on nonresident payments and the House’s desire to expand and extend unemployment payment provisions.
On the Senate side, Republicans are dragging their feet a little to see what the initial weeks of recovery look like as Covid-19 fears subside. Combined with the death of the House bill, it’s unlikely anyone will see a stimulus payment before the middle of July if at all.
Stimulus in the Form of Payroll Tax Cuts
Not to be left out of the conversation, the Trump administration is toying with the idea of offering stimulus in the form of payroll tax cuts. What would that look like? The government would effectively reduce or eliminate federal payroll taxes for the remainder of the year. As people go back to work, they would receive more cash in their paychecks. If employer taxes were also suspended, employers might be motivated to rehire more people.
The problem with this proposal is there’s no way of knowing now how many Americans will be able to go back to work. The ones who don’t go back to work would get no additional benefits, which would create big problems if unemployment remained high.
Potential of No Second Stimulus Check
As was mentioned above, the Republicans are taking a cautious approach to the idea of an additional stimulus. As the Coronavirus issue fades and people go back to work, the thought is it might not be necessary to pay individuals additional money. Right now, all eyes are on the unemployment numbers.
Still, it’s a good bet Congress will continue pushing for additional stimulus monies to help Americans recover the shutdown. Many people fell behind on rent, mortgage payments, utilities, and insurance. With all these payments eventually coming due, there is still a lot of pain on the way. For the Americans who were forced out of work or to close their businesses, something still needs to be done.
There is good news on the economic horizon. With that said, America is still not out of the woods. In the next few weeks, it’s fair to assume Congress will be moving forward to help in some way.
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