President Joe Biden’s $ 1.9 trillion relief plan to coronavirus would give millions of Americans a third round of federal economic reviews. Although lawmakers on both sides of the aisle have expressed support for the proposal, there is less consensus on who should be eligible for the $ 1,400 direct payments.
Congressional Democrats are driving Mr. Biden’s relief plan through a process known as budget balancing that would allow the Senate to approve the effort without Republican support. As the process continues, the House and Senate committees will discuss spending priorities before drafting and voting on legislation. This is expected to happen later in the week of February 8, according to Goldman Sachs economists.
On February 4, the Senate approved a bipartisan plan put in place by Democratic Senator Joe Manchin and Republican Senator Susan Collins to prevent “higher-income citizens” from the next round of stimulus checks. In particular, however, the plan does not define “upper income”. The move would ensure “the warring families who need it most” receive the checks, Collins said in a statement.
The amendment adds, “Uncertainty as to whether all Senate Democrats will support President Joe Biden’s full plan, with Joe Manchin already voicing doubts about the need to send $ 1,400 stimulus checks to those who may not need the money,” Paul Ashworth, US chief economist at Capital Economy, told investors in a research note.
Do stimulus checks help the economy?
The US economy continues to struggle with above-average layoffs and other setbacks. Almost 800,000 peopleIn the week up to February 6, a decrease from the previous week, the Ministry of Labor announced on Thursday. At the same time, new economic data released on February 17th suggest that the second stimulus check is working as intended. Retail sales in January rose 5.3%, or five times higher than expected.
“These oversized gains in large ticket discretion suggest that the $ 900 billion fiscal stimulus introduced late last year is working as intended. Most Americans will receive $ 600 stimulus checks earlier this month. Dollars per person while monthly unemployment insurance payments increased, “noted Michael Pearce, senior US economist at Capital Economics, in a report.
At the same time, it is clear that millions of households are still suffering from income and job losses. The number of Americans applying for unemployment benefitsto 861,000, which reverses several weeks of steady decline, the Ministry of Labor announced on Thursday. The latest unemployment figures “paint a bleak picture of the job market,” said Oxford economist Lydia Boussour in a research report on Thursday.
“The economy remains weak, the recovery in jobs has lost momentum and there are nearly 10 million fewer jobs than in February 2020,” the Center for Budget and Policy Priorities said Thursday. It added that millions should be supported by Mr Biden’s proposed stimulus package.
House Democrats have completed their markups on the bill without major changes to Mr. Biden’s $ 1.9 trillion proposal, height safety analyst Hunter Hammond wrote in a February 12 research report. The bill will go through other House committees and is expected to come to a vote in the week of February 22nd, he said. The analyst predicts that the Senate will vote on the bill by early March.
Here’s what the experts are saying about the next stimulus check and who may be eligible.
Why are income limits a problem?
The first two state economic reviews – $ 1,200 for the first round and $ 600 for the second round – also set income thresholds that made higher-income households ineligible for payments. In both previous rounds, individuals earning up to $ 75,000 and married couples earning up to $ 150,000 received full payments.
People with higher incomes received lower payouts as their incomes increased, until payments for higher income families ceased entirely. In the first round, the exit was $ 99,000 for singles and $ 198,000 for married couples.
In the second round, the exit was slightly lower – $ 87,000 per year per individual and $ 174,000 per couple. However, this was a function of the smaller size of the checks, as the law reduced both checks by 5% for every $ 100 earned over the income limits for full payments.
Recent economic research shows that finances have stabilized for many middle- and higher-income families who managed to work from home during the coronavirus pandemic. This is a fierce debate among lawmakers and experts as to whether direct aid should be targeted at lower-income households that are more likely to feel the ongoing economic impact of COVID-19 and its spread.
Households earning less than $ 78,000 a year quickly issued their second stimulus checks upon receipt in January, while households with incomes above that level put away most of the moneyfrom Opportunity Insights Economic Tracker, a not-for-profit group led by Harvard economics professor Raj Chetty.
“The recession in jobs for higher-income households has been over since mid-June – employment was the same as it was before the pandemic,” Michael Stepner, an economist at Opportunity Insights, told CBS MoneyWatch, because their work can be done remotely.
Are there any new income limits for getting a check?
Not yet, as nothing has been decided yet. Nevertheless, Mr Biden has expressed his willingness to negotiate. The president said he would insist on checks for $ 1,400 while he suggested that the checks be directed to those in need of the most help.
This could lead Democrats to lower the income threshold to qualify for payment to individuals earning $ 50,000 or less and married couples earning $ 100,000 or less, according to the Washington Post. In that case, millions of households that received the previous two stimulus checks would likely not qualify for the third.
For example, the IRS said it sent 30 million payments to households that made more than $ 75,000 in the first round of stimulus checks. Under the income thresholds reported by the Washington Post, many of these households would likely not qualify for the full check for $ 1,400.
But on February 8, House Democrats pushed back those floors and suggested keeping income thresholds at the same level as the previous controls. This would ensure that the full relief payments of $ 1,400 go to those earning $ 75,000 or less, while couples who earn $ 150,000 are eligible for relief payments of $ 2,800. Payments would decrease for incomes above these levels and would be phased out completely for singles earning $ 100,000 and couples earning $ 200,000.
“We are currently discussing what this threshold will look like. A conclusion has not yet been drawn,” said Jen Psaki, White House press secretary.
At a CNN event on Tuesday, Mr. Biden highlighted his commitment to major stimulus measures. “The overwhelming consensus is that we can’t spend too much to grow the economy for a year, two, three, and four across the board,” said Biden. “Now is the time we should be. Now is the time to make it big.”
What do the experts say?
Wall Street analysts aren’t betting on many changes. Goldman Sachs expects the same income thresholds as the first checks – $ 75,000 for individuals and $ 150,000 for married couples.
Some lawmakers are pushing against it to limit the payout to a smaller group of households, such as Senator Bernie Sanders, a Vermont independent.
“It is absurd that some Democrats think we should tell a worker who makes $ 52,000 a year that they are” too rich “and cannot get the full $ 2,000 benefit we promised,” wrote he was on Twitter on February 7th.
According to Morning Consult’s economist John Leer, the number of adults who faced financial difficulties in January was little changed from December, despite the introduction of the second round of stimulus checks. Most of the fighting has been witnessed by people earning less than $ 50,000 in annual income, he said.
A third round of $ 1,400 checks would allow 22.6 million adults to pay their expenses for more than four months without running up more debt or gobbling up their savings, according to his analysis.
“Low-income households and parents were most desperate to get their second stimulus checks and most likely to need additional stimulus in the future,” wrote Leer in his analysis. “According to a survey conducted in early February, Americans with an annual household income of less than $ 50,000 were already spending around 67 percent of the money they received.”
By comparison, households earning more than $ 100,000 spent about 50% of their stimulus checks, according to his analysis.
When would I receive a check for $ 1,400?
Analysts predict that this has not been the case for a few weeks. The House and Senate committees must first draft and vote on laws. It is likely that the relief bill will be passed by mid-March, Barclays analysts said in a February 10 research report. Democratic lawmakers have said they want to pass a new relief bill before the current $ 300 weekly additional unemployment benefit expires on March 14th.
“As we wrote, we continue to expect a stimulus package of $ 1 to 2 trillion – an early estimate that looks very reasonable in retrospect – by mid-March, when the latest unemployment benefit extension expires,” wrote analysts von Barclays. “If policy makers need more time to finalize the details, they can consider extending unemployment benefits in the short term.”
As soon as the auxiliary law is passed, it must be signed by Mr. Biden. Thereafter, the IRS would direct stimulus checks to eligible households. Based on previous payment plans, checks could be received by direct deposit within a week of Mr Biden signing the invoice.
However, those who do not have bank accounts or payment information on file with the IRS would likely have to wait longer for checks or prepaid debit cards to arrive in the mail.
With coverage by the Associated Press.