President Joe Biden’s $ 1.9 billion coronavirus relief plan will provide millions of Americans with a third round of federal stimulus tests. Although lawmakers on both sides of the aisle have voiced support for the proposal, there is less agreement on who is eligible for the $ 1,400 direct payments.
Congress Democrats are moving forward with the approval of Mr. Biden’s emergency relief plan through a process called budget reconciliation, which allows the Senate to approve the effort without any Republican support. As the process moves forward, 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 economists from Goldman Sachs.
On February 4, the Senate approved a bipartisan plan introduced by Democratic Senator Joe Manchin and Republican Senator Susan Collins to block ‘higher-income citizens’ from the next round of stimulus checks. It is noteworthy, however, that the plan does not define “higher income”. The measure would ensure that “the struggling families who need it most” would 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 doubting the need to send $ 1400 stimulus checks to those who may not need the money,” Paul Ashworth said. , chief U.S. economist at Capital, said. Economics, investors said in a research note.
But the economy is still struggling with higher-than-normal layoffs and other setbacks. Nearly 800,000 people applied for unemployment benefits in the week ending February 6, representing a slight decrease in the previous week, the Labor Department said Thursday.
“Additional fiscal stimulus and broader distribution of vaccines will eventually cure the labor market, but as data on January’s employment showed, current conditions are still weak,” said Oxford Economics economists Nancy Vanden Houten and Gregory Daco. , Said Thursday.
House Democrats this week finalized their comments on the bill without any major changes to Mr. Biden’s $ 1.9 trillion proposal, Hunter Hammond, an analyst at Height Security, wrote in a February 12 research note. The bill will move through more house committees and is likely to be put to the vote during the week of Feb. 22, he said. The analyst predicts that the Senate will vote in early March.
Here’s what the experts say about the next stimulus test and who may be eligible.
Why are income restrictions a problem?
The first two government stimulus controls – $ 1,200 for the first round and $ 600 for the second round – also set income thresholds that higher-income households are not eligible for payments. In both previous rounds, singles earning up to $ 75,000 and married couples earning up to $ 150,000 received full payment.
People with higher incomes received smaller payments as their income increased, until the payments were completely cut for higher income families. In the first round, the phase-out was $ 99,000 for singles and $ 198,000 for married couples.
In the second round, the phasing out was slightly lower – $ 87,000 per year per single person and $ 174,000 per married couple. But that was a function of the smaller checks, as the law reduced both checks by 5% for every $ 100 earned above the income for full payments.
Recent economic research indicates that finances have stabilized for many higher and higher income families who have managed to work from home during the coronavirus pandemic. This raises debate among legislators and experts as to whether direct assistance should be targeted at lower-income households, which are more likely to experience the ongoing economic impact of COVID-19 and its spread.
Households earning less than $ 78,000 annually spent their second stimulus checks quickly after receiving them in January, while those with above-average incomes chased away most of the money, according to research of the Opportunity Insights Economic Tracker, a nonprofit group led by Harvard professor of economics Raj Chetty.
“Since mid-June, the recession in jobs for higher-income households has passed – jobs were just like before the pandemic” because their jobs could be done remotely, Opportunity Insights economist Michael Stepner told CBS MoneyWatch . .
Are there new income limits to getting a check?
Not yet, because nothing has been decided. Mr Biden nevertheless expressed a willingness to negotiate, and the president said he would insist on $ 1400 checks, while proposing that he be prepared to direct the checks to people who need the most help.
That could lead Democrats to lower the income threshold to qualify for a payment to singles earning $ 50,000 or less and married couples earning $ 100,000 or less, according to the Washington Post. If that happens, millions of households that have received the previous two stimulus tests are unlikely to qualify for the third.
The IRS, for example, said it sent 30 million payments to households earning more than $ 75,000 during the first round of stimulus checks. Among the revenue thresholds reported by the Washington Post, many of the households are unlikely to be eligible for the full $ 1400 amount.
But on Feb. 8, House Democrats pushed back the lower limits and proposed keeping the revenue thresholds at the same level as for previous checks. This would ensure that the full $ 1400 relief is earned to individuals earning $ 75,000 or less, while couples earning $ 150,000 are entitled to $ 2,800 relief. Payments will decrease for income above these levels, and it will decrease completely for single people earning $ 100,000 and couples earning $ 200,000.
“There is currently a discussion about what the threshold will look like. A conclusion has not yet been finalized,” said White House press secretary Jen Psaki.
What do the experts say?
Wall Street analysts are not making much change, while Goldman Sachs expects the same income thresholds as with the first checks – $ 75,000 for individuals and $ 150,000 for couples.
Some lawmakers are pushing to limit the payout to a smaller group of households, such as Sen. Bernie Sanders, an independent from Vermont.
“It’s absurd that some Democrats think we should tell a worker who earns $ 52,000 a year that they are ‘too rich’ and cannot get the full benefit of $ 2000 we promised,” he said. wrote on Twitter on February 7th.
According to John Leer, economist at Morning Consult, the number of adults who had financial hardship in January had changed little compared to December. Most struggles have been experienced by people earning less than $ 50,000 in annual income, he said.
A third round of $ 1,400 checks would enable 22.6 million adults to pay their expenses for more than four months without incurring more debt or eating up their savings, according to his analysis.
“Low-income households and parents were the most desperate to receive their second stimulus checks and probably needed the necessary additional stimulus,” Leer wrote in his analysis. “According to a survey conducted in early February, Americans with an annual household income of less than $ 50,000 have already spent about 67 percent of their money.”
By comparison, households earning more than $ 100,000 spent about 50% of their stimulus checks, his analysis found.
When would I get a $ 1400 check?
Analysts do not predict for a few weeks. The committees of the House and the Senate must first draft legislation and vote on it. Analysts at Barclays likely said in a February 10 research note that the bill would be passed by mid-March. Democratic lawmakers have said they want to pass a new bill before the current $ 300 weekly additional unemployment benefit expires on March 14.
“As we have written, we continue to expect a $ 1-2 billion stimulus package – an early estimate that looks very reasonable afterwards – by mid-March, when the most recent extension of unemployment benefits expires,” Barclays said. analysts wrote. “If policymakers need more time to finalize the details, they could consider a short-term extension” of unemployment benefits.
Once the bill has been passed, it must be passed by Mr. Bids are signed. Thereafter, the IRS will direct stimulus checks to eligible households. Based on previous payment schedules, checks can come via direct deposit within a week after Mr Biden signed the account.
However, people who do not have bank accounts or payment information with the IRS will probably have to wait longer for paper checks or prepaid debit cards by mail.
With coverage by Associated Press.