Joe Biden’s President $ 1.9 trillion coronavirus relief plan proposes a third round of $ 1,400 stimulus checks for most Americans. However, while this may extend a helping hand to millions of families who are still suffering from the economic consequences of the pandemic, it can take months for payments to arrive, analysts say.
The price of the aid package, called the American Rescue Plan, is likely to face resistance from Republican lawmakers, who last year resisted Democratic efforts to pass a $ 2 trillion bill. Hunter Hammond, an analyst at Heights Securities, expects the final package to be reduced to $ 1 trillion or $ 1.5 trillion. But most analysts think lawmakers on either side of the corridor will support direct payments of $ 1,400, which economists see as a lifeline for many cashless workers who lost their jobs or saw their income plummet during the pandemic. .
Support for another stimulus package could gain momentum, given several developments that point to a worsening of the economic crisis as the pandemic worsens, according to Ed Mills, an analyst at investment bank Raymond James. Weaker prospects for the labor market, with a higher than expected picture 1 million unemployment insurance claims during the first week of January, as well as the record number of COVID-19 infections and deaths, could lead lawmakers to support Biden’s plan for further stimulus, analysts say.
“There are signs of a stiffening of opposition to Biden’s domestic agenda – particularly in his $ 1.9 trillion pandemic relief plan,” Mills said in a January 22 report. “We hope that the Biden government will allow time for these negotiations to unfold.”
The main questions are whether Republican lawmakers would support the package or whether the Biden government would eventually deal with its spending priorities by splitting spending proposals into two projects, analysts say, with one party perhaps focusing more directly on the mission to improve the distribution of vaccines to the US population.
Janet Yellen, the choice of President Joe Biden as secretary of the Treasury, said on January 19 that the next government would focus on getting swift approval of its $ 1.9 trillion pandemic relief plan. Yellen argued that additional stimuli, including Biden’s proposal for a $ 15 minimum wage, were needed to avoid “economic scars due to this pandemic”.
The plan to provide more direct aid to low- and middle-class families can help raise GDP by 0.7%, although other measures in the account – such as a higher minimum wage and aid to states – may boost GDP growth in 1.5%, according to a January 18 report by Oxford Economics Chief Economist Gregory Daco. He predicts that a $ 1.3 trillion stimulus package will be approved before the end of March.
“The additional stimulus will be welcome, given the extent of the damage to the labor market, with 10 million jobs still less than before the pandemic,” he and US economist Lydia Boussour of Oxford Economics wrote in January, 22th.
Here’s what analysts are predicting about $ 1,400 checks and other spending proposals.
Are $ 1,400 checks a closed deal?
Most likely, according to Wall Street and political analysts. There is growing support among Republican lawmakers for additional stimuli targeting low- and middle-income families, with the latest effort to pass $ 2,000 stimulus checks gaining some bipartisan support.
There is an 85% chance that a smaller scale package will be approved in the first three months of 2021, predicts Hammond of Height Securities. Due to ongoing support for additional direct help to families, checks are likely to be included in this smaller package.
“We believe there is support for a smaller package that includes checks for $ 1,400, more health financing, support for small businesses and some state and local aid,” said Mills.
When would you receive a check for $ 1,400?
Alec Phillips, chief political economist at Goldman Sachs, believes the package can be approved in mid-February to mid-March. After the relief bill is passed in Congress, it must be signed by the president. Thereafter, the IRS would distribute the funds through direct deposit, checks in the mail and prepaid debit cards.
The House is likely to vote on Biden’s American Rescue Plan in the first week of February, according to Height Securities’ Hammond in a January 22 research note.
In the first stimulus payments in April 2020, which targeted $ 1,200 to eligible adults, as well as $ 500 per child, it usually took two weeks to several months for payments to reach people. The second round of checks, which sent $ 600 to each eligible adult and child, required about a week for funds to arrive via direct deposit.
But in some cases, people have experienced delays in receiving money due to problems with your account information. President Biden will sign an order on January 22 that will direct the treasure to streamline the delivery of stimulus checks to those who have not yet received their direct payments.
Based on previous stimulus money payments and assuming that Congress passes a new relief bill in mid-February, checks can reach bank accounts in late February, although this is probably the best scenario. If a package is approved in late March, people can receive their checks in early April.
The caveat is that these deadlines assume that at least 10 Republican senators support the package, as well as all 50 Democratic senators, allowing 60 votes in the Senate to overcome a possible obstruction and then approve the bill, analysts note. If the Biden administration fails to garner enough support from the GOP, supporters of the stimulus could move to approve it in a process known as budget reconciliation. This parliamentary maneuver requires only a majority vote for the legislation to become law, although it may delay approval.
Would more people qualify for a check?
Millions of other Americans could qualify for a check if Biden’s plan is approved as he envisions it. One of its objectives is to expand the payment to adult dependents, who were excluded from the first two rounds of checks.
This exclusion meant that university students declared dependent on their parents’ taxes, as well as adults with disabilities who would be declared dependent, would not be eligible for checks. Since the two previous relief checks defined a child as someone under 17, they also excluded high school students aged 17 or 18. Biden’s plan would also extend payments to older teenagers.
Do Americans really need the money?
The signs indicate that millions of families are facing increasing financial difficulties as the pandemic worsens, which is causing some companies to lay off employees and cut down on hours.
In December, hiring in the USA fell to first time in seven months, as the virus particularly affected restaurants, bars and other service-related businesses. The number of Americans applying for weekly unemployment insurance claims, an indicator of layoffs, also in the past week jumped to almost 1 million.
The financial need is greatest among low-income families. However, almost half of households with an income above $ 150,000 said they needed stimulus checks for financial stability, according to a recent survey by Credit Karma. Almost 6 out of 10 families are facing financial difficulties, TransUnion concluded in a November survey.
The additional stimulus funds “will be essential to the financial stability of many Americans, including those who appear to have the highest income,” Colleen McCreary, Credit Karma’s personal director, told CBS MoneyWatch by email. “As the pandemic drags on, Americans continue to feel the financial squeeze.”
A new Bankrate.com survey found that more than half of Americans said the second $ 600 per person stimulus check will not last more than a month. Most said they would use the money to pay their household bills and day-to-day needs.
Overall, Biden’s stimulus plan would amount to about $ 3,500 per family, according to Oxford Economics. In other measures to support workers and help boost the economy, he also wants to raise unemployment insurance to $ 400 a week and called for the federal rate hike minimum wage at $ 15 an hour.
The wage floor, now $ 7.25 an hour, has not been lifted since 2009, although many U.S. states and cities have raised the local minimum wage.
—With an Associated Press report.