President Joe Biden’s $ 1.9 trillion coronavirus relief plan would provide millions of Americans with a third round of federal stimulus checks. Still, although lawmakers on both sides of the corridor have expressed support for the proposal, there is less agreement on who should be eligible for direct payments of $ 1,400.
Congressional Democrats are moving forward with the approval of Biden’s relief plan through a process called budgetary reconciliation, which would allow the Senate to approve the effort without any Republican support. As the process progresses, House and Senate committees will discuss spending priorities before drafting and voting on legislation. This is expected to occur at the end of the week of February 8, according to economists at Goldman Sachs.
On February 4, the Senate passed a bipartisan plan presented by Democratic Senator Joe Manchin and Republican Senator Susan Collins to block “high-income citizens” from the next round of stimulus checks. Notably, however, the plan does not define “higher income”. The move would ensure that “families in difficulty who need it most” would receive the checks, Collins said in a statement.
The amendment adds “uncertainty whether all Senate Democrats will support President Joe Biden’s complete plan, with Joe Manchin already expressing doubts about the need to send $ 1,400 stimulus checks to those who may not need the money,” Paul Ashworth , chief US economist at Capital Economy, told investors in a research note.
But the economy continues to struggle with above-normal layoffs and other setbacks. Almost 800,000 people applied for unemployment benefits in the week ending February 6, representing a slight drop from the previous week, the Department of Labor said on Thursday.
“Additional fiscal stimulus and wider dissemination of vaccines will eventually allow the labor market to recover, but as January employment data showed, current conditions are still quite weak,” observed Oxford Economics economists, Nancy Vanden Houten and Gregory Daco, on Thursday.
House Democrats completed their appointments on the bill this week without any major changes to Biden’s $ 1.9 trillion proposal, Height Security analyst Hunter Hammond wrote in a February 12 research note. The bill will go through more House committees, likely reaching a vote during the week of February 22, he said. The analyst predicts that the Senate will vote on the bill by the beginning of March.
Here’s what the experts are saying about the next stimulus check and who might be eligible.
Why are income limits an issue?
The first two government stimulus checks – $ 1,200 for the first round and $ 600 for the second round – also set income limits that made higher-income families ineligible for payments. In both previous rounds, singles who won up to $ 75,000 and couples who won up to $ 150,000 received full payment.
Higher-income people received lower payments as their incomes increased, until payments were cut entirely for higher-income families. In the first round, the elimination was $ 99,000 for singles and $ 198,000 for couples.
In the second round, the elimination was slightly lower – $ 87,000 per year per single person and $ 174,000 per couple. But that was due to the smaller size of the checks, since the law reduced both checks by 5% for every $ 100 earned over the income limits for full payments.
Recent economic research indicates that finances have stabilized for many middle and upper income families who were able to work from home during the coronavirus pandemic. This is spurring the debate between policymakers and experts about whether direct aid should be targeted at low-income families, who are more likely to feel the continued economic impact of COVID-19 and its spread.
Families earning less than $ 78,000 a year quickly spent their second stimulus checks after receiving them in January, while those with income above that level kept most of the money, according to search Opportunity Insights Economic Tracker, a nonprofit group led by Harvard economics professor Raj Chetty.
“Since mid-June, the job recession for high-income families has ended – the job is just like it was before the pandemic” because their jobs can be done remotely, Michael Stepner, an economist at Opportunity Insights, told CBS MoneyWatch.
Are there new income limits for receiving a check?
Not yet, because nothing has been decided. Still, Biden expressed a willingness to negotiate, with the president saying he would insist on checks for $ 1,400, while suggesting that he was willing to direct the checks to the people who most needed help.
This could result in Democrats lowering the income limit to qualify for a payment to single people who earn $ 50,000 or less and couples with an income of $ 100,000 or less, according to the Washington Post. If this happens, millions of families who received the previous two stimulus checks are unlikely to qualify for the third.
For example, the IRS said it sent 30 million payments to families who earned more than $ 75,000 during the first round of stimulus checks. According to the Washington Post reported income limits, it is likely that many of these families would not qualify for the $ 1,400 total check.
But on February 8, House Democrats backed down on those lower limits, proposing to keep income limits at the same level as previous checks. This would ensure that the total payment of $ 1,400 goes to individuals who earn $ 75,000 or less, while couples who earn $ 150,000 are entitled to $ 2,800. Payments would be reduced to incomes above those levels, eliminating entirely for single people who earn $ 100,000 and couples who earn $ 200,000.
“There is a discussion now about what that limit will look like. A conclusion has not been finalized,” said White House press secretary Jen Psaki.
What do the experts say?
Wall Street analysts are not betting on many changes, with Goldman Sachs expecting the same income limits as the first checks – $ 75,000 for individuals and $ 150,000 for couples.
Some lawmakers are struggling to limit payment to a smaller group of families, such as Senator Bernie Sanders, an independent from Vermont.
“It is absurd that some Democrats think we should tell a worker who earns $ 52,000 a year that he is ‘very rich’ and cannot receive the full $ 2,000 benefit that we promised,” he wrote on February 7 in Twitter.
When would you receive a check for $ 1,400?
Only several weeks from now, analysts predict. House and Senate commissions must first draft and vote on legislation. The relief bill is likely to pass in mid-March, Barclays analysts said in a February 10 research note. Democratic lawmakers have said they want to pass a new relief bill before the current $ 300 in additional weekly unemployment benefits expire on March 14.
“As we wrote, we continue to expect a $ 1-2 trillion stimulus package – an initial estimate that looks very reasonable in retrospect – in mid-March, when the most recent extension for unemployment assistance expires,” analysts at Barclays wrote. “If lawmakers need more time to complete the details, they can consider a short-term extension” of unemployment benefits.
Once the relief bill is passed, it must be signed by Mr. Biden. After that, the IRS would direct stimulus checks to eligible families. Based on previous payment schedules, checks can arrive by direct deposit one week after Mr. Biden signs the account.
However, people who do not have bank accounts or payment information registered with the IRS will likely have to wait longer for checks or prepaid debit cards to arrive in the mail.
With Associated Press report.