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 later this week, 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.
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.
People with higher incomes 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. 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 the coronavirus pandemic.
Families earning less than $ 78,000 annually quickly spend their second stimulus checks after receiving them in January, while those with income above that level pocket 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 – 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 that 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. Under the income limits reported by the Washington Post, it is likely that many of these families would not qualify for the $ 1,400 total check.
What do the experts say?
Still, Wall Street analysts are not betting on many changes, with Goldman Sachs expecting the same income limits as first checks – $ 75,000 for individuals and $ 150,000 for couples.
Some lawmakers are resisting limiting payment to a smaller group of families, such as Senator Bernie Sanders, an independent from Vermont.
“It is absurd that some Democrats think that we should tell a worker who makes $ 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?
Not for several weeks, according to analysts. House and Senate commissions must first draft and vote on legislation.
“At this stage, we will learn much more about the details, size and schedule of specific provisions,” noted Goldman Sachs economists. “However, the main decision may not be taken within a few weeks, when the Senate is likely to adopt its version of the COVID relief bill.”
There is a strong likelihood that a stimulus package valued at $ 1.5 trillion to $ 2.25 trillion will pass through the end of March, according to Heights Securities analyst Hunter Hammond. “We expect there to be tension on the overall cost, both from a political and an economic point of view,” he said.
Lawmakers are looking to expire on March 14 the expansion of unemployment benefits, which include an extra $ 300 in weekly federal unemployment benefits. But it could “take until the end of March if things don’t go well,” noted Goldman Sachs.
Once the relief bill is passed, it must be signed by Mr. Biden. After that, the IRS will direct stimulus checks to eligible families. Based on previous payment schedules, checks can arrive by direct deposit one week after Biden signs his account.
However, people who do not have bank accounts or payment information registered with the IRS may have to wait longer for checks or prepaid debit cards to arrive in the mail.