If you’re hoping for a larger second stimulus check, you might be out of luck.
Here’s what you need to know.
Second Stimulus Checks: Smaller Than $1,200?
As reported by Fox Business, White House economic adviser Larry Kudlow says that second stimulus checks could be smaller than $1,200 and targeted toward Americans with lower income and those who are unemployed. Why? The answer: cost. Senate Majority Mitch McConnell (R-KY) wants to target about $1.3 trillion for the next stimulus bill. This amount is substantially less than the $3 trillion Heroes Act that House Democrats passed, and the $2 trillion stimulus amount that President Donald Trump is targeting. Trump also said he wants a larger second stimulus check than Democrats support, which runs contrary to Kudlow’s comments. In the Heroes Act, House Democrats proposed a $1,200 second stimulus check and $1,200 for each dependent, with a maximum of three dependents. The delta between Democrats and Republicans on second stimulus checks and other issues ultimately may be narrowed, but some in Washington are concerned that the next stimulus deal could fall apart. This is not the first time that Kudlow said second stimulus checks would be narrowly tailored. For example, Kudlow told Fox Business last month that second stimulus checks could focus on those who lost their jobs and need the most financial assistance. However, the size of the second round of stimulus checks is not the only potential limitation.
Second stimulus checks may be limited to $40,000 income?
In addition to limiting the dollar amount of second stimulus checks, McConnell said Monday that Congress may limit who is eligible to receive a second stimulus check. Despite popular expectation, not everyone may receive a second stimulus check (and potentially fewer people than the first stimulus check). McConnell did not specifically discuss eligibility criteria for second stimulus checks, but he did reference that Americans earning $40,000 or less a year, especially in the hospitality industry, have been hit hardest by the Covid-19 pandemic. McConnell’s comments could suggest that the second round of stimulus checks may have a lower income threshold than the Cares Act, the $2.2 trillion stimulus package that included first stimulus checks. The Cares Act included a stimulus check of $1,200 for individuals earning up to $75,000 of annual adjusted gross income ($150,000 for married joint filers). The $1,200 stimulus check “phased out” (decreased) for incomes above $75,000 (and above $150,000 for married/joint filers) and was not available to individuals who earned more than $99,000 (and $198,000 for married joint filers). Based on McConnell’s comments, this is what we know:
Second Stimulus Checks: Key Questions
Based on these latest developments, here are some key questions that Congress will need to address:
- $40,000 income limit: If you earn more than $40,000 of adjusted gross income, will you get a second stimulus check?
- Second stimulus checks phased-out: Is $40,000 the maximum income to receive a full second stimulus check, or will this threshold be the maximum income to receive any stimulus check? Simply put, will there be any second stimulus checks that phase out like the first stimulus check?
- Furloughed: If second stimulus checks are targeted to those who have lost their job, what if you are furloughed?
- Return-to-work bonus: Will unemployed Americans receive second stimulus checks plus a return-to-work bonus? Senate Republicans and the White House want to replace the supplemental $600 a week unemployment benefit with a $450 a week return-to-work bonus for those Americans who return to work.
If you combine Kudlow’s and McConnell’s comments, it’s possible that second stimulus checks are:
- narrowly targeted to lower-income individuals;
- narrowly targeted to unemployed individuals; and
- less than $1,200.
At the same time, Trump has called for a larger second stimulus check, and House Democrats want to keep the second round of stimulus checks the same as the first (but want to increase the dependent payment from $500 to $1,200). Republicans only have 53 seats in the Senate, so they will need to compromise on the next stimulus bill. That compromise could happen with second stimulus checks, but it also may focus on state and local aid and unemployment benefits, which are two other high-priority, hot button issues. Congress returns from recess on July 20 and will work to finalize a deal before leaving for summer recess after August 7.