Less than a month ago I speculated in this space on the likelihood of the then-proposed $2,000 per month stimulus package that was floating around Congress.
Called the HEROES Act, it passed the Democratic controlled House of Representatives, but it did so without the $2,000 per month provision.
That’s not surprising, given how generous it was and how costly it would be.
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But the idea of some type of second stimulus plan is very much alive. The $2,000 per month provision may have been stripped out of the bill, but a scaled-down version with another single payment of $1,200 – similar to the CARES Act that became law in March – was included in the revised plan.
It even has the support of some Republicans in the Senate. There’s also been some indication the White House may be on board as well.
What’s the current rendition of the HEROES Act offering, and how likely is the next stimulus check to happen?
What the Current HEROES Act Proposal Includes
Right now, the bill is something of a greased pig. Though both Democrats and Republicans seem willing to pass the bill in some form, the specific details it will contain is where the contention lies.
Naturally, of greatest concern to ordinary Americans is the likelihood of a second round of stimulus checks.
The current version being advanced in the House of Representatives not only includes a second round of stimulus payments to individuals and families, but also proposes to extend the $600 per week federal unemployment benefits through year end. (It’s currently due to expire on July 31.)
The stimulus check portion of the House version includes paying up to $1,200 per family member, up to a maximum of $6,000 for a family of five.
Though the amount of the individual payment is identical to that dispersed under the CARES Act, the payment per person differs. Under the CARES Act, each taxpayer in a household was eligible to receive $1,200.
The payments were limited to $500 for children under 17. The current version of the HEROES Act eliminates the distinction between taxpayers and dependents.
The Republican Counter Offers
Republicans have yet to propose a concrete set of alternatives to the Democratic version. But numbers being suggested are significantly different.
For example, the White House is considering reducing the current unemployment enhancement from $600 per week to $300 or even $250 from July 31 through the end of the year. They believe this will provide greater incentive for people to return to work than the current weekly benefit.
The White House is also pushing for a reduction in the payroll (FICA) tax, to provide stimulus in the form of a temporary tax cut. If the reduction is anything like what President Barack Obama did with the Middle Class Tax Relief and Job Creation Act of 2012, it will reduce the Social Security tax on employees from 6.2% to 4.2%. That will translate into a 2% tax cut for most working Americans.
The White House is also looking at potential tax breaks for Americans who take vacations in the US. It’s a targeted stimulus program designed to resuscitate the beleaguered travel and hospitality industries.
How Likely is the Next Stimulus Check to Happen?
As it stands now, a second round of stimulus checks is unlikely to be passed until July. If it is, it’s anyone’s guess exactly what the payment timetable will be this time around.
Not only are Democrats and Republicans miles apart on the magnitude of the proposal, but with most of the details it contains as well. For example, the total cost of the Democratic version in the House of Representatives is in the neighborhood of $3 trillion. Republicans are proposing a bill that won’t exceed $1 trillion in total.
Considering the wide gap in total stimulus plan costs between two parties – plus the details that still need to be worked out – passage of a compromise bill in July may be way too optimistic.
Factors Affecting Passage of a Bill
Slowing the progress of the passage of any stimulus bill are the recent unemployment figures for May. Falling to 13.3%, and down significantly from 14.7% at the end of April, the economy added a surprising 2.5 million jobs during the month. That’s against an expected unemployment rate as high as 20%. The favorable jobs report adds a serious question as to whether or not a second stimulus package is even needed.
But even the supposedly favorable May employment numbers may be less than rock-solid.
“With the country incrementally opening up in May, June and July the jobs reports for August and September will probably be the critical ones showing if hiring and recalling workers continues,” notes Forbes Senior Contributor, Chuck Jones. “This will be dependent on how many come back to work in June and July, but if there are still 10 million or more unemployed after July at least 2 million or more will need to become employed in these later months for the recovery to continue.”
If the reopening of the economy is followed by an increase in unemployment, or even a flattening out, the pressure to pass a comprehensive stimulus package will increase.
The November election is still another looming incentive to pass a bill. Democrats will be eager for another round of stimulus, especially on the heels of the protests in the wake of the death of George Floyd while being arrested by a Minneapolis police officer. But Republicans may be equally anxious in the face of a stagnant or declining economy.
If There is a Second Stimulus Check, it May Come Later than Expected
If a second stimulus check does happen, we can probably suppose it’ll come sometime between July 31 and election day on November 3. It would seem at least that much time will be required to assess whether the improvement in the unemployment situation in May is a one-off event or the beginning of a trend.
If the stimulus package is passed, it may take until August or even September before it passes through the many hoops of Congress, and makes it to the President’s desk. But rest assured if the bill is passed, the checks will almost certainly go out sometime well before Election Day.
Despite the hesitation Republicans may be showing on the size of the bill currently before the House, it’s likely they’re as anxious as the Democrats to get some sort of stimulus package passed.
No member of Congress wants to face the voters back home rolling into the election, having voted against a stimulus plan that will benefit millions of people.
Final Thoughts
We should probably expect a stimulus package, complete with checks (in some amount), sent out before November. But because of the uncertain timetable, and the many details to be worked out, don’t bank on receiving another payment anytime in the coming weeks.
Though Congress and the White House moved unusually fast in passing the CARES Act and distributing the payments, there is a quite as much urgency this time around.
At least not until Election Day shows up on the radar screen.
