Second Stimulus Checks May Be Smaller And Limited To Lower-Income Individuals

The anticipated cost of the next stimulus bill is causing government leaders to propose more restrictive guidelines for any future stimulus checks. This comes less than two weeks after President Trump stated he supported larger stimulus checks than were included in the $2 trillion CARES Act, or that were included in the $3 trillion HEROES Act proposal.

However, according to several reports, the next stimulus bill could be anywhere from less than a trillion dollars to around the $1.3 trillion range. Less funding means concessions will need to be made.

Yesterday, White House Economic Adviser Larry Kudlow stated the next round of stimulus checks will likely be less than $1,200 and would be limited to individuals in the lower-income tax brackets and those who are unemployed.

Kudlow did not state how much the next stimulus checks would be, nor did he mention the income threshold for those who would be eligible. However, earlier this week, Senate Majority Leader Mitch McConnell stated the next round of stimulus checks may be limited to those with an income of $40,000 or less.

This is counter to the HEROES Act proposal, which was passed by the House and awaits a vote by the Senate (though it’s not likely to be passed). This also runs counter to President Trump’s wishes. Not only does President Trump support another stimulus check, but that he wants it to be larger than the previous check and larger than the one proposed by the Democrats in the HEROES Act.

Current Stimulus Check Proposals on the Table

New stimulus check proposals should be compared to the CARES Act, which provided $1,200 stimulus checks for qualifying adults, and $500 per qualifying dependent, ages 16 and under.

Eligibility was based on several factors, one of which was the individual’s Adjusted Gross Income (AGI).

• Full Stimulus Check – AGI of $75,000 or less ($150,000 for married filing jointly). 
• Partial Stimulus Check – AGI between $75,000 and $99,000 ($150,000 and $198,000 for married filing jointly). 
• No Stimulus Check – AGI Above $99,000 ($198,000 for married filing jointly) 

The HEROES Act also proposes $1,200 stimulus checks for qualifying adults, as well as for up to 3 dependents, for a maximum of $6,000 per family. The HEROES Act has similar income eligibility limitations as the CARES Act, but does not impose an age limit for dependents. Stimulus checks under the HEROES Act would be more generous for most families than the CARES Act. However, the HEROES Act is not likely to be passed.

There are several other stimulus check proposals, including several proposals that would pay $2,000 per month. However, those stimulus bill proposals could cost upward of $10 trillion and are simply too expensive to be passed at this time.

Another Stimulus Bill is Likely to Be Passed, But it May Be Smaller 

Right now, there is still a good chance there will be another stimulus bill, as there is support from the President and both parties. However, there is disagreement about the size and scope of the support the bill will offer.

It’s important to note, Senator McConnell has repeatedly referred to the next stimulus bill as the “fourth and final bill,” and Republican leadership has gone on record stating they hope to keep the bill in the $1 trillion range.

There are other line items that are likely to be included as well, including expanded unemployment benefits (which are likely to be smaller than the $600 monthly benefit), a possible $450 weekly back to work bonus, business liability protection, infrastructure spending, and payroll tax cuts. 

All of these competing priorities and a more modest price tag may limit the amount of funds available for another round of stimulus checks.

How Limited Will the Next Stimulus Check Program Be?

The driving factor will be the total size of the next stimulus package.

Prior to White House Economic Adviser Larry Kudlow’s statements, there was a belief that the stimulus checks would be at least equal to the $1,200 checks offered under the CARES Act, and possibly higher, based on the support from the Democratic Party and President Trump.

However, these new comments shed some doubt on the size of another check.

Reducing the income eligibility threshold to those who earn $40,000 or less will reduce the number of checks that need to be sent out. This may work in favor of keeping the size of the checks larger, allowing more financial assistance to get to those who need it the most.

Related:

Second Stimulus Checks Will Come Fast If Approved, But Fewer People May Receive Them

Next Stimulus Bill Likely To Include Stimulus Checks & Back To Work Bonuses

Second Stimulus Check Update—President Trump Supports Larger Stimulus Payment

Second Stimulus Check Timeline—Everything We Know About A Possible Second Stimulus Check

President Trump Supports Another Stimulus Check—Will Congress Back It?

HEROES Act Proposal – $1,200 Stimulus Check For Individuals And Up To $6,000 For Families