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President Joe Biden’s $ 1.9 trillion coronavirus relief plan would provide a third round of federal stimulus checks to millions of Americans. Still, while lawmakers on both sides of the aisle have expressed support for the proposal, there is less agreement on who should be eligible for direct payments of $ 1,400.
Democrats in Congress are moving forward by adopting Mr. Biden’s rescue plan through a process called budget reconciliation, which would allow the Senate to pass the effort without any Republican backing. As the process progresses, House and Senate committees will discuss spending priorities before drafting and voting on legislation. This is expected to happen later this week, according to economists at Goldman Sachs.
On February 4, the Senate approved a bipartisan plan put forward 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 “top income”. The measure would ensure that “struggling families who need them most” would receive the checks, Collins said in a statement.
The amendment adds “uncertainty as to whether all Senate Democrats will support President Joe Biden’s comprehensive plan, with Joe Manchin already voicing doubts over the need to send $ 1,400 stimulus checks to those who don’t. might not need the money, ”Paul Ashworth, chief US economist at Capital Economics, 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 a problem?
The government’s first two stimulus checks – $ 1,200 for the first round and $ 600 for the second round – also established income thresholds that made higher-income households ineligible for payments. In the previous two rounds, singles earning up to $ 75,000 and married couples earning up to $ 150,000 received full payouts.
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 phase-out amounts to $ 99,000 for single people and $ 198,000 for married couples.
In the second round, the elimination was slightly lower – $ 87,000 per year per single person and $ 174,000 per married couple. But that was a function of the smaller check sizes, as the law reduced both checks by 5% for every $ 100 earned above the income limits for full payments.
Recent economic research indicates that finances have stabilized for many middle and upper income families. It’s a heated debate among lawmakers and experts on whether direct aid should be targeted to low-income households, who are more likely to feel the continued economic impact of the coronavirus pandemic.
Households earning less than $ 78,000 a year quickly spent their second stimulus checks after receiving them in January, while those with incomes above that level amassed most of the money, according to research from the Opportunity Insights Economic Tracker, a nonprofit group led by Harvard professor of economics Raj Chetty.
“As of mid-June, the employment recession for high-income households is over – employment is like it was before the pandemic” because their work can be done remotely, said Michael Stepner, economist at Opportunity Insights , at CBS MoneyWatch. .
Are there any new income limits for getting a check?
Not yet – nothing has been decided. Still, Mr Biden has expressed his willingness to negotiate, with the president saying he would insist on checks for $ 1,400 while suggesting he was ready to direct the checks to those who need help the most.
This could cause Democrats to lower the income threshold to qualify for a payment to singles earning $ 50,000 or less and married couples with incomes of $ 100,000 or less, according to the Washington Post. If that happens, millions of households that received the previous two stimulus checks would likely not be eligible for the third.
For example, the IRS said it sent 30 million payments to households earning more than $ 75,000 in the first round of stimulus checks. Below the income thresholds reported by the Washington Post, it is likely that many of these households would not qualify for the $ 1,400 check.
But on February 8, House Democrats pushed those lower limits back, proposing to keep income thresholds at the same level as for previous checks. This would ensure that relief payments of $ 1,400 would go to people earning $ 75,000 or less, while couples earning $ 150,000 would be entitled to $ 2,800 in relief payments. Payments would skyrocket for incomes above these levels, disappearing entirely for singles earning $ 100,000 and couples earning $ 200,000.
Mr Biden said he would not allow per capita payments to fall below $ 1,400, but indicated flexibility on income thresholds.
“There is currently a discussion about what that threshold will look like. A conclusion has not been finalized,” White House press secretary Jen Psaki said.
What are the experts saying?
Wall Street analysts aren’t banking on many changes, with Goldman Sachs expecting the same income thresholds as for the first checks – $ 75,000 for individuals and $ 150,000 for married couples.
Some lawmakers oppose limiting payment to a smaller group of households, 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 ‘too rich’ and that he cannot get the full benefit of the $ 2,000 that we have promised,” he wrote on Twitter Feb. 7.
When will I receive a check for $ 1,400?
Not for several weeks, analysts said. The House and Senate committees must first draft and vote on legislation.
“At this point, we’ll learn a lot more about the details, size and timing of some provisions,” noted economists at Goldman Sachs. “However, the key decision may not be made for a few weeks, when the Senate is likely to resume its version of the COVID relief bill.”
According to Hunter Hammond, an analyst at Heights Securities, it is highly likely that a stimulus package valued at $ 1.5 trillion to $ 2.25 trillion will be enacted by the end of March. “We expect there to be tensions over the overall cost, both from a political and economic point of view,” he said.
Lawmakers are watching the March 14 expiration of expanded unemployment benefits, which include an additional $ 300 in weekly federal unemployment assistance. But it could “take until the end of March if things don’t go well,” Goldman Sachs noted.
Once the relief bill is passed, it must be signed by Mr. Biden. After that, the IRS will direct the stimulus checks to eligible households. Based on past payment schedules, checks could arrive by direct deposit within a week of Mr. Biden signing the invoice.
However, people who don’t have bank accounts or payment information registered with the IRS may have to wait longer for paper checks or prepaid debit cards to arrive in the mail.
—With a report from The Associated Press.
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