President Joe Biden’s $ 1.9 trillion coronavirus program would get millions of Americans a third round of federal stimulus checks. But while lawmakers on both sides of the aisle have expressed support for the proposal, there is less agreement on who should be eligible for the $ 1,400 direct payments.
Congressional Democrats continue to pass Mr. Biden’s contingency plan through a process called budget reconciliation, which could allow the Senate to weather the effort without any Republican backing. As the process progresses, the House and Senate committees will discuss spending priorities before drafting and voting on legislation. Goldman Sachs economists say that will happen later this week.
On February 4, the Senate approved a bipartisan plan introduced by Democratic Senator Joe Manchin and Republican Senator Susan Collins to block “higher-income citizens” from the next round of stimulus controls. Specifically, however, the plan does not define “higher income”. The measure would ensure that “the struggling families who need it most” would receive the checks, Collins said in a statement.
The amendment adds “uncertainty as to whether all Democrats in the Senate will support President Joe Biden’s full plan, with Joe Manchin already expressing doubts about the need to send $ 1,400 incentive 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 say about the next stimulus check and who might qualify.
Why are income limits a problem?
The government’s first two incentive checks – $ 1,200 for the first round and $ 600 for the second round – also set income thresholds that prevented households with higher income from qualifying for the payments. In both previous rounds, single people who made up to $ 75,000 and married couples who made up to $ 150,000 received the full payout.
People with higher incomes got smaller payouts as their income increased, until payments for higher-income families were stopped completely. In the first round, the phaseout was $ 99,000 for singles and $ 198,000 for married couples.
In the second round, the phase-out was slightly lower: $ 87,000 per year per single person and $ 174,000 per married couple. But that was a function of the smaller size of the checks, as the law reduced both checks by 5% for every $ 100 earned above the full payment income limits.
Recent economic research indicates that finances have stabilized for many middle- and higher-income families. That sparks a debate between lawmakers and experts as to whether the direct aid should target lower-income households, who are likely to feel the ongoing economic impact of the coronavirus pandemic.
Households earning less than $ 78,000 annually quickly issued their second stimulus checks after receiving them in January, while those with incomes above that level turned away most of the money, according to Research from the Opportunity Insights Economic Tracker, a non-profit group led by Harvard economics professor Raj Chetty.
“Since mid-June, the recession in jobs for higher-income households is over – employment is just like before the pandemic,” because their work can be done remotely, Michael Stepner, an economist at Opportunity Insights, told CBS MoneyWatch. .
Are there any new income limits for getting a check?
Not yet – nothing has been decided. Still, Mr. Biden has expressed a willingness to negotiate, with the president saying he would push for $ 1,400 checks, while suggesting he was willing to direct the checks to those who need the most help.
That could lead Democrats to lower the income threshold to qualify for payment to single people who earn $ 50,000 or less and married couples with an income of $ 100,000 or less, according to The Washington Post. If that happens, millions of households that received the previous two incentive checks are unlikely to qualify for the third.
For example, the IRS said it sent 30 million payments to households that made more than $ 75,000 during the first round of incentive checks. Below the income thresholds reported by the Washington Post, many of those households are unlikely to qualify for the full $ 1,400 check.
But on Feb. 8, House Democrats pushed back on those lower limits and proposed keeping the income thresholds at the same level as the previous controls. That would ensure that the full $ 1,400 aid payments go to individuals making $ 75,000 or less, while couples making $ 150,000 are entitled to $ 2,800 aid payments. Payments would decrease for incomes above those levels, disappearing completely for singles earning $ 100,000 and couples earning $ 200,000.
Mr. Biden has said he will not allow payments per person below $ 1,400, but has indicated that he has flexibility with regard to income thresholds.
“There is currently a debate about what that threshold will look like. A conclusion is not yet final,” said White House press secretary Jen Psaki.
What do the experts say?
Wall Street analysts aren’t counting on many changes, with Goldman Sachs expecting the same income thresholds as with the initial checks – $ 75,000 for individuals and $ 150,000 for married couples.
Some lawmakers are doing everything they can to limit the payout 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 an employee who earns $ 52,000 a year that they are ‘too rich’ and cannot get the full $ 2,000 benefit we promised,” he wrote on Twitter Feb. 7. .
When will I receive a check for $ 1,400?
According to analysts only in a few weeks. The committees of the House of Representatives and the Senate must first draft and vote on legislation.
“At this stage, we will learn a lot more about the details, scope and timing of certain provisions,” noted Goldman Sachs economists. “However, the most important decision won’t be made until a few weeks from now, when the Senate is likely to adopt its version of the COVID bill.”
According to Heights Securities analyst Hunter Hammond, chances are that a stimulus package worth $ 1.5 trillion to $ 2.25 trillion will have passed by the end of March. “We expect there will be tension over the overall cost, both from a political and an economic standpoint,” he said.
Lawmakers are watching the March 14 expiration of comprehensive unemployment benefits, including an additional $ 300 in weekly federal unemployment support. But that could take “until the end of March if things don’t go smoothly,” Goldman Sachs noted.
Once passed, the Stool Act must be signed by Mr. Biden. After that, the IRS will run the incentive checks to eligible households. Based on past payment schedules, checks can come in via direct deposit within one week of account signing by Mr. Biden.
However, people who don’t have bank accounts or payment information with the IRS may have to wait longer for paper checks or prepaid debit cards to arrive in the mail.
—With reporting by the Associated Press.