A $1.9 trillion coronavirus relief initiative from President Joe Biden will provide millions of Americans with a third round of federal stimulus checks. Yet, though politicians have voiced enthusiasm for the plan from both sides of the aisle, there is less consensus on just who could apply for cash payments of $1,400.
For Mr. Biden's relief proposal, Congressional Democrats are going forward with a mechanism called budget reconciliation, which will allow the Senate to approve the initiative without any Republican support. As the process goes forward, before drawing up and deciding on bills, House and Senate committees will debate budget priorities. According to Stifel chief Washington policy analyst Brian Gardner in a February 22 research report, House members could vote on the bill as soon as later this week.
"Absent any sudden surprises, we expect a roughly $1.9 trillion bill will pass in early March," Gardner said. A compromise bill proposed by Democratic Senator Joe Manchin and Republican Senator Susan Collins to block "upper income citizens" from the next round of stimulus checks was approved by the Senate earlier this month. Notably, however, the proposal would not describe "upper income." The measure would guarantee that the struggling households who need it most would receive the checks.
The amendment introduces "uncertainty whether all the Senate Democrats will support President Joe Biden's full plan, with Joe Manchin already expressing doubts about the need to send $1,400 stimulus checks to those that might not need the money," said Paul Ashworth, chief U.S. economist at Capital Economics, in a research note to investors.
Treasury Secretary Janet Yellen supported Mr. Biden's stimulus plan in a simulated event organised by the New York Times on Monday, and fought back against the notion of restricting stimulus tests to smaller households.
"The truth is, there are pockets of pain that go beyond what can be reached in those highly targeted ways," Yellen said.
Yellen has previously argued that certain government estimates for certain U.S. families do not adequately represent the facts. "We have an unemployment rate that, if properly measured in some sense, is really close to 10 percent ," Yellen told CNBC earlier this month. "In addition to over 9 million people unemployed, we have 4 million who've dropped out of the labour force, another 2 million who have seen reduced hours."
While there are signs of economic change, on Tuesday, Federal Reserve Chairman Jerome Powell told lawmakers that the coronavirus-battered economy is far from being cured. Powell said in written evidence, "The path ahead is highly uncertain," That adds to the argument that the economy will need further support to recover its feet in 2021, amid optimistic trends, such as a boost in consumer spending in January.
House Democrats pressed back on lower levels on February 8, requesting that the wage rates be held at the same amount as the previous restrictions. This would mean that the entire $1,400 relief payments would go to people making $75,000 or less, while $2,800 relief payments would be entitled to couples receiving $150,000. For earnings above those thresholds, the benefits will ratchet down, eventually phasing out completely for single individuals making $100,000 and couples making $200,000.
"There is a discussion right now about what that threshold will look like. A conclusion has not been finalised," said Jen Psaki, press secretary of the White House. Mr. Biden stressed his contribution to a massive stimulus campaign at a CNN event on Tuesday. "The overwhelming consensus is, in order to grow the economy a year, two, three and four down the line, we can't spend too much. Now's the time we should be spending. Now is the time to go big."
Photo via Unsplash