Senate Republicans are expected to introduce their long-awaited, proposed stimulus package on Monday—and here’s what’s likely inside.
Here’s what you need to know.
Second stimulus checks
Will there be a second stimulus check? How much is the second stimulus check? Treasury Secretary Steven Mnuchin confirmed that the amount of the second stimulus check in the proposal will be a one-time $1,200 stimulus check.
The requirements to receive the second stimulus check will be the same as the first stimulus check under the Cares Act, which was the $2.2 trillion stimulus package in March. So, if you received a first stimulus check, then you would receive a second stimulus check under the Republican plan.
Who is eligible for a second stimulus check?
If the second stimulus check is the same as the first stimulus check under the Cares Act, then the second stimulus check would be based on the following:
- a one-time stimulus check up to $1,200 for each individual;
- $2,400 for married/joint filers;
- up to $500 for dependents under age 17.
- Democrats have called for $1,200 second stimulus checks for dependents (compared to $500 under the Republicans proposal), up to a maximum of three dependents.
- Income requirements: If you earned less than $75,000 (individuals) or $150,000 (married/joint filers), you would receive a $1,200 second stimulus check.
- The first stimulus check phased out by $5 for every $100 of adjusted gross income above those income limits until $99,000 of adjusted gross income for individuals and $198,000 for married/joint filers.
Since the Cares Act, there have been countless proposals about second stimulus checks, including keeping the same $1,200 one-time stimulus check to $2,000 a month second stimulus checks. Previously, McConnell suggested that second stimulus checks may only be available to Americans who earn up to $40,000 a year. However, that $40,000 threshold won’t be in the new stimulus.
Unemployment benefits / return-to-work-bonus
The Associated Press reports that Senate Republicans are leaning toward a proposal that would extend enhanced weekly unemployment benefits, but they would no longer be $600 a week. Mnuchin told CNBC that unemployment benefits would be based on an approximately ‘70% wage replacement.’ This could equate to about $200 or $300 per week for supplemental unemployment benefits, rather than the $600 a week that Congress authorized under the Cares Act. Why? Many Republicans have believed that the $600 a week unemployment benefit creates a disincentive for recipients to return to work. They also argued that some recipients can earn more from unemployment benefits (e.g., not working) than from employment (e.g., working). So, Republicans could extend these unemployment benefits without creating, in their view, a disincentive to return to work. Democrats are likely to balk at the proposed reduction is these unemployment benefits at a time when more than 40 million people have applied for unemployment benefits Without congressional intervention, unemployment benefits expire this weekend. Congress may use a stop-gap measure while they finalize terms for unemployment benefits after July. Will there also be a return-to-work bonus?Senate Republicans and the White House previously had rallied around Sen. Rob Portman (R-OH), who proposed a $450 a week cash return-to-work bonus.
Payroll tax cut
Mnuchin told CNBC that a payroll tax cut wouldn’t be included in the initial stimulus bill proposal. Previously, President Donald Trump said he would consider vetoing the stimulus package if it does not include a payroll tax cut, which he believes is a pro-growth strategy to stimulate the economy. A payroll tax cut would reduce or eliminate Medicare and Social Security tax. Both employees and employers can benefit, since employers contribute as well. The payroll tax cut may be structured as a payroll tax deferral (rather than an upfront tax cut). A payroll tax deferral could mean the payroll tax could be owed at a later date, which would provide upfront savings. Mnuchin told CNBC that “the president’s preference is to make sure we send out direct payments quickly so that in August people get more money.”
State and local aid
Republicans plan to propose $105 billion to open schools, according to the Associated Press. This includes $70 billion for K-12 schools to reopen, $30 billion for colleges and universities and $5 billion for governors to spend at their discretion. The funding may be available to schools that open for both in-person and remote instruction, although it’s possible funding may be tied in part to schools reopening. In contrast, Democrats are targeting approximately $1 trillion for state and local aid, and $430 billion to open schools. Both parties in Congress understand that state and local governments have been adversely impacted by the Covid-19 pandemic. However, Senate Republicans are not proposing any new state or local aid. Why? They believe that authorization in prior stimuli is sufficient. Without federal support, however, many Democrats argue that some states and localities will face dire financial circumstances, budget cuts and potential bankruptcy.
Liability protections for businesses
McConnell made liability protection his top issue for the new stimulus. Businesses, hospitals and schools would receive five-years of liability protection, retroactive to 2019. Liability protection is expected to be included in the Republican stimulus proposal.
Student loan forgiveness
Don’t expect student loan forgiveness in the new stimulus. House Democrats passed a weakened student loan forgiveness plan in the Heroes Act that would provide $10,000 of student loan forgiveness only for borrowers who are “struggling financially.” While the Heroes Act provides for an extension of these benefits, Senate Republicans (or Senate Democrats) have not made student loans a top issue of the next stimulus.
Payroll Protection Program
The new stimulus legislation is expected to extend the Paycheck Protection Program (PPP), which is scheduled to expire on August 8. There may be additional tax credits for companies who hire new employees.
Coronavirus testing
Senate Republicans plan to propose $25 billion for Coronavirus testing and contact tracing. According to the Associated Press, the $25 billion is equal to the $9 billion already authorized in a prior stimulus plus $16 billion of new spending.
Final Thoughts
Update: McConnell has now postponed an announcement of the stimulus package proposal until early next week. McConnell says he will introduce the stimulus package in multiple bills, rather than a single legislative proposal. However, according to the Washington Post, Democrats want one, comprehensive stimulus package, not multiple bills. It appears that Senate Republicans and the White House have not yet reached consensus on the entire stimulus package, but have agreed in principle. However, there appears to be emerging consensus to tackle liability protection, school openings and unemployment insurance, according to the Washington Post, which quoted Mnuchin. The total amount of the new stimulus package could increase from the targeted $1 trillion as Democrats demand higher funding for their legislative priorities, such as extending unemployment benefits and increasing aid to states and localities, among other measures. What is the timeline for the new stimulus? Congress has until August 7 to reach a deal on the new stimulus when senators leave for summer recess until September. House members are on recess after July 31. House Democrats proposed $3 trillion for the Heroes Act (their proposed stimulus bill hasn’t passed the Senate) and is more than double McConnell’s proposed legislation. Senate Republicans hold 53 seats in the U.S. Senate, and will need Democrats to secure a bipartisan stimulus package. If Congress does not finalize legislation in July or August, then the new stimulus could be delayed until after Labor Day. However, if Congress finalizes the new stimulus before August 7, it’s possible that second stimulus checks could be sent as early as late August.
Be the first to comment