The status of a second round of IRS stimulus checks hasn’t changed much, but there has been some movement on the issue. Pressure on lawmakers to act is increasing, and now the proposal for $2,000 payments per month is back on the table.
Updated status of round 2 of IRS stimulus checks
Lawmakers are looking at several ways to put more money in the pockets of Americans who have taken a financial hit during the coronavirus pandemic. The chances of a second round of coronavirus stimulus checks have been looking slim as lawmakers are finding it impossible to agree on anything. However, the longer the emergency goes on, the more likely they are to act.
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Just as many businesses are being allowed to reopen amid the pandemic, other businesses are being forced to shut down due to the widespread looting and rioting related to the death of George Floyd in police custody. Even stores that weren't affected by the pandemic are now closing to protect against looters.
Although the closures may not lead to layoffs because they aren't expected to last as long as the pandemic-related closures, they will still result in income losses for workers whose stores are closed. These closures are occurring at a time when the U.S. can ill afford more income losses and financial turmoil for workers.
Three main proposals are being talked about right now. The first is a second round of IRS stimulus checks amounting to $1,200 per adult and $1,200 per dependent of any age. However, this proposal is part of the House's HEROES Act, which is encountering strong opposition from both Republicans and Democrats in the Senate.
Proposals for monthly payments
Two proposals for monthly payments come from Senators Kamala Harris and Andrew Yang. Harris renewed her call for a $2,000 per month stimulus payment, while Yang pushed for a $1,000 per month universal basic income. The two senators touted their plans for a monthly check during a virtual town hall hosted by The Appeal.
According to Forbes, the Monthly Economic Crisis Support Act touted by Harris would provide up to $2,000 per month to Americans earning up to $120,000 per year. The amount starts to phase out at $100,000 per year. The stimulus package provides $4,000 for married couples and $2,000 per dependent up to three dependents. It would also be retroactive to March.
Every resident of the U.S. would be eligible for the payments, whether they file taxes or have a Social Security Number. The monthly checks would last until three months after the pandemic ends.
Yang's plan goes further than Harris' and calls for $1,000 monthly payments via a Freedom Dividend. This plan isn't tied to the pandemic, which means the payments would continue for life. Everyone would be eligible to receive the payments.
He suggests that people who already receive government benefits could either choose to keep their benefits or receive $1,000 per month, but they couldn't get both. He also suggests a 10% value-added tax, which he estimates would generate $800 billion in revenue annually.
He believes if Americans have stable, monthly income, they will spend more money, driving economic growth. The rest of the Freedom Dividend would be paid for by a financial transactions tax that would end favorable treatment for capital gains and carried interest. It would also remove the Social Security cap and add a carbon fee.
Proposals for monthly payments are unlikely to pass because they don't have any Republican support. Given the status that some Senate Democrats are even opposing a second round of IRS stimulus checks for everyone, it also seems unlikely that they will support monthly payments for everyone.
Why many seek the status of a second round of IRS stimulus checks
Over 40 million Americans have filed for unemployment since the beginning of the pandemic. A Bankrate survey found in April that for 31% of Americans, the first stimulus payment wouldn't help them for more than a month.
Bankrate Chief Financial Analyst Greg McBride told CNBC that the problem runs even deeper than unemployment. He said that even though many people are still working, their pay has been cut, so they aren't making as much as they were before the pandemic.
Republicans have a different proposal in the status of a second round of IRS stimulus checks. They want to pay a $450 weekly bonus to those who return to work, incentivizing people to get back to work. According to a study conducted by the University of Chicago and American Action Forum, 60% to 70% of those who are unemployed are making more money while being out of work than they did while on the job. This is happening because lawmakers enacted an extra $600 in weekly federal unemployment benefits in addition to state benefits.
The status of a second round of IRS stimulus checks is still very much up in the air, the debate over what to do next will continue in the coming weeks.