Many Americans are constantly checking the status of a second round of stimulus checks from the IRS. There hasn’t been anything concrete yet, but lawmakers and White House officials have been commenting on what they want to see in the phase four stimulus package. There is a chance that a second stimulus check will be included.
Status of a second IRS stimulus check
The status of a second round of IRS stimulus checks is still very much up in the air. Fox Business reports that a second round of checks could face opposition from some Republicans in the Senate. They're worried about the cost of more direct payments as they aim to keep the total cost of the phase four stimulus package at no more than $1 trillion.
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Sen. John Kennedy of Louisiana said last week that the federal government owes $3 trillion and "climbing." That doesn't include the $3 trillion the Federal Reserve added to its balance sheet. According to Fox Business, Kennedy said if someone were to put a gun to his head and demand that he tell them what's going to happen with the next stimulus package, he'd have to say that he honestly doesn't know.
The status of a second IRS stimulus check will also be impacted by concerns that Americans are saving the money instead of spending it. The purpose of direct payments is to stimulate the economy, and if Americans save the money instead of spending it, then the payments aren't doing what they are supposed to do.
Bank deposits in the U.S. have jumped $2 trillion since the pandemic started, which lawmakers will use as evidence that the stimulus money is being saved rather than spent. The White House in particular have been concerned about whether the money has been spent or saved, although President Donald Trump supports a second round of stimulus checks.
Who will be eligible for a second IRS stimulus check?
It's sounding more and more like lawmakers will target the second round of stimulus checks at unemployed and low-income Americans. Senate Majority Leader Mitch McConnell said last week that he believes those who have been hit the hardest by the pandemic are those earning $40,000 or less.
Status updates on the second IRS stimulus check last week widely speculated that $40,000 could be the income threshold for receiving a second check. The White House reportedly wants to limit the cost of the phase four coronavirus stimulus package at $1 trillion to capture the support of conservative Senate Republicans who are worried about the fiscal deficit.
The Congressional Budget Office said last week that the federal deficit jumped to $2.7 trillion in the first eight months of the fiscal year. For fiscal 2020, the gap between what the government collects and what it spends is expected to reach a new record high $3.7 trillion. The previous record was set in 2009 and $1.41 trillion.
Reducing the number of Americans who are eligible to receive the second check would go a long way toward keeping the price tag at $1 trillion while also including other provisions. It would also address concerns that the first round of checks wasn't targeted at people who need money the most.
How much might the second payment be?
One other thing that would keep the phase four stimulus package at or below $1 trillion is reducing the amount of the second round of checks. White House economic adviser Larry Kudlow said last week that the second round of payments could be less than $1,200 and targeted at unemployed and low-income Americans.
The status of a second IRS stimulus check is still unclear, but if lawmakers do come to an agreement on more payments, Treasury Secretary Steven Mnuchin said they would be able to get the money out "very, very quickly." Congress is on a tight timeline for reaching an agreement.
The House of Representatives officially starts its one-month August recess on Aug. 3, while the Senate starts a week later. Negotiations on the phase four package won't start until July 20 when both houses of Congress will return to vote on legislation.
Beyond more direct payments
The status of a second IRS stimulus check will also depend on whether lawmakers can reach an agreement on other provisions for the next package. One sticking point will likely be unemployment. Democrats want to extend the extra $600 in weekly benefits, but Republicans want to encourage people to return to work.
The extra $600 in weekly benefits has many people receiving more money while out of work than while on the job. The extra benefit expires at the end of this month, but Republicans may be convinced to extend the extra benefit but at a lower amount than $600 a week.
Republicans also want to see liability protection for businesses and healthcare facilities in connection with the steps they take to battle the coronavirus and reopen. Democrats oppose the idea, however. Other topics that could come up for negotiation include financial assistance for state and local governments, student loan forgiveness, a payroll tax cut and back-to-work bonuses.