Will the $600-a-week unemployment bonus disappear at the end of July? Will we get a second round of stimulus checks?
Those are two big questions that will be determined in the coming days as Congress returns from recess and starts negotiating the next stimulus plan.
Here’s what we know as of July 20 about discussions of expanded unemployment benefits, additional stimulus checks and more.
7 Things We Know So Far About the Next Stimulus Bill
As of this writing, President Trump was meeting with Republican Senate Majority Leader Mitch McConnell and House Minority Leader Kevin McCarthy to discuss their positions for the next stimulus package. We’ll update this post as we learn more.
1. The $600-a-week unemployment bonus is likely to be reduced.
There’s a good chance that the $600-a-week provided by the CARES Act will be cut significantly but won’t go away completely.
Many Republican lawmakers want to eliminate it altogether because they worry it’s deterring people from returning to work. But some have said they’re open to a reduced benefit in the $200 to $400 range, The Washington Post reports.
The HEROES Act that passed the Democrat-led House of Representatives in May called for extending the $600 weekly federal subsidy until January 2021. But the HEROES Act has little chance of passing the Republican-controlled Senate; President Trump called it “dead on arrival.”
Without the extra $600 a week from the federal government, more than 30 million people getting jobless benefits would only receive their state benefit — an average of just $333 per week, according to the Center on Budget and Policy Priorities.
2. If Congress doesn’t act quickly, unemployment benefits could be interrupted.
Technically, the federal unemployment bonus expires July 31. But because state unemployment benefits are paid on a weekly cycle ending on a Saturday or Sunday, the last payments with the extra $600 will be made on July 25 or July 26.
Michele Evermore, senior policy analyst at the National Employment Law Project, explained to CNBC that come July 25, states will have to turn off the function in their computer systems that pays out the additional $600.
“To get it started back up again, it may take a while to reprogram,” Evermore told CNBC. “I’ve been told that even in states with modernized systems, it could still take weeks.”
If Congress extends the benefit this week, an interruption is less likely to happen.
3. More stimulus checks are likely, but no one knows the details.
There’s a decent possibility of a second round of stimulus checks — but we don’t know who would get them or the dollar amount.
The HEROES Act includes a second round of $1,200 coronavirus stimulus checks for each person in the household, including children, with a cap of $6,000 per family.
Early in July, President Trump told Fox Business Network that he supports “even larger numbers than the Democrats” for stimulus payments. But some Republican lawmakers want to restrict checks to people with lower incomes or those who have lost their jobs.
4. The $40,000 income limit for another round of stimulus checks? So far, it’s just a rumor.
You may have heard that the next stimulus checks will be limited to people who make less than $40,000 a year. But the only basis for these headlines is a comment McConnell made at an event in his home state of Kentucky.
McConnell said that many of the people hardest hit by the pandemic earn less than $40,000 a year and work in hospitality, hotels and restaurants. McConnell said lawmakers would be “acutely aware of that particular segment going into this next package.”
The bottom line: Yes, the GOP may propose a lower income limit if there’s another round of stimulus checks, but even McConnell hasn’t said it would be capped at $40,000. The $40,000 limit is speculation based on McConnell’s remark and hasn’t been spelled out in any actual proposal.
5. The odds of a $2,000 monthly stimulus check for everyone passing? Pretty much zilch.
Since May, Democratic senators Kamala Harris, Ed Markey and Bernie Sanders have made the case for direct payments of $2,000 for most Americans until three months after the Health and Human Services Department declares an end to the coronavirus public health emergency.
There’s virtually no chance of this happening, considering that much-less costly relief measures, like extending the $600 a week unemployment bonus, face an uphill battle.
6. Republicans and Democrats disagree about a back-to-work bonus.
Sen. Rob Portman (R-Ohio) proposed giving workers who stop collecting unemployment and return to work a $450 weekly bonus for several weeks, while other GOP lawmakers have discussed a one-time $1,200 bonus. Trump has also been supportive of a back-to-work bonus.
But Democrats favor extending unemployment benefits over a return-to-work bonus. Some have suggested gradually reducing the federal unemployment subsidy as the unemployment rate drops.
7. Trump is pushing for a tax break for people who haven’t lost their jobs.
Trump has said he won’t sign a stimulus bill without a payroll tax cut.
Payroll taxes are the 7.65% of your paycheck that goes toward Social Security. Your employer matches that 7.65%. If you’re self-employed, you pay 15.3% because you’re on the hook for both your portion and your employer’s match.
The goal of a temporary payroll tax cut is to stimulate the economy by giving workers more money to spend. Of course, the big drawback is that it wouldn’t benefit people who have lost their jobs, which is why Democrats are opposed to it. Plus, there could be long-term ramifications for the Social Security and Medicare trusts.
What Has to Happen for the Next Stimulus Bill to Pass?
Senate Republicans are expected to present their plan for the next stimulus bill this week.
The issues outlined above are just a fraction of what lawmakers have to work out. The long list of topics the next bill is expected to address includes tax credits for businesses, state and local government assistance, money for reopening schools and health care funding.
GOP lawmakers have also vowed to push for liability protection for businesses and schools that reopen during the pandemic.
With Democrats and Republicans divided over so many key issues, it’s unclear whether lawmakers will be able to send a bill for Trump to sign before Aug. 7, the last day Congress will meet before it goes on recess until September.
Robin Hartill is a certified financial planner and a senior editor at Codetic. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected]