Coronavirus

IRS Stimulus Check Round 2, Will It Happen?

After a slightly rocky rollout, complaints that funds took a long time to arrive and that a few dead people got payouts they can’t really use, the first round of $1,200 stimulus funds has largely been delivered. Americans have been expending the money on things like rent, groceries, bills and debt reduction; with a not inconsiderable amount rolling into savings accounts.

And with those funds now more or less resolved and on the way to recipients, a new question is arising: will there be more funds coming soon?

As of last week, U.S. House Democrats sought to answer that question in the affirmative, passing at a $3 trillion relief package called the HEROES Act (formally the ‘‘Health and Economic  Recovery Omnibus Emergency Solutions” Act). The measure aims to provide more assistance to the people and institutions economically devastated by the coronavirus — devastation, PYMNTS surveys have determined, that has been steadily expanding as lockdowns wear on the U.S. economy. Our polls have found the economic problems are impacting an ever-growing share of both workers and small and medium-sized businesses (SMBs).

So what will the new bill do for those workers should it become law? And what are the odds of that actually occurring?

What Stimulus Checks 2.0 Would Look Like

The HEROES Act first and foremost is about sending funds to individuals affected by the pandemic. It would do this by extending enhanced unemployment aid and sending out another round of stimulus checks — this one sightly more generous than the first round’s $1,200 for most adults and $600 per child.

The second cash payment, if passed, would offer up to $1,200 per family member with a cap of $6,000 per household. The bill also extends a special $600 weekly unemployment benefit until January. Additionally, the measure earmarks funds for struggling businesses, the U.S. Postal Service, local communities and increased COVID-19 testing.

Proponents of the bill sketched out the case for the new appropriations in the House fact sheet. They justify the massive price tag by citing the coronavirus pandemic’s unprecedented scope and economic effects, arguing that combating them requires “bold action.”

U.S. House Speaker Nancy Pelosi said in a recorded statement that the measure will cushion “the economic blow of the coronavirus crisis [by] putting much-needed money in the pockets of the American people.” She noted that 36 million Americans who’ve filed for unemployment benefits in the past six weeks have pushed the nation’s unemployment rate to a record 14.7 percent.

Supporters say putting money into consumers’ hands will save not just individuals, but also protect the economy from even deeper damage than has already been wrought. For instance, the Census Bureau recently reported that U.S. April retail sales last month plummeted roughly 17 percent from the prior month and 21 percent year on year. That was the largest drop on record, roughly doubling the previous record set a month earlier (which itself doubled the prior record holder, set during the Great Recession). That’s a problem, since consumer spending generates roughly two-thirds of U.S. gross domestic product.

However, Republicans oppose the HEROES Act, so passage seems unlikely.

“Let me state the obvious. What Nancy Pelosi is proposing will never pass the Senate,” Sen. John Barrasso, (R-Wyo.) tweeted last week before the House had voted on a final bill.

Some opponents note that the enhanced unemployment benefits are actually paying certain workers more than the jobs they lost did. Add in stimulus payments and critics say the measure would create disincentive to work.

Others have called the bill a Democratic Party wish list that’s at best only tangentially connected to the COVID-19 pandemic. Still others note that since Congress has already spent trillions of dollars on relief, it might be prudent to take a breath before approving any more 13-figure bailouts. Senate Majority Leader Mitch McConnell (R-Ky.) last week began to loudly wonder how exactly the country planned to handle the explosion of national debt that passing another few trillion in stimulus would cause.

So Now What? 

Having passed the Democratic-controlled House, the bill now heads to the Republican-majority Senate. Sources told The Wall Street Journal that negotiations between the two sides won’t begin until later this month.

But Republicans might eschew that route entirely, preferring to instead work jointly with the Republican-controlled White House to craft their own stimulus bill separate from the HEROES Act. That outcome seems increasingly likely, since President Donald Trump has already said he will veto the House bill if it should arrive on his desk.

But even if Republican senators come up with their own measure, that would have to go back to the Democratic-majority House for approval — which would then kick off a negotiation process anyway.

Given the situation has many variables in play — and a lot of individuals jockeying for position — it’s hard to predict where all of this will end up. However, a reasonable bet would be that more stimulus in some form is likely coming down the pike in the not entirely distant future, as the pandemic’s fallout is clearly becoming more serious and lasting.

But will that take the form the $3 trillion measure that the House voted for last week? That’s looking increasingly improbable.

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