Please ensure Javascript is enabled for purposes of website accessibility

HEROES ACT: Will We Get a Second Stimulus Check?

By David Butler – Jun 9, 2020 at 8:30AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Another massive stimulus bill has been passed in the House of Representatives, but a Republican-held Senate seems likely to view the bill with a great deal of scrutiny.

It seems unlikely that we'll see a second stimulus bill, let alone stimulus check, that lives up to the scale of the CARES Act. A Republican-led Senate is unlikely to approve the measures currently being pushed by the Democrat-controlled House of Representatives. The recent economic numbers have given some strength to the market and provided optimism to those who worried the ramifications of the shutdown on workers could be pervasive.

Current legislation up for vote

The big subject of discussion right now is the HEROES Act. The legislation has already made it through the House of Representatives, but faces a bit more scrutiny in the Senate.

picture of digital stimulus check

Image source: Getty Images.

We just saw the largest stimulus package in U.S. history with the $2 trillion CARES Act. The HEROES Act outpaces it with $3 trillion in further proposed stimulus. To be direct, the legislation is probably already dead. Mitch McConnell, Senate majority leader, has already said that any further stimulus would be smaller than the CARES Act. He also said it would be the last.

The span and scope of the bill is simply too much. Democrat in origin, it calls for an extension on unemployment benefit protections to carry through to January 2021 instead of July 2020. One of the debates here is the incentive to get people back into the workforce. With expanded unemployment protections, that incentive decreases. A billion dollars of the plan would be for first-line workers and teachers, and $200 billion would go to create a fund for essential workers. Direct stimulus payments would be similar to before: $1,200 per individual, with an increase to $1,200 each for up to 3 dependents. For a Republican-held Senate, that's going to be a tough sell. 

To find common ground, there has to be a demonstrated need. So far we haven't seen a second wave of coronavirus infection. The economic numbers from May also haven't done the legislation any favors.

Jobs might be coming back faster than expected

We watched stocks take off last week as news broke that the U.S. added 2.5 million jobs in May. This came as a surprise in a month for which economists had forecast job losses of 8 million, and it's a huge contrast to the 20 million jobs that disappeared in April. The unemployment rate was 13.3%. That's a 1.4% improvement from April. Again, this was below what economists had expected. Visa (V -1.34%) reported that U.S. payments declined at a slower rate in May than in April. This gives credence to the idea that consumer spending started to right itself last month.

This unexpected upside is just the sort of thing that the Republican Senate can use to oppose further stimulus.

Will you see that check?

Overall, the stronger-than-expected economic data and political divide between the House and the Senate make it unlikely that people will be seeing a stimulus check. To say that further economic stimulus is completely out of the question would be premature. The Senate probably won't vote on this right away, and that leaves time to see what happens in terms of COVID-19 cases as well as the economy. Nothing seems impossible these days, however, a Republican-held Senate will oppose spending unless it's absolutely essential to avoid a deep recession.

David Butler has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Visa. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Visa Inc. Stock Quote
Visa Inc.
$177.65 (-1.34%) $-2.41

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.