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Will a Second Stimulus Check Be Limited to Lower Earners Only?

By Maurie Backman - Jul 15, 2020 at 6:18AM

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Lawmakers may be more open to a follow-up stimulus now that COVID-19 cases are surging -- but will it exclude millions of Americans who were eligible during the first round?

By late March, when the CARES Act was passed, it was clear that Americans were facing a financial crisis unlike one they'd ever experienced before. In just weeks, unemployment claims skyrocketed as countless small businesses closed their doors to the public, wondering when they'd be able to reopen.

But at one point, things seemed to be looking up. Both May and June saw a drop in unemployment, and as restrictions were eased throughout the country, many businesses were able to start welcoming customers, adding jobs, and collecting revenue.

It was during this time that Democratic lawmakers introduced the HEROES Act, a $3 trillion relief package that called for a second stimulus payment. Under the HEROES Act, anyone who received stimulus cash the first time around would be eligible for an additional lump sum of money.

Banded stacks of bills

Image source: Getty Images.

Republican lawmakers had bashed the HEROES Act, calling it too expensive and arguing that in light of the much-improved economy, a second stimulus wasn't necessary. But recent events are getting some lawmakers who were initially opposed to a second stimulus payment to change their tune.

COVID-19 cases have exploded in July, to the point where many states are rolling back reopening plans and putting additional restrictions in place. All of this could very well cause an uptick in job loss and result in our current recession being dragged out further. As a result, it's now harder to argue against a follow-up stimulus check. But if a second stimulus payment does pass, it could be limited to lower earners, thereby excluding a whopping 20 million Americans who benefited from that money under the CARES Act.

Will moderate earners be eligible for a second stimulus check?

Under the CARES Act, single tax-filers with an adjusted gross income of $75,000 or less were entitled to a full stimulus payment. The same held true for married couples filing jointly with an adjusted gross income of $150,000 or less.

But recently, Senate Majority Leader Mitch McConnell said that any follow-up stimulus payment that goes should be aimed at Americans with lower incomes -- specifically, those earning $40,000 or less. It's these people, he argues, who are most likely to have been negatively impacted by the pandemic from a financial standpoint.

There's truth to that. The hard-hit hospitality industry is notorious for less-than-generous wages, and the struggle of restaurant workers in particular existed well before the pandemic started. But while it does, to some degree, make sense to target lower earners when laying the groundwork for a second stimulus check, it doesn't negate the fact that moderate earners are struggling, too. And if a second stimulus is limited to those whose income is $40,000 or less, it will exclude a staggering 20 million Americans who may, in their own way, be equally desperate for relief.

In fact, another thing the CARES Act did was boost unemployment benefits by $600 a week, regardless if that resulted in a raise. And while that provision is set to expire by the end of the July, it does mean that a lot of lower earners have actually been bringing home more money during the pandemic than they did before. On the other hand, moderate earners may still be struggling with an income gap even with that $600 boost in place, and to exclude them from a second stimulus payment could be disastrous.

Lawmakers are expected to hammer out a second relief package later on in July. There's still no guarantee that it will even include a stimulus check to begin with, but if it does, those earning over $40,000 should brace for the possibility that they may not be eligible for any more money.

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