The $1,200 stimulus checks that were distributed as part of the CARES Act served as a lifeline for cash-strapped Americans who were immediately impacted by the COVID-19 crisis. But helpful as those payments may have been, for a lot of people, they're long gone. And as our current recession continues to rage on, many Americans remain desperate for some follow-up relief.
In fact, 49% of Americans say a second stimulus check is very important to their finances, according to SimplyWise's July 2020 Retirement Confidence Index. Meanwhile, 25% say a follow-up stimulus check is somewhat important to them.
Given that most Americans expect our current recession to last into 2021, that sentiment makes sense. But whether there will actually be a second stimulus is yet to be determined.
Lawmakers have been butting heads on relief
Democratic lawmakers introduced a bill called the HEROES Act in May that calls for, among other things, a follow-up stimulus payment that would max out at $1,200 per eligible individual. But Republican lawmakers have been pushing back. Their main arguments are:
- A second stimulus check will be too expensive.
- A second stimulus check isn't needed as the economy reopens.
- A second stimulus isn't as vital since unemployment has been dropping.
But here's why these arguments don't hold water. First, though a follow-up stimulus will indeed be expensive, the cost to our economy could be huge if Americans don't get that relief. More and more rent and mortgage payments will be delinquent. Bills will be missed. Those living paycheck to paycheck before the pandemic may be forced into debt that they ultimately don't make good on. And in the absence of additional funds to pump into the economy, businesses won't get the revenue they need to stay afloat.
Secondly, while it's true that much of the economy has reopened since the HEROES Act was first introduced, it's clear that many states reopened too soon, as evidenced by the recent surge of COVID-19 cases that has public health officials extremely worried. In fact, some states are already curbing reopening plans and imposing further restrictions, which could, in time, put the economy right back to where it was in April.
Finally, while it's true that May and June unemployment rates were lower than April's disastrous 14.7% jobless rate, the numbers are still very high. June's unemployment rate was 11.1%, which is a far cry from the 3.5% jobless rate that existed back in February, prior to the pandemic. Furthermore, as more and more states impose lockdown measures, we could see an increase in job loss -- particularly in already hard-hit industries like restaurants and retail.
Clearly, there's a good argument for a second stimulus check, but we won't know whether one's in the cards until lawmakers start hashing things out once they return to the Senate on July 20 following an extended recess. At that point, there may be additional stimulus proposals to consider on top of the HEROES Act, which Republicans have expressly opposed.
Even if there is a second stimulus payment, there's no guarantee that it will mimic the $1,200 the CARES Act allowed for. But given the number of Americans who are desperate for an influx of cash, any lump-sum payment is surely better than no follow-up stimulus at all.