7 Reasons We'll Get Another Stimulus Bill (and 3 Reasons We Might Not)

Author: Dan Caplinger | July 06, 2020

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Will another stimulus bill pass?

The coronavirus pandemic has ravaged the world in 2020, and the U.S. remains at the epicenter of the COVID-19 outbreak. With the coronavirus affecting nearly every American in one way or another, calls for further measures to stimulate the economy are getting louder. Not everyone agrees that a second stimulus bill would be a good idea, though. Throughout, we'll look at reasons both for and against another stimulus bill getting passed.

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1. The U.S. economy is in recession

U.S. gross domestic product fell almost 5% in the first quarter of 2020, and that led economists to declare that the economy entered its first recession in more than a decade. With the Federal Reserve having called for the government to add fiscal stimulus to the monetary measures the central bank has taken, legislators have used the recession as a key reason to argue for a new stimulus bill.

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2. Unemployment is still extremely high

Unemployment levels remain extremely high, with June unemployment coming in at 11.1%. A stimulus bill could give employers incentives to hire again, and it could give those who are out of work the financial support they need to make ends meet.

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3. COVID-19 cases are picking up in many states

After the initial wave of COVID-19 cases were concentrated in a relatively small number of states, subsequent outbreaks have shown up in key places like Florida, Texas, California, and Arizona. The spread into areas that were previously less affected by the pandemic could spur lawmakers into action.

ALSO READ: Did Florida Theme Parks Open Too Soon?

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4. It's an election year

Every member of the House of Representatives is up for re-election this fall, as are one-third of the members of the Senate. Washington gridlock is a powerful force, but those hoping to keep their seats have incentives to respond to their constituents. Providing more funding could go a long way toward helping incumbents stay in Congress.

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5. The cost of deficit spending is low

Historically, a sizable fraction of lawmakers have argued against spending measures, as the U.S. already has a sizable budget deficit. However, with interest rates at near-record lows, the immediate cost of borrowing more money to pay stimulus checks to Americans is far lower than it would've been in the past.

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6. Families are feeling extra pressure

The pandemic has affected everyone, but parents with young children have had particularly large challenges to overcome. With schools turning to remote learning and daycare centers closing, working parents have had to multi-task working from home with helping kids with schoolwork. Some have resorted to taking time off or even quitting their jobs in order to handle the increased workload of family care.

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7. Some people got left out of the first stimulus

The first round of stimulus payments sent $1,200 to adults and $500 to children. However, that legislation left millions of people out of the mix, including college students who got claimed as dependents on their parents' tax returns. Advocates hope that a second stimulus bill will also fill in the gaps and get those first checks out to people who missed out.

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The U.S. Capitol building.

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But there's disagreement about the best stimulus

Not surprisingly, there's plenty of debate about exactly how to structure a stimulus package. Some just want another set of one-time payments, while others want prolonged financial support. Still others want to target more money to getting people back to work. Reaching consensus will be hard, especially with election-year rhetoric making it harder to find bipartisan agreements.

ALSO READ: This Is the Biggest Hurdle to a Second Stimulus Check

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An improving economy might not need stimulus

Many lawmakers who are reluctant to do another stimulus bill point to signs that the economy is improving. The latest employment report, for example, included a jump of 4.8 million nonfarm payroll jobs in June. Opponents argue that the improving numbers still have a long way to go to catch up to where things were before the pandemic hit, but many still want to wait before committing to another sizable stimulus measure.

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Some lawmakers are worried about the national debt

Even with low interest rates, the size of the national debt has soared, climbing above $26 trillion recently. That's enough to make many in Washington and elsewhere worry about the long-term financial sustainability of the nation, especially if interest rates rise in the future. Opponents of further stimulus don't want to add trillions more to the total in what's already been a historic year for the debt.

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Keep your eyes on Washington

At this point, it's anyone's guess whether another stimulus measure will become law. Even with the House of Representatives having passed a bill, there could be wrangling for weeks or even months to come before lawmakers can find a way to move forward with more stimulus for the Americans who need it most.

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