What a grueling slog it's been to reach the midpoint of 2020 -- and it only took five years, or so it's felt that way.
The coronavirus disease 2019 (COVID-19) pandemic has completely altered our societal norms, claimed the lives of more than 130,000 Americans as of July 2, 2020, and wreaked untold havoc by pushing the U.S. economy into a recession. Despite record jobs creation in June, the unemployment rate is still at levels that haven't been seen in many decades.
The CARES Act divvied out $2.2 trillion to fight COVID-19
It was this unprecedented level of financial disruption that ultimately prompted Congress to pass and the president to sign the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law on March 27. The $2.2 trillion price tag attached to the CARES Act makes it the largest economic-relief package ever signed into law.
The CARES Act was designed to throw a lot of money at a truly unforeseen problem. It apportioned $500 billion for distressed industries, allocated almost $350 billion for small business loans, handed $100 billion to hospitals to help combat COVID-19, and even gave $260 billion to expand the unemployment benefits program. But it's the $300 billion in direct stimulus payouts that folks associate most with the CARES Act.
Under the CARES Act, more than 160 million Americans have received an Economic Impact Payment, with the total amount paid out totaling over $270 billion. For those who may recall, maximum payouts were $1,200 per individual and $2,400 for married couples filing jointly, with an added $500 kicker for each dependent aged 16 and under. To qualify for this maximum stimulus payment, a single, married, or head-of-household filer needed an adjusted gross income below $75,000, $150,000, and $112,500, respectively.
While the CARES Act had excellent intentions, it simply didn't do enough for most Americans. A Money/Morning Consult poll from April found that nearly three-quarters of the 2,200 respondents had already spent or planned to spend their economic stimulus money within four weeks. Given the level of economic disruption caused by the coronavirus pandemic, as well as the slow nature of the recovery, there's little question that additional stimulus is desired (and needed) by Americans.
President Trump wants to give you a "larger stimulus check"
Though it's been a point of contention for well over two months, it's looking increasingly likely that a second round of stimulus will become a reality sooner than later.
Earlier this week, President Trump was interviewed by Fox Business Network' Blake Burman regarding the possibility of another round of direct stimulus payment for the American public. When questioned about his support for direct stimulus payments, Trump had this to say:
I do. I support it. But it has to be done properly. And I support actually larger numbers than the Democrats, but it's got to be done properly.
This is actually the second time in as many weeks that Trump has confirmed his desire to see another bipartisan stimulus package passed on Capitol Hill -- although it's the first time he's alluded to the idea that the next round of stimulus could be even larger than the first, at least in terms of direct payments reaching Americans.
For the president, there's clearly an incentive to get money into the hands of the public. First off, roughly 70% of U.S. gross domestic product derives from consumption. This means putting money directly into the hands of workers and seniors should result in a signification portion of these payouts filtering their way back into the economy fairly quickly. In short, these payouts can help reignite economic growth during a period of historic weakness.
Additionally, don't overlook the fact that it's an election year. Neither party wants to be the one that didn't go to bat for their constituents. And it's especially important for President Trump to pass another round of stimulus given the recent polling figures that show him trailing Democratic Party challenger Joe Biden. Passing another direct stimulus package is something the president may attempt to pass off as a feather in his cap as the November election approaches.
A larger stimulus check is far from a guarantee
Of course, just because President Trump wants to see the American public receive larger direct payments doesn't mean this will come to fruition. It's quite possible that Trump could find opposition within his own party.
Senate Majority Leader Mitch McConnell (R-Ky.) has been particularly skeptical about passing a second round of stimulus without allowing the first round of payments to work their way into the U.S. economy. Republicans, as a whole, are also skeptical of running up the already massive federal budget deficit during an election year.
Another big issue of contention is the extension of enhanced unemployment benefits, which I believe to be the biggest sticking point between Democrats and Republicans. With 19.3 million people receiving unemployment benefits as of June 20, Democrats have argued the need to ensure that these recipients receive an extension of the $600 a week payout handed out via the CARES Act. This extra $600 per week expires at the end of July.
Meanwhile, Republicans (as well as Trump) have argued that an extension of enhanced unemployment benefits would disincentivize people to go back to work and are therefore opposed to the idea. If Democrats and Republicans can't resolve their difference on this issue, there'll be no second stimulus package.
President Trump has also favored the idea of a payroll tax holiday as a means of getting additional money into the hands of working Americans. Thus, it's not even clear if the end result of another round of stimulus would involve a payment similar to what the more than 160 million Americans received with the CARES Act.
At this point, there's no question that President Trump would like to see another stimulus package passed. However, he'll need to contend with Democrats' desire to see enhanced unemployment benefits expanded, as well as his own party's desire to keep spending from getting out of hand.