For most Americans, this has been one of the most challenging years of their lives. The coronavirus disease 2019 (COVID-19) pandemic has completely upended societal norms, pushed more than 20 million people out of work (at the peak), and cost more than 130,000 Americans their lives. The physical and financial toll is immense.
In an effort to at least stem the financial pain associated with COVID-19, lawmakers passed and the president signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law on March 27.
CARES Act stimulus money was very much needed, but didn't last long
The CARES Act chimed in at a value of $2.2 trillion, making it the most expensive piece of relief legislation ever passed on Capitol Hill. It allocated funds to aid hospitals fight the coronavirus pandemic, as well as enhance unemployment benefits, provide small business loans, and support distressed industries. But most important (at least in the eyes of the public), it set aside $300 billion for direct stimulus payments to the public.
Under the CARES Act, individuals and couples are eligible to receive a maximum payout of $1,200 and $2,400, respectively. To net this maximum Economic Impact Payment (as these payouts are officially known), a single, head-of-household, or married tax filer simply needs a respective adjusted gross income below $75,000, $112,500, or $150,000. Also, parents and households are eligible to receive $500 per qualifying dependent aged 16 and under.
While divvying out a boatload of cash seemed like the right move to make at the time, the lack of precedent to a pandemic in the modern era has rendered portions of the CARES Act insufficient. For instance, an additional small business loan measure was passed not long after the CARES Act divvied out close to $350 billion to small businesses.
But more important, the $300 billion in Economic Impact Payments proved nowhere near sufficient for most people. In many instances, the stimulus money they received was gone in four weeks or less. Considering the slow pace of the economic recovery and the resurgence of coronavirus cases in most states, it would appear that another round of stimulus is very much needed.
Here's when to expect the next stimulus bill from the Senate
The big question is, when might this next bill come to fruition?
Lawmakers certainly have an incentive to act quickly for a variety of reasons. As noted, the initial stimulus payouts simply didn't do enough for tens of millions of people, and the economic recovery hasn't supported a quick decline in the unemployment rate.
Furthermore, it's an election year, which means politicians have added incentive to do right by their constituents. Passing another round of stimulus would be a major talking point for lawmakers on the campaign trail.
But the timeline to get something done is exacerbated by the expected end to enhanced unemployment benefits on July 31. By "enhanced," I mean the extra $600 a week that unemployed beneficiaries have been bringing home since early April or until they landed a job. Without an extension to these enhanced benefits, it's likely that mortgage, rental, and auto loan defaults could rise significantly. Thus, a phase 4 deal (the CARES Act was phase 3) would seem highly likely before July 31.
However, we can probably narrow this down even further. Senate Majority Leader Mitch McConnell (R-Ky.) has been clear that the next round of stimulus will originate in the Senate. Senators are due back from a two-week hiatus on Monday, July 20. There's a very good chance that McConnell will have spoken with ranking Democrats in the Senate, and probably even the Democrat-controlled House of Representatives, prior to July 20.
The point is that McConnell will want to introduce and vote on a measure that will have a real shot at passage in both chambers of Congress without too much back-and-forth debate. This makes the week of July 20 the likely reveal of the phase 4 deal.
What's the holdup on another round of direct stimulus?
If you're wondering why lawmakers are seemingly waiting until the last minute to tackle this issue, there are two explanations.
First, Senate Majority Leader Mitch McConnell has proved to be an obstacle. He and some of his Republican colleagues have been leery about even discussing another round of stimulus until it was clear what sort of impact the CARES Act had on the job market and U.S. economy. It's still not perfectly clear what this impact is, but the upcoming end of enhanced unemployment benefits is going to put pressure on lawmakers in Washington to act sooner rather than later.
To add to this first point, McConnell and the GOP are also concerned about ballooning the federal deficit after already passing numerous rounds of coronavirus aid.
The second reason for the delay has to do with political disagreements between Democrats and Republicans over a key issue -- the aforementioned enhanced unemployment benefits. Democrats have argued in favor of an extension of this $600 a week payout. In fact, the House-passed HEROES Act calls for an extension of enhanced unemployment benefits through January 2021.
Meanwhile, Republicans perceive the $600 a week kicker as a disincentive to get back to work and have argued against its inclusion in future stimulus bills.
What's clear is that there's no path to a second stimulus package unless Democrats and Republicans can find some sort of common ground on enhanced unemployment benefits.