You might be tired of the same descriptors being used to describe the coronavirus disease 2019 (COVID-19) pandemic, but the truth is that it has been unprecedented and times are indeed challenging. More than 137,000 Americans have lost their lives to COVID-19, and at one point well over 20 million workers were displaced from their jobs in a matter of weeks. We've never seen anything like this in the modern era.
While the medical community's response to save lives is ongoing, lawmakers felt that the smartest way to combat the financial aspects of an unforeseen pandemic was to throw a record amount of money at it. Thus, the Coronavirus Aid, Relief, and Economic Security (CARES) Act came into existence.
The CARES Act provided sorely needed money to Americans -- just not enough of it
The $2.2 trillion CARES Act was signed into law on March 27, ultimately supplying cash to hospitals, small businesses, and distressed industries, as well as expanding the unemployment benefits program for tens of millions of newly eligible people. But what folks will associate most with the CARES Act is the $300 billion allocated for direct stimulus payments to workers and senior citizens.
According to figures from the Internal Revenue Service, more than 160 million people have been disbursed an Economic Impact Payment, totaling more than $270 billion. Maximum payouts for individuals and couples are $1,200 and $2,400, respectively, with a parent or household eligible for an extra $500 for each dependent aged 16 and under. To receive this max payout, a single, head-of-household, or married tax filer simply needed a respective adjusted gross income below $75,000, $112,500, and $150,000.
Though well-intentioned, the CARES Act simply didn't do enough, from a financial perspective, for most workers and families struggling from the COVID-19 nonessential business shutdowns. A Money/Morning Consult survey in April found that nearly three-quarters of stimulus recipients had spent, or expected to spend, their entire payment in four weeks or less.
With the U.S. economy recovering slowly and the unemployment rate still at multi-decade highs, it would appear that another round of direct stimulus is sorely needed.
Here's why July 20 is the most important day for the next stimulus deal
The good news, should you favor the idea of another round of stimulus from the federal government, is that both parties looks to be onboard. The Democrat-led House of Representatives passed the HEROES Act on May 15, which is a $3 trillion proposal that would have given direct payouts of up to $6,000 to couples with up to three qualifying dependents.
Meanwhile, President Trump, Treasury Secretary Steven Mnuchin, and Senate Majority Leader Mitch McConnell (R-Ky.) have all expressed support for another round of direct stimulus to the public in recent weeks.
But if a second round of stimulus is to come to fruition, today, July 20, is undoubtedly the most important date of them all. That's because today is the first day back from a two-week recess for the U.S. Senate. Lawmakers in the Senate have less than three weeks until they go on recess again for a full month (Aug. 10 through Sept. 7), meaning their time frame to work out the next stimulus deal is limited.
But more specifically, lawmakers have probably been working on the framework of a second stimulus package for weeks. With McConnell adamant that the next stimulus package will originate in the Senate, the first day back in session (i.e., July 20) will set the tone for what's expected to be more contentious discussions than when the CARES Act was signed into law in March.
These are the biggest hurdles lawmakers will need to overcome
To be brutally honest, there's a big-time incentive for lawmakers from both parties to pass stimulus deal 2.0. After all, this is an election year, and it would make for one heck of a feather in the cap for Democrats and Republicans to say they went to bat for workers and seniors. Thus, it's not a matter of if a deal gets done, but when and what it might look like.
Arguably the biggest hurdle for Congress is going to be figuring out what to do with enhanced unemployment benefits. Under the CARES Act, unemployed beneficiaries are receiving an extra $600 a week from April 1 through July 31, or until they get a job. Mnuchin recently stated in an interview that the weekly unemployment bonus won't be extended, at least in its current form. Democrats want to see this enhanced benefit extended through January 2021, whereas Republicans view it as a disincentive to get back to work. According to Mnuchin, a compromise that involves a dynamic enhancement -- i.e., unemployed persons receiving no more than 100% of what they'd net while working -- may be in the cards.
There'll also likely be a battle over who qualifies for a second direct payment. The HEROES Act was very clear in its efforts to break down disqualifying factors. It removed the age limit tied to dependents, upped the payout given to a parent or household with a dependent, and allowed certain undocumented workers with a taxpayer identification number (or their family) to qualify for a payment. Republicans may not be so willing to compromise on expanding the pool of potential recipients, especially with the federal budget deficit ballooning in fiscal 2020.
With the Senate back at work, as of today, we should begin to see the outline of the next stimulus deal take shape very soon.