It Looks Like the Number of People Receiving Another Stimulus Check May Shrink

by Dana George | Updated July 25, 2021 - First published on Jan. 30, 2021

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The desire to tighten income qualifications for the third round of stimulus checks appears to be picking up steam.

President Joe Biden is attempting to make good on his promise to push for $2,000 stimulus checks by promoting an economic aid bill that includes another direct payment -- this one for $1,400. Added to the $600 checks passed into law in December, the total payment would be $2,000.

However, given lawmaker concern, the number of people who receive another stimulus check may shrink.

Sunday Zoom meeting

On Sunday, lawmakers -- including eight Democratic and eight Republican senators -- met with Biden administration officials via Zoom to hash out concerns over the president's $1.9 trillion coronavirus relief package.

Sen. Angus King called it a "genuine, open discussion between top White House staff and a dozen or so senators."

Not only did the senators voice concern over the total price tag of the stimulus package, but some also made it clear that they believe direct pay stimulus checks should be more narrowly targeted to those in need.

What's clear

It appears that lawmakers from both sides of the aisle agree on one thing: The fight against COVID-19 is priority number one. There seems to be bipartisan unity regarding the importance of manufacturing and distributing enough vaccine to create herd immunity and get the pandemic under control.

Priority number two is getting money into the bank accounts of Americans struggling to pay their bills as the pandemic wages on. This is where negotiations are more complicated. Identifying which Americans are "struggling" has become a sticking point for legislators.

What's less clear

If the Senate were to adopt the House of Representatives' legislation, income limits would essentially remain the same. Stimulus checks would be sent to individuals earning $75,000 or less per year and couples earning $150,000 or less. For those making more, the amount phases out -- and that's the rub.

Depending on how many children a family has, it's possible for a family earning $300,000 to receive a check. Although it would likely be small, lawmakers question if funds should be directed to higher-income families at all.

What this group of lawmakers questioned in Sunday's meeting is whether the next round of stimulus checks could be better targeted to the people who need them most. That would likely mean the creation of stricter income guidelines.

Evidence-based concerns

Economists with Opportunity Insights, a nonpartisan research policy institute, used real-time spending data to assess the effects of the second round of stimulus checks distributed to Americans this month.

The group found that the $600 checks increased spending among lower-income households considerably but had far less impact on higher-income individuals. Specifically, families with annual incomes of $78,000 only spent $45 of each $600 check received. When the first round of checks was distributed in the spring of 2020, the situation was different. More people were out of work, and higher-income households were pressed to spend the funds they received. According to the economists, the same is not true today.

Based on its calculations, Opportunity Insights estimated that households earning more than $78,000 will spend only $105 of the $1,400 stimulus checks under consideration. They suggest that targeting the third round toward lower-income households will produce more significant economic effects because those families are likely to put more of their stimulus money into the economy. Families with less need are more likely to save or invest the funds.

It's all in the details

The president appears poised to negotiate stimulus check eligibility, if only to get another round of checks through with bipartisan approval. What we await is word of whether there will be new, tighter income qualifications and when we might expect to see another round of payments.

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