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Stimulus Check Update: 7 Reasons a Third Stimulus Check Is Likely to Become a Reality

by Dana George | Jan. 22, 2021

The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation.

A hand holding a small American flag and a stimulus check from the U.S. Treasury.

Image source: Getty Images

The weakened economy underscores the need for another round of stimulus checks.

Although some are still waiting on their second stimulus check, there is no doubt that President Joe Biden is already pushing ahead for another round of checks. Biden has asked Congress to approve a new bill that includes sending $1,400 more in stimulus money to the bank accounts of eligible Americans.

Here are seven reasons we believe a third stimulus check is bound for Congressional approval despite expected resistance from Republican lawmakers.

1. Democrats have the majority in the House and Senate

While it is a small majority, if Democrats stick together, they only need 10 other senators to join them in passing another coronavirus aid bill. Even if one or two Democrats, like Senator Joe Manchin of West Virginia, vote against the bill, some Republicans pushed for bigger checks to the American people in December, so it's easy to see some of them crossing the aisle.

2. Unemployment claims are still high

As the number of COVID-19 cases surged following the holidays, approximately 900,000 workers filed for unemployment benefits during the week that ended Jan. 16. Jobless claims in the U.S. are higher today than during any previous economic recession on record. It will be difficult for politicians from any party to deny the ongoing need for financial assistance to the American people.

3. Economists back more stimulus

According to economists, due to a weaker-than-expected outlook for the job market, worsening pandemic, and overall economic suffering, the U.S. requires an economic life raft. While Congress may not back the entirety of President Biden's plans for a $1.9 trillion coronavirus relief package, most expect them to support $1,400 direct payments -- if only to stimulate local economies.

4. Retail sales are falling

Consumer spending accounts for 70% of the U.S. economy, making the fact that retail sales fell for the third straight month in December especially bad news. Direct $1,400 payments are intended to spur Americans to spend and help shore up the retail and restaurant sectors.

5. The fear of economic scarring

This is not the first time Biden has inherited an economy in crisis. As vice-president in the Obama administration, Biden was part of the team charged with tackling the Great Recession from the first day in office. He punctuates the need for more stimulus funds today by saying that failure to stimulate the economy will end up costing far more than the $1.9 trillion he has proposed. His nominee for Treasury Secretary, Janet Yellen, argues that additional stimulus is necessary to prevent "scarring" of the economy.

6. Chance to boost the GDP

Another round of direct aid alone could lift the GDP by 0.7%, according to a report from U.S. economist Gregory Daco.

7. It could happen without 60 votes

There are 100 U.S. Senators, with Vice President Harris acting as the tiebreaker in a 50/50 split. To avoid a filibuster and get the bill passed, the bill requires 60 votes. If the motion for another stimulus package cannot muster the support of at least 10 Senate Republicans, all is not lost. It is still possible to move it to a process called "budget reconciliation."

In a nutshell, budget reconciliation allows legislators to get bills passed with a simple majority instead of the 60 votes usually required in the Senate. Only specific amendments that change spending or revenue can be moved to budget reconciliation. Once there, debate time is limited, and the bill needs a simple majority of 51 to pass into legislation.

While no one expects Congress to adopt all of the president's proposals without a fight, it appears that most lawmakers are in favor of another direct payment to the American people. Whether recipients use it to pay bills, shore up their savings accounts, or invest, another round of checks is like to provide an emotional shot in the arm as the pandemic drags on.

One way to accomplish this may be to break the president's proposal down into two separate bills, allowing Congress to vote on another round of direct stimulus payments as a separate bill. If all else fails, there's always budget reconciliation.

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About the Author

Dana George
Dana George icon-button-linkedin-2x

Dana has been writing about personal finance for more than 20 years, specializing in loans, debt management, investments, and business.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.

The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.

The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation.

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