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It looks like there might be more momentum building with Republicans in the Senate with respect to limiting the eligibility of the next round of stimulus checks to lower income individuals.
Initially we heard talks about this $40,000 limit from Senate Majority Leader Mitch McConnell.
“I think the people who have been hit the hardest are people who make about $40,000 a year or less,” McConnell said during a public appearance in Kentucky. “Many of them work in the hospitality industry.”
And now according to Business Insider and as reported by the Washington Post, Republicans are now seeking to scale back the amount of spending on the next stimulus package.
Reportedly, more conservatives are seeking to lower the income threshold for getting the full $1,200 stimulus check.
There is a paywall for that article but according to BI, “The Post cited four officials familiar with internal deliberations who said talks were fluid and no income cap has been established yet.”
If lawmakers decided to move ahead with an income cap of $40,000, approximately 20 million people would be left out of a second round of direct payments.
This is going to be a tough balancing act because surveys indicate that those hit the hardest were individuals making $40,000 or under.
For example, a May 2020 Federal Reserve study showed that around 40% of households earning less than $40,000 per year lost at least one job due to the outbreak.
I am in the camp of believing that we should focus efforts on those hit the hardest, especially those in industries like hospitality which were absolutely gutted.
At the same time, there are people making more than $40,000 who have been hit pretty significantly and I think they should still receive something.
There is also a standard of living problem where making $40,000 in one city in the US is drastically different from making $40,000 in another city.
With all of the talk that we have heard about how generous the next package is going to be, it would seem unlikely that a hard income cap would be placed at $40,000.
More likely, I think we will see some type of tiered system similar to what came out with the CARES Act.
A big question is how would this potential income cap affect those filing jointly.
We still don’t know for sure if an income cap will be placed but it would not surprise me to see it implemented in some form.
Congress is set to resume debates on July 20th so we may not know any for sure details until that date.
But it does feel like we are starting to hear the first true negotiating positions from the Republicans in the Senate when it comes to eligibility. For quite some time, we did not hear much and now that we are starting to hear some details, it tells me that negotiations are happening behind the scenes.
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Daniel Gillaspia is the Founder of UponArriving.com and creator of the credit card app, WalletFlo. He is a former attorney turned full-time credit card rewards/travel expert and has earned and redeemed millions of miles to travel the globe. Since 2014, his content has been featured in major publications such as National Geographic, Smithsonian Magazine, Forbes, CNBC, US News, and Business Insider. Find his full bio here.