Income limits coming for the $1,400 checks?

Update:

As we await to hear news regarding the third round of stimulus checks, it seems like talk about a targeted approach is really heating up.

Many lawmakers question how effective sending out stimulus checks is, especially to those people who have higher incomes.

They worry about wasting resources and so there has been a new push to limit the eligibility for the stimulus checks to lower income brackets.

And it seems like this approach is getting backed up by data.

According to a study from the Opportunity Insights Economic Tracker, a nonprofit research group led by Harvard economics professor Raj Chetty, Household earning more than $78,000 have largely saved their $600 check (second stimulus check).

Moreover, it doesn’t look like the pandemic is still affecting many of those with these higher incomes.

“We see this massive discrepancy,” said Michael Stepner, an economist with Opportunity Insights.

“Since the middle of June, the recession in jobs for higher income households is over — employment has been just like it was before the pandemic.”

This is largely because a lot of these higher income occupations can be done remotely, often just as effectively as in person. But jobs for lower income Americans are still down about 20% compared to where they were before the pandemic.

“Those are millions of jobs that are lost, and millions at the bottom of the income distribution are still out of work,” Stepner said. 

Findings like these will be crucial in determining the steps that Congress takes with the third round of stimulus checks.

There are a lot of different routes they could take with a targeted approach.

On one end, they could have a hard cut off at somewhere around $80,000 so that if you are in above that you don’t receive anything. Or, they could just phase out the payments more aggressively.

There’s also the possibility of them going with a much lower income threshold such as somewhere around $40,000 to $50,000. Those figures have been discussed before so I would not be surprised to see lawmakers entertain them once again.

Either way, Biden has already announced that he is open to a more targeted approach and with many lawmakers voicing that too, I think we will likely see it happen.

The main issue is that lawmakers want to move very quickly and there is already talk about having votes as soon as next week. Putting together a thorough and effective targeted plan in a short amount of time could be a real challenge.

=====

Update:

One of the biggest complaints that we have heard from both Republicans and Democrats regarding the next round of stimulus checks is that they believe the relief is simply too broad.

Too many Americans are receiving stimulus checks that don’t truly need them.

Because of that many lawmakers would much rather prefer a targeted approach that helps out the people who are in need the most.

One of the most practical ways that this could be accomplished is with tighter income limits on the stimulus checks.

Up to this point, we have not heard a lot of discussion about income limits except for Republicans who were on board for it over the summer.

But, it looks like President Biden is now open to negotiating income limits for the next round of stimulus payments.

The current income limits allow for the full payment for individual incomes of up to $75,000 and married couples with incomes of up to $150,000.

But it’s not clear where these new income limits would cut off.

“There’s legitimate reason for people to say, ‘Do you have the lines drawn the exact right way. Should it go to anybody making over x number of dollars or y,” Biden said.

“I’m open to negotiate those things.”

While income limits definitely makes sense when approaching a targeted relief measures, there will be considerable backlash if tighter limits are imposed, especially if they are drastically under the current limits.

There was a lot of talk from Democrats, including Biden, about passing “$2,000 stimulus checks” at the time of the all important Georgia runoff elections.

Many people felt like it was a bit of false advertising when it was revealed that the stimulus checks would actually be $1,400 since they had been presented as if $2,000 checks would go out in addition to the $600 checks that already been issued.

If lawmakers decide to further cut back I think that backlash is going to be amplified by a large degree and probably justifiably so.

Not only will people feel duped but there are some complications with income limits because they don’t fully account for things like cost-of-living.

So we’ll have to see how this new development plays out.

H/T

=====

Original article:

A lot of people got excited when Biden announced his plan for a $1.9 trillion coronavirus rescue package.

The package contained a wide variety of benefits, including $1,400 stimulus payments.

What made this proposal more exciting than prior proposals is that Democrats have the majority in the Senate now so the prospects of passing such a bill are more likely.

But there still is some worry that the talks for this new bill could last for weeks or potentially even months, especially with an impeachment trial coming in the near future.

However, it looks like lawmakers are trying to streamline the process to pass more stimulus checks.

According to Speaker Nancy Pelosi, the House is fast tracking Biden’s proposal and House committees are expected to vote on it this week.

It will reportedly be “completely ready” to pass the following week.

That is very encouraging news but the ultimate decision that really matters is what happens in the Senate because we have seen multiple bills passed in the House only to be killed in the Senate.

It doesn’t seem like experts believe that 60 votes are possible for the $1.9 trillion proposal.

Instead, there will likely have to be concessions in order to get that bill to pass.

That could mean dropping items like the federal minimum wage increase or simply trying to pass measures through a standalone bill such as a bill that only contains $1,400 stimulus checks.

It’s very possible that we might see the support for a vaccine distribution lumped in together with the direct payments as standalone bills.

If that happens, lawmakers might shift their attention to the impeachment after passing those measures and then return to coronavirus relief once the impeachment proceedings are finished.

If Democrats don’t feel like they can get the votes they need they might resort to an alternative path that allows them to pass legislation with only a simple majority of 51 votes.

There has not been a lot of talk of Democrats going that route but it could certainly be a possibility if they hit a roadblock with some of these key relief measures.

So I expect for the House to make some moves this week and for them to likely pass a relief bill next week but the real discussions likely won’t take place until the bill finds itself in the Senate.

And the best prospect for a short negotiation process, in my opinion, would likely be for the stimulus checks to arrive in a standalone bill or lumped in with crucial aid like vaccine distribution.

H/T

Related

How stimulus checks may get passed (even with no Republican support)

Third stimulus check update: When to expect the next bill

Biden signs executive orders for stimulus checks and minimum wage

UponArriving has partnered with CardRatings for our coverage of credit card products. UponArriving and CardRatings may receive a commission from card issuers. Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

One comment

  1. When it comes time to pay it back in taxes will the low income be required to pay it back like the middle class???…… I think not

Leave a Reply

Your email address will not be published. Required fields are marked *