Senate Republicans have indicated they may be willing to pass another stimulus measure that would include individual payments to Americans.
But the GOP is balking at another $2 trillion going out the door, so they are looking for ways to reduce that figure to less than $1 trillion.
One way to do that is to limit stimulus payments to those Americans making less than $40,000 a year. It’s a dubious proposal because Democrats in the House won’t sign on to it. But it’s a starting point for negotiations. And with states dramatically slowing down or pulling back on reopening their economies because of coronavirus hot spots driving the infection rate up, both sides may feel more like negotiating later this summer when the economy begins to sputter.
Those $1,200 payments went to individuals making up to $75,000 and couples earning up to $150,000 per year. The amount was then reduced incrementally for incomes up to $99,000 for individuals and $198,000 for couples, above which it was completely phased out.
In a CNBC interview on Thursday, Treasury Secretary Steve Mnuchin declined to comment on the proposed $40,000 threshold.
“We do support another round of economic impact payments,” Mnuchin said. “The level and criteria we’ll be discussing with the Senate.”
It’s problematic that millions of Americans would be ineligible for checks if the $40,000 limit was passed. For House Democrats, it’s a non-starter. But McConnell has a great big chip to play: extending the $600 a week extra unemployment benefit, which expires July 31. The extra money at the state level that was being given to workers during the crisis has largely run out and most unemployed workers will lose their regular unemployment soon — if they haven’t lost it already.
This has rapidly become more than an unemployment problem. It’s getting to be a subsistence problem, where millions of people need government assistance just to survive. This should help drive the two sides toward making a deal.
“It’s right that we should target people at lower incomes,” said Kris Cox, senior tax policy analyst at the Center on Budget and Policy Priorities. “But we need to make sure they’re actually able to receive their payments.”
Chuck Marr, director of federal tax policy at the Center on Budget and Policy Priorities, said it is “really heartening” that McConnell “identified the problem” that low-wage workers have been hit the hardest.
That subsistence assistance will also include expanding SNAP benefits and trying to find a way to help shore up state and local budgets, which is really the first line of defense against people who desperately need government assistance.
The challenges facing Congress in the coming years will be severe and unless both parties prove they can work together to get the American people through safely to the other side of this crisis, the recovery will be severely affected.