There have been numerous stimulus check proposals brought forward since the Covid-19 pandemic began. However, only the CARES Act has been successfully passed thus far.
The CARES Act had overwhelmingly bipartisan support, yet proposals since then have experienced setbacks and have been unable to garner a similar result.
However, Congress is back in session on July 20, so the American people might finally have answers soon on whether or not more stimulus checks are headed their way.
What we know so far is Senate Majority Leader Mitch McConnell said Congress will discuss a new stimulus package that’s different from the HEROES Act, which passed in the House of Representatives but has yet to pass in the Senate. He also said this new package might include direct stimulus checks to the American people, although the checks might be limited to those who earn $40,000 per year or less.
This is a much more watered down proposal than the $2,000/month recurring stimulus check payment that Senators Kamala Harris, Bernie Sanders, and Ed Markey introduced back in May. However, the idea of recurring payments is gaining traction again.
Leading Economists Suggest Monthly Payments
Earlier this week, 156 top economists drafted a letter stressing the need for monthly recurring payments for the American people until the Covid-19 pandemic improves. Several notable economists participated in writing this letter including Jason Furman, who used to be an economic advisor to President Obama.
The letter specifically states, “Direct cash payments are an essential tool that will boost economic security, drive consumer spending, hasten the recovery, and promote certainty at all levels of government and the economy – for as long as necessary.” This letter coming days before Congress reconvenes could impact lawmakers as they put together another stimulus package that will need bipartisan support to pass.
Monthly payments could come as a great relief to Americans who are still experiencing significant job loss. Fox Business reports, “More than 48 million Americans have lost their jobs since stay-at-home orders designed to slow the spread of COVID-19 were first issued in March”
What About the June Jobs Report?
The June jobs report was supposed to be a deciding factor in whether or not Americans would get another round of direct stimulus checks. A successful jobs report could indicate Americans don’t need more checks, and successful it was. The White House reported numbers that exceeded all expectations saying, “Our Nation’s economy has broken another record as 4.8 million jobs were added in June.” They went on to say, “In June, nearly every major employment sector enjoyed a gain in jobs, with the leisure and hospitality industry seeing a gain of 2.1 million and retail trade increasing by 740,000.” Even so, President Trump has said he supports a second stimulus check.
Plus, the jobs report leaves out some critical information. While it’s positive news that many Americans are headed back to work, the economy is not fully recovered yet. In fact, CNN reports, “Although the unemployment rate has come down from 14.7% in April, it remains higher than at any point during the Great Recession.” As such, it’s pretty clear, Congress has no choice but to pass a second stimulus bill.
How will the American People Use More Stimulus Payments?
In the letter by economists mentioned previously, they urged the need for more stimulus payments so that Americans would do more consumer spending. Consumer spending means a more robust economy, which is good news for businesses, employers, and by extension – employees. But, will the average American actually use their stimulus payment for consumer spending?
According to research by Betterment, “Over a third of investors (34%) indicated they did not come into the COVID-19 pandemic with a sufficient emergency fund.” Perhaps, then, Americans who are worried about potential job loss would use monthly stimulus payments to build up their emergency reserves.
Another interesting statistic from the Betterment survey was, “As a direct result of COVID-19, 18% of respondents have stopped saving and 21% have withdrawn from their savings account to cover regular expenses.” So again, perhaps Americans would use a stimulus check to re-supply the savings accounts they had to dip into during the recession.
In fact, when asking how respondents would spend their stimulus check, 41% said they would save or put it towards an emergency fund and 28% said they would use it to pay off debt. Only 18% said they would use it to spend.
It seems as though many Americans, lawmakers, and also the President himself are in favor of a second stimulus check. However, we don’t know whether or not that will include monthly recurring stimulus checks or another one-time check. We also don’t know whether or not lawmakers will limit check recipients to those making under $40,000 per year.
If Americans do receive second stimulus checks, even monthly ones, it’s likely they will use the money for regular household bills, savings, and paying down debt more so than travel or non-essential purchases. Either way, now that Congress is heading back in session in just a few days, we should know soon whether or not a new proposal comes forward that can actually get enough bipartisan support to move forward.