Jul 20, 2020
4 mins read
Discussions on a second stimulus package are expected to come to some form of conclusion in the coming weeks, and with a wage cap of $40,000 attracting a lot of press, we wanted to get a feel for who was saying what about it and whether it was likely to get agreement.
Would it apply a $40,000 cap to the second stimulus check?
"We 're going to launch a new bill next week," said Senate Majority Leader Mitch McConnell during an interview with WRVK radio in his home state of Kentucky Monday. He added that the law, which has not yet been introduced, is likely to be more controversial than the four previous coronavirus aid bills that injected more than $3 trillion into the hobbled economy with a mix of business loans, extended workers' unemployment compensation and direct family payments.
"I think we're going to get there and do something that needs to be done," McConnell said, promising a final resolution will be revealed before Congress starts its recess in August.
Nevertheless, there are disagreements among Republicans-in the White House and in Congress-about the exact course of the bill, including whether another round of direct payments to individuals and families will take place. And on that, the Kentucky Senator has already been paying a lot of attention to the adjustment to the wage cap that determines who will qualify.
"I think the people who've been hit hardest are people who earn around $40,000 a year or less," McConnell said. "Some of them work in the hospitality industry. As you all know, the hospitality industry just got rim-racked-hotels, restaurants-and maybe [more stimulus checks] might be part of that.
Federal Reserve Chairman Jerome Powell found out in May that, in March, 40 percent of Americans who earned less than $40,000 a year lost their jobs. There seems to be no doubt that these are the people who have suffered and are least likely to bear the greater economic burden of the coronavirus epidemic.
So, what is being said ahead of the more formal discussion about the proposed limit?
"I think there are many households, so many different things depending on the size of the family, that it will have to justify $40,000, justified, the rest," she said. "But I agree the families who make up over $40,000 will need support. Once, relying just on the situation in their lives.
Jeff Stein, The Washington Post's White House economics columnist, went on Twitter to say the cap was a planned solution that gained momentum.
"Different reports claim that McConnell was not only haphazard in tossing out $40,000 as a cut-off. Within GOP, opinion shifts in that direction, which would dramatically restrict eligibility, "he tweeted. Bankrate 's chief financial analyst, Greg McBride, shared his opinion.
"Replacing this missing revenue would help keep customers up-to-date on bills and sustain a spending level that supports the economic recovery," he said via Forbes. "The widespread pandemic effect on household income, the length of time it takes to recover that income, and persistent fear of it happening again will all weigh on the economic recovery."
"Higher earnings and lower earnings issues have a direct impact on consumer spending. It takes longer rather than later to bring money into the pockets of those customers.' And for those over the estimated $40,000, Amanda Novello, a senior economic policy associate with the public policy analysis organization The Century Foundation, also makes a compelling argument, calling it 'absurd.'
"We are faced with so many urgent problems that collide and not enough is being done to stop the bleeding. By the end of July, about 25 million people are going to lose a vital lifeline offered by supplementary unemployment benefits, and 30% of Americans missed home payments in June.
"We should not be testing-especially at such a small level in the face of such insurmountable need. Think of someone who made $50,000 last year but has near-zero savings and this year lost their work, and they are about to lose any significant unemployment insurance.
"This provision specifies that they are not eligible for assistance. This is all nonsense. We really need the same things that we wanted three months ago: an extra federal unemployment payment, an eviction moratorium, and generous direct cash assistance.
At a time when more, not less, transparency is needed, Republicans have put forward a range of alternatives that include modifying enhanced benefits or eventually replacing them with a back-to-work bonus, but they are not satisfied with the continuation of the $600 scheme.
"We would like to see some changes in unemployment," Larry Kudlow, the National Economic Council's CEO, told Fox News earlier this week. "We would like a small nature-type return-to-work incentive. We don’t want to give people disincentives.”
Clearly there is still a lot to be debated, and sadly those most in need of help will have to struggle on before decisions are made. The hope is that those people will be the ones to receive it when it is.