The subject of a second stimulus check has been on the minds of many Americans for months. Until today, we only had half of the puzzle.
In May, the House of Representatives passed the Heroes Act. It created a second stimulus check of $1,200 for Americans earning less than $75,000 a year plus an additional $1,200 per dependent up to three. In many ways, it was very similar to the Cares Act but it has to yet to move within the Senate due to its high cost.
But back then, many Republicans were against the idea of a second check. But given the recent economic developments and the resurgence of the pandemic in many areas, there’s a greater appetite for more economic assistance.
For weeks, Senate Leader Mitch McConnell (R-KY) has worked with Treasury Secretary Steven Mnuchin on a package but we have yet to see the full details. We only knew that Republicans do not want a bill that’s as expensive as the Heroes Act, which weighs in at around $3 trillion.
On Tuesday, McConnell took the Senate floor and delivered an address in which he confirmed a stimulus check would be included in the next bill: “And speaking of building on what worked in the CARES Act, we want another round of direct payments to help American families keep driving our national comeback.”
After some negotiation this week with the White House and discussions with some House and Senate Democrats, The Hill reported that Treasury Secretary Mnuchin confirmed that the proposed second stimulus check will be the same as the first: “We’re talking about the same provision as last time, so our proposal is the exact same proposal as last time.”
Second Stimulus Check Details
While the exact language has to be worked out, if the second stimulus check is the same as the first, this is how it will be structured.
It would give an advance on a refundable tax credit of $1,200 to qualifying Americans plus an additional $500 for dependent children under 17 years old.
The qualification is based on your adjusted gross income:
Single filers who earn less than $75,000 a year will get the full benefit. Those who earn more will see their check reduced by 5% of the amount they earn over $75,000.
Joint filers who earn less than $150,000 a year will get the full benefit. Those who earn more will see their check reduced by 5% of the amount they earn over $150,000.
This is lower than what was proposed by the Heroes Act but since it matches the amounts of the Cares Act, anyone who received a check from the first stimulus check would receive the same one for the second stimulus check.
Second Stimulus Check Calculator: The HEROES Act Proposal
Consensus on Stimulus Checks
A direct payment to Americans is just one small part of a much larger package of assistance and it’s actually the least controversial. Both parties support direct payments, the White House supports direct payments, and it’s just a matter of adjusting the numbers so the cost is acceptable.
There are members of the Republican party who are balking at the total cost of the bill, which McConnell has tried to keep around $1 trillion.
There are many other aspects of the package that are more likely to stall the negotiations – including a payroll tax cut, liability shield for businesses and schools, unemployment benefits, and additional financial assistance to state and local governments. It will take some time before we can reach consensus and get a bill passed.
How Long Does It Take to Issue Checks?
It took the Cares Act approximately 13 business days to begin sending the stimulus checks. Since the IRS and the Treasury Department has all the information it needs, and presumably has learned from the first delivery, they could be issued slightly faster.
This is all based on a bill being passed by Congress and signed by the President before Congress recesses in early August. On CNBC’s Squawk Box, House Minority Leader Kevin McCarthy (R-CA) said that he doesn’t expect the bill gets done by July, so we will see how quickly they can come to a consensus and pass this bill into law.