By Aman Jain. Originally published at ValueWalk.
It is very likely that there will be another round of some sort of coronavirus stimulus package. But, what most people want to know is if there will be another round of stimulus checks. President Donald Trump, many times in the last few weeks, has talked in favor of sending out stimulus checks. Now Senate Majority Leader Mitch McConnell sounds supportive of the coronavirus stimulus checks. Moreover, he might have also hinted as to who would get the next stimulus checks.
Q2 2020 hedge fund letters, conferences and more
Second coronavirus stimulus checks possible
At public events in Kentucky on Monday, McConnell said the next stimulus package could include another round of stimulus checks. However, he said the new checks would be aimed at low-income Americans.
When asked if the next coronavirus bill would include direct payments, McConnell said it “could well.” McConnell’s words should come as a relief to many as previously he opposed the second coronavirus stimulus checks.
Further, he said that the people who make about $40,000 or less annually had been hit the hardest, and many of these work in the hospitality industry.
“The hospitality industry, as all of you know, just got rim-racked — hotels, restaurants — and so that could well be a part of it,” McConnell said.
Considering McConnell’s comments, it wouldn’t be a surprise if the cut-off income for the next stimulus checks is $40,000.
McConnell acknowledged that the country needs “one last boost,” but expressed doubt if it would pass “unanimously.”
“The atmosphere has become more political than it was in March, but I think we will do something,” he said.
McConnell’s remark that the country needs a boost is also backed by a new study. The Columbia University researchers claim that the economic stimulus package prevented about 12.5 million people from falling below the poverty line. Things haven’t improved much since the first stimulus. So, the economy does need another boost in the form of a stimulus package.
McConnell hints at $40,000 cut-off
Though McConnell did not talk about the eligibility criteria for the next coronavirus stimulus checks, he did make a reference to those earning $40,000 or less. The first stimulus checks were sent to those with an adjusted gross income of less than $99,000.
Now with McConnell talking about $40,000, does this mean that the second coronavirus stimulus checks would be sent to those earning less than this? Though McConnell shared no details on it yet, the reference to $40,000 could at least suggest that the next coronavirus stimulus checks would be more targeted and limited.
Something similar was said by Larry Kudlow last month. Kudlow told Fox Business that the next stimulus checks would target those who lost jobs and are in need of financial assistance.
Also, McConnell previously talked about a stimulus package of close to $1 trillion. If the next package is close to this budget, then it would be necessary to have the stimulus checks income threshold at around $40,000 or less. Only then would there be room for other high-priority stimuli, such as a payroll tax cut, travel credit, and a return-to-work bonus.
As per a Federal Reserve report, 39% of the people with a household income of less than $40,000 in February lost a job in March. Additionally, 6% saw a reduction in their working hours or took unpaid leave. This again highlights the importance of providing assistance to people falling in this income bracket.
If $40,000 is the next threshold, then millions of Americans may not be eligible for the next stimulus checks. In 2018, there were 131 million Americans with an income of $39,999 or less, as per the most recent census data available. Early last month, the IRS informed that it sent out about 159 million stimulus checks to Americans.
Next coronavirus stimulus: what to expect?
As to what the next bill might include (apart from the coronavirus stimulus checks), McConnell noted that liability protection is one of his top priorities. Liability protection, if implemented, would protect the businesses from coronavirus-related litigation.
McConnell said the liability protection would not be just for doctors, but would extend to hospitals, doctors, nurses, nonprofits, universities, colleges and K-12 as well. The liability protection could be for five years, retroactive from 2019 through 2024.
The Senate Majority Leader said such protection would ensure that “people who acted in good faith during this crisis are not confronted with a second epidemic of lawsuits in the wake of a pandemic that we’re already struggling with.”
McConnell is also focused on healthcare, opening schools, jobs and the economy. He does not seem to be interested in student loans or student loan forgiveness.
As to when we could expect the next coronavirus bill, McConnell said he would present his own legislation after the Senate reconvenes July 20. “I’ll be unveiling something which will be a starting point in a few weeks and we’ll be dealing with the administration and the Democrats,” he said.
Additionally, McConnell said that the next stimulus package would be the last. He suggested that the country can’t afford more as the debt now is the same size as the economy, something that has never happened since World War II.
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