Today, House Minority Leader Kevin McCarthy admitted that the next COVID-19 stimulus bill probably won’t pass until August. While the news that Congress is putting together another relief package is a welcome one, Americans have been waiting for a second direct stimulus payment for months now — the CARES Act was passed in late March. On top of another direct stimulus, the next package is also likely to include extra provisions for federal unemployment benefits. But with no renewal likely before August, it means the extra $600 given on top of state unemployment benefits will expire after this week.
McCarthy has said that he expects a bill to pass “probably in the first week of August.” But if Republicans and Democrats don’t come to an agreement by the first week of August, there won’t be a bill until September — after August 7th, Congress is in recess until September 7th. Yesterday, it returned from a recess that lasted from July 3rd to July 17th.
Will the extra $600 unemployment be extended?
Republican lawmakers have continued to say that the extra unemployment money disincentivizes people from working, encouraging them to stay at home and do nothing. “We don’t think any federal money should be spent that gives you a disincentive to work,” said McCarthy at the White House yesterday.
Treasury Secretary Steven Mnuchin expressed similar sentiments, saying that he would “make sure that we don’t pay people more money to stay home than go to work.” He has said that if the next bill extends unemployment benefits, it will limit the replacement rate to not exceed 100% of past wages. Other lawmakers have suggested it could be reduced to $200 to $400 a week.
The disproportionate worry over disincentivizing work ignores that the extra $600 was intended exactly to encourage people to stay home during a pandemic that has so far killed over 140,000 Americans. Allowing the $600 benefit to expire, some argue, could disincentivize people from choosing their lives over a paycheck. The extra money was also included because state unemployment benefits have typically been ungenerous, replacing less than 50% of usual pay. It has been especially helpful to the many Americans who make low wages, in a nation where the federal minimum wage is only $7.25.
Many experts believe that allowing the $600 to expire would be devastating, setting off a wave of evictions and homelessness, especially as it coincides with the expiration of a federal eviction moratorium. Even Jerome Powell, chairman of the Federal Reserve, has encouraged Congress to extend the extra unemployment money. The Century Foundation has estimated that over 25 million people are currently receiving the $600; new weekly unemployment claims have stayed high as many populous states experience a huge rise in confirmed COVID-19 cases.
Will there be another stimulus payment?
Senate Majority Leader Mitch McConnell announced today that the next bill will include a second direct stimulus payment. But it’s not clear if Congress will send another $1,200 with the same eligibility rules. The CARES Act sent $1,200 to individuals making $75,000 and under, phasing out the payment completely at an income of $99,000, but in recent weeks McConnell has suggested that there may be an income cap at $40,000 this time. White House economic adviser Larry Kudlow said earlier this month that the next stimulus payment may not only be limited to Americans with lower incomes and those who have lost a job, but that it could also be less than $1,200.
The HEROES Act, which passed the House in mid-May, included not just another $1,200 to individuals but closed the loophole that shut some college students out of the first stimulus, as well as increasing the amount paid per dependent from $500 to $1,200. It has not been taken up in the Senate.
Other relief ideas
There are other measures being floated for the next stimulus bill, including additional Paycheck Protection Program (PPP) funding for small businesses impacted by COVID-19, according to McConnell. The Washington Post has also reported that the bill will provide about $70 billion for schools, but that this funding would be tied to schools reopening. In early July, President Trump threatened to take away federal funding for schools that didn’t reopen. Teachers across the nation, especially in states currently being overwhelmed by new cases, have expressed serious concern over going back to school. In Florida, teachers have filed a lawsuit against a state mandate requiring reopen schools next month.
According to the Washington Post, the White House is reportedly seeking to block additional funding for coronavirus testing and contact tracing, as well as money for the CDC, in the next stimulus bill. Senate Republicans, on the other hand, allegedly want to give an extra $25 billion to states so they can continue ramping up testing and contact tracing. In some states, people are waiting over a week to receive their COVID-19 test results. Last week, the Trump administration suddenly ordered hospitals to stop reporting COVID-19 information to the CDC and to instead send it directly to the Department of Health and Human Services, causing worries over data transparency in the face of a White House that has consistently lied about or downplayed the number of new cases.