$2.2 trillion HEROES Act would provide second round of stimulus checks
The House Democrats' revised stimulus bill would restore some popular programs that were devised to help families weather the coronavirus pandemic. Chief among them: $1,200 per adult stimulus checks targeted to middle- and low-income families.
In a statement earlier this month, House Speaker Nancy Pelosi said the bill reflects a package that's $1.2 trillion less than the Democrats' original HEROES Act in May, which failed to advance amid opposition from Republicans. The new bill is called the updated HEROES Act (which stands for Health and Economic Recovery Omnibus Emergency Solutions).
The new bill would also restore $600 in extra weekly jobless benefits, which until expiring in July provided a lifeline to tens of millions of adults who lost their jobs when the pandemic crippled the economy in March. The House passed the bill on Thursday, and Pelosi and Treasury Secretary Steven Mnuchin had held negotiations earlier this week on its provisions.
On Tuesday, the odds of a stimulus package passing before the November 3 election became slimmer after President Donald Trump called off negotiations. "I am rejecting their request," he said on Twitter, referring to the Democrats' stimulus proposal. Mr. Trump later tweeted that he would be open to approving "standalone" funding for stimulus checks, as well as a few other measures, including aid for the airline industry.
Mr. Trump also praised the economy, writing that jobs are "coming back in record numbers."
But economists aren't as rosy, including Federal Reserve chair Jerome Powell. On Tuesday, Powell warned that the nation risks a "downward spiral" without more stimulus. Although the unemployment rate has declined to 7.9% in September from a high of 14.7% in April, more than 21 million workers remain jobless or out of the workforce because of the pandemic, according to an estimate from the Economic Policy Institute.
Restoring the supplementary $600 in weekly federal jobless benefits would provide a critical income boost, "particularly for recipients in states where unemployment compensation is capped at sub-poverty-levels," Rebecca Dixon, executive director of the National Employment Law Project, said in an email.
Prior to Mr. Trump's negotiation flip-flop, the Democrats and the Trump administration had been in talks about the bill's funding priorities, although they were far apart on issues including support for state and local governments. Senate Majority Leader Mitch McConnell has indicated that he would not support any legislation that cost more than $2 trillion.
Mr. Trump's stance on Tuesday appeared to backtrack on his earlier support for another relief bill. While being treated for COVID-19 at Walter Reed Medical Center in Washington, D.C., he tweeted on Saturday that the nation "needs stimulus."
Even if the bill fails to progress, however, the legislation could become the basis for another stimulus round if Democratic presidential nominee Joe Biden wins the White House and Democrats gain control of the Senate.
Who would get a stimulus check?
A second stimulus payment would mirror the initial round of checks, which was authorized in March by the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act.
- Individual taxpayers with incomes of up to $75,000 would receive $1,200.
- Married taxpayers with incomes of up to $150,000 would receive $2,400.
- An additional $500 for each dependent.
As with the first round, the taxpayers would see their payments reduced if they earn above those limits, phasing out completely at $99,000 for single taxpayers and $198,000 for married couples.
One important change is how the updated stimulus bill treats dependents. In the first round, only children under 17 years old received the $500 payments, and adult dependents — people over 17 — were excluded. That meant older high school students and college students who are claimed as dependents on their parents' tax returns didn't qualify for the $500 checks.
The updated HEROES Act specifies that any dependent, regardless of age, would qualify for the $500.
$600 in unemployment benefits
The bill would also restore the $600 in extra weekly unemployment benefits, which were originally directed by the CARES Act through July, when they expired.
The extra payments would be retroactive from September 6 and continue through January 31, providing more than four months of additional jobless aid to millions of families.
Currently, many states are providing an additional $300 in jobless aid directed by President Donald Trump through an August executive order. The government agency overseeing those benefits has guaranteed six weeks of payments. Eight states have already exhausted that benefit, according to UnemploymentPUA.com, which tracks the program.
The average weekly jobless benefit is about $333, or about $1,300 a month. Experts say that's far from enough to pay for basics like rent, groceries and utilities in most regions.
Child care, food-stamp benefits
The legislation includes spending on other programs designed to help families, such as a proposal to spend $225 billion for education, including $182 billion for schools spanning kindergarten through 12th grade and $57 billion on child care.
The updated HEROES bill would boost the maximum food-stamp benefit by 15%, a measure supported by anti-hunger advocates.
New data from the Census shows that "23 million adults reported their household sometimes or often didn't get enough to eat, a marked increase from a similar survey in 2019," said Robert Greenstein, president of the liberal-leaning Center on Budget and Policy Priorities, in a statement. "Children are being hit especially hard. Households with children are likelier to report difficulty affording food and rent, which subjects children to serious hardships that research shows can have long-lasting, adverse impacts."
How people are spending the money
Stimulus payments were largely used to sock away money or pay down debt, according to an analysis published by the National Bureau of Economic Research. Only about $4 of every $10 in stimulus money was spent, which indicates the checks weren't entirely successful at spurring consumer spending.
But that could be due to the lack of opportunities to spend the money given the shutdowns that impacted stores, restaurants and travel earlier this year.
"To the extent that the pandemic will ultimately end, it suggests that future stimulus payments to households may be more effective in future crises," the researchers wrote.
