President Joe Biden’s $ 1.9 trillion coronavirus relief plan proposes a third round of stimulus checks of $ 1,400 for most Americans. But while that could be a helping hand for millions of households still suffering from the economic impact of the pandemic, it could take months for payments to arrive, analysts say.
The price tag for the aid package, called the American Rescue Plan, is likely to face setbacks from Republican lawmakers, who last year opposed Democratic efforts to pass a $ 2 trillion bill. Heights Securities analyst Hunter Hammond expects the ultimate package to be reduced to $ 1 trillion or $ 1.5 trillion. But most analysts think lawmakers on both sides of the aisle will back the $ 1,400 direct payments that economists see as a lifeline for many cash-strapped workers who lost their jobs or saw their income drop during the pandemic.
According to Ed Mills, an analyst with investment bank Raymond James, support for another stimulus package may gain momentum, given several developments that point to growing economic distress as the pandemic worsens. A weaker expectation for the labor market, with a higher than expected 1 million unemployment claims During the first week of January, as well as the record number of COVID-19 infections and deaths, could prompt lawmakers to back Mr. Biden’s plan for additional stimulus, analysts say.
“The market is back to expecting more fiscal stimulus to be almost inevitable in the early days of the Biden administration, with the release of a ‘US $ 1.9 trillion bailout,'” Mills said in a report on January 15. . “We expect additional fiscal support to remain likely, the timing and scope are highly evolving.”
The key question is whether Republican lawmakers would back the package, or whether the Biden administration would eventually address its spending priorities by splitting the spending proposals into two bills, analysts say.
Janet Yellen, President Joe Biden’s choice as Chancellor of the Exchequer, said on Jan. 19 that the incoming government would focus on getting its $ 1.9 trillion pandemic emergency plan swiftly implemented. Yellen argued that additional incentives, including Mr Biden’s proposal for a $ 15 minimum wage, were needed to avoid economic “scars from this pandemic.”
The plan to provide more direct aid to low- and middle-class households could help boost GDP by 0.7%, although other measures in the bill – such as higher minimum wages and aid to states – will drive GDP growth by 1.00. 5%, according to a Jan. 18 report by US chief economist Gregory Daco of Oxford Economics.
Here’s what analysts are predicting about the $ 1,400 checks and other spending proposals.
Are the $ 1,400 checks a done deal?
Most likely, according to Wall Street and political analysts. There is growing support among Republican lawmakers for additional stimulus targeting low- and middle-income households, with the latest attempt to pass $ 2,000 stimulus checks, gaining bipartisan support.
There is an 85% chance that a scaled down package will pass in the first three months of 2021, Height Securities’ Hammond predicts. Due to the continued support for additional direct aid to households, controls are likely to be included in that smaller package.
“We believe there is support for a smaller package that includes the $ 1,400 checks, more health care funding, support for small businesses and some state and local aid,” Mills said.
When will I receive a check for $ 1,400?
Alec Phillips, the US chief political economist at Goldman Sachs, thinks the package could be adopted in mid-February to mid-March. After the emergency relief bill passes Congress, it must be signed by the president. After that, the IRS would distribute money via direct deposit, postal checks, and prepaid debit cards.
It is likely that the House will vote on Mr. Biden’s US bailout plan in the first week of February, according to Hammond of Height Securities in a Jan. 22 investigation note.
With the first incentive payments in April 2020, spending $ 1,200 on eligible adults and $ 500 per child, it typically took anywhere from two weeks to several months for the payments to reach people. The second round of checks, which sent $ 600 to each eligible adult and child, took about a week for the money to come in via direct deposit.
But in some cases people experience delays in receiving the money due to issues with their account information. President Biden will sign an order on January 22 that will happen lead the treasury to streamline the delivery of incentive vouchers for those who have not yet received their direct payments.
Based on previous incentive money disbursements, and assuming Congress passed a new bill in mid-February, the checks could appear in bank accounts in late February, though that would likely be the best scenario. If a package has passed by the end of March, people can receive their checks in early April.
The caveat is that these timeframes assume that at least 10 Republican senators will support the package, allowing 60 votes in the Senate to overcome a potential filibuster and pass the bill, analysts note. If the Biden administration cannot collect enough GOP support, stimulus supporters can proceed to pass it on through a process known as budget reconciliation. That parliamentary maneuver only requires a majority of votes for legislation to become law, although it can delay passage.
Would more people qualify for a check?
Millions more Americans could qualify for an audit if Mr. Biden’s plan is passed as he envisions it. One of its goals is to extend payments to adult dependents, who were excluded from the first two rounds of scrutiny.
That exclusion meant that college students who are claimed to be dependents of their parents’ tax, and disabled adults who are charged as dependents, were not eligible for checks. Because the two previous childcare vouchers defined a child as someone younger than 17, high school students aged 17 or 18 were also excluded. Mr. Biden would also extend payments to older teens.
Do Americans Really Need the Money?
Signs indicate that millions of households face increasing financial hardship as the pandemic worsens, forcing some companies to lay off staff and cut hours.
In December, recruiting in the US fell to the first time in seven months, as the virus particularly affected restaurants, bars and other service-related businesses. The number of Americans who applied for weekly unemployment claims last week, a proxy for layoffs jumped to nearly 1 million.
The financial need is greatest in households with a lower income. Still, nearly half of households with incomes over $ 150,000 said they needed stimulus controls for financial stability, according to a recent study by Credit Karma. Nearly 6 in 10 households are facing financial problems, TransUnion found in a November survey.
The additional stimulus funds “will be essential to the financial stability of many Americans, including those who appear to have higher incomes,” Colleen McCreary, chief people officer at Credit Karma, said in an email to CBS MoneyWatch. “As the pandemic progresses, Americans continue to feel the financial crisis.”
A new survey from Bankrate.com found that more than half of Americans said the second $ 600 per person stimulus check won’t last more than a month. Most said they would use the money to pay for household bills and daily necessities.
According to Oxford Economics, Mr. Biden’s stimulus plan would total about $ 3,500 per household. In other measures to support workers and sustain the economy, he also wants to increase increased unemployment benefits to $ 400 a week and has called for an increase in federal minimum wage up to $ 15 an hour.
The wage floor, now $ 7.25 an hour, hasn’t been raised since 2009, although many states and cities in the US have raised the local minimum wage.
—With Associated Press reporting.