Republicans Release HEALS Act; Stimulus Provides $1,200 Checks, Cuts To Unemployment Payments

Senate Majority Leader Mitch McConnell released the Republican version of a second round of stimulus bill, calling it the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act while laying out the vision for the aid, as Congress works to secure support to those at home and strengthen the economy as coronavirus cases and unemployment rises. Parts of the proposed bill will look familiar to those that received aid in the March CARES Act. Others will lead to significant negotiations with Democrats, as well as with other Republicans.

The bill details rolled out in eight parts, with Senate committee leaders summarizing their separate portion of the bill.

The total cost of the proposed bill will run about $1 trillion, which is $2 trillion less than the stimulus bill, the HEROES Act, passed by the House of Representatives in May. It includes many protections that the country received in March, upon the initial passing of the CARES Act, including stimulus checks. But it also leaves out some protections that Democrats sought in the HEROES Act.

Some of the high points in or excluded from the bill, include:

  • Another $1,200 stimulus check to the same group of taxpayers that were meant to receive the stimulus checks after the passing of the CARES Act
  • Income limits for the full, $1,200 stimulus checks are $75,000 for individuals and $150,000 for families
  • It provides a $500 additional check for each dependent in a family, which is the same level as the CARES Act
  • It reduces the unemployment benefits, capping them to $200 a week from the $600 a week level that the unemployed received under the CARES Act. At the end of September, this benefit would switch to providing 70% of wages prior to losing one’s job.
  • It does not provide additional aide to states and municipalities that have lost millions to billions during the pandemic

The proposal sets the table for conversations between House and Senate leaders of both parties, in order to come to a complete bill that can pass Congress. McConnell labeled the release a “starting point.” Negotiations are expected to continue into August, leaving aid up in the air, as many protections passed in the CARES Act time out at the end of this week.

Here’s what’s in the proposal that has an impact on your finances.

Stimulus Checks

What’s clear: stimulus checks will not require much debate. Despite much bluster from Republicans in the lead up to the proposal, where the range of stimulus checks went from none to those making less than $40,000, Senator Chuck Grassley, Chairman of the Senate Finance Committee confirmed that the bill would provide a $1,200 check per taxpayer and $500 for dependents. The income limits for the checks will match the CARES Act, providing the payments to anyone making $75,000 or less as an individual or $150,000 or less, when filing jointly. The checks will taper off in amount until you make $99,000 as an individual or $198,000 as a couple.

This will not require much debate between Democrats. The House of Representatives passed a version of stimulus in May, which called for the same measure. The only area of contention will be in the amount families receive for dependents. Republicans call for $500 while the House bill sought $1,200 per (a maximum of three) dependent.

Unemployment Benefits

While the conversations between the GOP and Democrats may be smooth when it comes to stimulus checks, that’s not the case when it comes to unemployment. As expected, the GOP has called to cut additional unemployment benefits to provide filers up to 70% of their original income. It’s believed this will provide $200 per week for two months, giving states the opportunity to set up their systems to provide the 70% rate of original income.

Arguing that the unemployment benefits at $600 would allow workers to get paid “more not to work than when they would get working,” Grassley warned that the higher benefits in the CARES Act would prevent people from going back to their job.

“What this country needs is workers,” he added.

In the CARES Act, the unemployment benefits were increased by $600 per week through July. That safety net will run out this Friday. There’s evidence that the US’s spending was significantly bolstered by this benefit. JPMorgan Chase JPM ’s research arm found that unemployment spending could drop by 29% without this aide.

The House sought to extend this benefit of $600 additional payments per week through the end of January 2021.

Expect significant debate over this issue, before a consensus is reached.

What’s Not Included

There are many areas and groups not aided by the GOP bill, which HEROES Act tried to address. But the most glaring one may be the lack of mention on extending the moratorium on evictions. It’s a feature of the bill that was expected to be included, according to reports.

The rate of people not paying rent has increased in July, up to 32%, according to Apartment Lists monthly report. Yet, protections against evictions ended on Friday, leaving millions at risk of becoming homeless. 

It differs from the House version in a big way, as the HEROES Act included a $100 billion emergency rental assistance program, among other features, which would have provided aid to those on the brink of losing their home. This is included, along with protections from evictions. 

These full housing protections weren’t likely to pass through the Senate, which could lead to a fight between the two parties as negotiations progress.

Student loan payers also receive little protection from this plan. The previous stimulus bill offered protections, including allowing relief to repayments through September 2020 on Federal loans. Interest would not continue to accrue during this period. 

The GOP plan allows to defer payments beyond Oct. 1, only if you have no income. If you do find a job, then the payment will not exceed 10% of the income, after you account for expenses, like food and rent or mortgage.

It also does not address state aid, which many governors have sought as the pandemic destroyed local, city and state budgets. The HEROES Act provided $1 trillion to cover state and local budget shortfalls.

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