Updated July 23, 2020. The Senate was expected to propose the next stimulus bill today. However this has now been delayed until at least next week. Here is a summary of the next proposal, based on what we know so far.
Senate Majority Leader Mitch McConnell (R-KY) is expected to present the long-awaited, “fourth and final” stimulus proposal today. It’s important to understand that this is going to be the first draft of the bill and is to be considered a starting point for negotiations with Democrats and even within his own party.
During a press conference, Senator McConnell said, “I’m going to introduce a bill in the next few days that is a starting place that enjoys fairly significant support among Republican Senators, probably not everyone.”
This statement comes on the heels of some highly publicized disagreements among Senate Republicans and the Trump administration regarding what should be included in the next stimulus bill.
Senate Republicans are focused on reigning in the total size of the next stimulus bill, hoping to keep it around $1 trillion, while the Trump administration and Democrats support larger spending bills.
What is Expected to be Included in the Next Stimulus Proposal?
This proposal is widely expected to include another round of stimulus checks, funding for schools, small business assistance and business liability protections, money for Covid-19 testing, and possibly a restructuring of the weekly federal unemployment benefit.
The next bill is not expected to include payroll tax cuts, a priority for the Trump administration.
Second Stimulus Checks
The GOP was initially opposed to the idea of providing a second round of stimulus checks. However, they have changed their tune in recent weeks and are now supporting a second check. That said, they have discussed limiting the size and scope of the second round of checks by reducing the amount of the checks, decreasing the income eligibility limit, or both.
As a reminder, the first round of stimulus checks was for $1,200, with an additional $500 payment for eligible dependents ages 16 and under. The House-sponsored HEROES Act also called for $1,200 checks with $1,200 for up to 3 dependents with no age limit (up to a maximum of $6,000 per family). The HEROES Act is not expected to be passed by the Senate.
President Trump has called for a larger stimulus check than the CARES Act and HEROES Act, but it is not believed that the Republican Party generally supports this idea. Most reports suggest the next check will be either the same size or smaller than the previous check.
The income eligibility limit is still unknown at this point. The CARES Act and HEROES Act shared the same income limits, which were set at an Adjusted Gross Income (AGI) of $75,000 or less for individuals ($150,000 for married filing jointly), with a phase-out for AGI above those levels. Those with an AGI of $99,000 ($198,000 for married filing jointly) or greater were ineligible for stimulus checks.
The Republican Party has suggested the income limit for the second round of checks could be as low as $40,000, though they have recently backed off that number.
$105 Billion for Schools
CNN reports that the next stimulus bill is expected to include $105 billion in school funding, including “$70 billion for K-12, $30 billion for colleges and universities and $5 billion for governors to use at their discretion.”
The school funding is not tied to schools reopening, which is a priority for the Trump administration.
Small Business Assistance & Business Liability Protections
The next stimulus bill is expected to include small business provisions, including tax incentives for hiring and retaining workers.
Treasury Secretary Steven Mnuchin has been lobbying for additional small business loans to assist minority-owned businesses and businesses that have been especially hard-hit by the pandemic. This could come in the form of another round of forgivable PPP Loans or an extension of the PPP program, which is set to expire on August 8th.
Mnuchin also appeared to support forgiving PPP Loans under $150,000 while testifying before Congress this week. This could serve as a means to streamline the loan forgiveness program and focus more time and resources on larger loans. It is unclear if PPP Loan forgiveness would be included in this stimulus bill or as a standalone bill.
Business liability protections are another priority for the Republican party. Senator McConnell recently stated, “No bill will pass the Senate without, liability protection for everyone related to the coronavirus.”
Funding for Covid-19 Testing and Government Health Agencies
The CNN reports the next bill is expected to include $25 billion for Coronavirus testing and contract tracing. This includes $16 billion in new funding and $9 billion that was previously authorized in a prior stimulus package.
Restructured Federal Unemployment Benefits May be Included
The Republican Party has been opposed to extending the $600 weekly federal unemployment benefit as it was written into the CARES Act. They argue that this serves as a disincentive to work, as some unemployed workers earn more through unemployment benefits than they earned while working.
However, Senate Republicans have recently discussed a reduced weekly federal unemployment benefit that would provide a lifeline for the 25 million unemployed workers while reducing the overall scope of the program. No firm numbers have been proposed to this point, but reports have included a weekly benefit of $200 per week, $300 – $400 per week, or an amount not to exceed the worker’s previous income.
The $600 weekly benefit is set to expire at the end of this month, adding urgency to this topic. Senate Republicans are aware the benefit may expire prior to the next stimulus bill being passed. Because of this, there have been discussions of a deal that would provide a short-term extension of the $600 weekly benefit, possibly at a reduced rate.
Payroll Tax Cuts May Not Be Included in the Next Stimulus Bill
President Trump and several members of his administration have been adamant about including a payroll tax cut in the next stimulus bill. President Trump has gone so far as to threaten to veto the next bill if it does not include payroll tax cuts.
However, there hasn’t been much support for this along either party line. Payroll tax cuts are seen by most members of Congress as a way to provide tax cuts to large corporations and help those who are already working, while not addressing the 25 million unemployed workers who are clearly in more need of financial assistance.