Here’s what we know.
A possible fourth stimulus check remains a popular topic with the third round of economic relief payments almost concluded.
About 161 million payments of up to $1,400 per person have been issued since the third stimulus package passed in mid-March. Paper checks and EIP cards continue to show up in mailboxes. And plus-up payments, for those who didn’t receive what they were due, have also been going out for weeks. Together they add up to most of the $422 billion allotted in President Biden’s $1.9 trillion American Rescue Plan Act.
These relief payments are part of a larger effort to cushion COVID’s economic impact on households and support the economy while the pandemic recovery continues. The stimulus package also extends unemployment benefits, enhances the child tax credit, and much more. The recent round of checks follows the $1,200 CARES Act payments at the pandemic’s outset and the $600 payments from January.
Why Is A Fourth Stimulus Check Unlikely?
All of this voiced support keeps the possibility of another round of stimulus checks — or recurring stimulus checks — alive. It doesn’t make them likely, however. And there are a number of reasons why.
Vaccinations are progressing steadily. Adults and those at least 16 years old are now eligible to be inoculated in all 50 states. Three different options are available to the public again since the pause has been lifted on the Johnson & Johnson vaccine. Actually putting needles in arms will take more time, even as supply catches up to demand. Americans have received over 237 million doses, with 43.3 percent of the population having received at least one dose and 30 percent completely vaccinated. Vaccination numbers continue to increase at a rate of well over two million doses per day.
With vaccinations rising, the economy is showing additional signs of recovery as well. State and local economies are reopening, as restrictions loosen. Hiring has picked up in some sectors. The average for new unemployment claims over four weeks continues to push downward. Consumer confidence continues to climb, reaching its highest level since the start of the pandemic. Consumers are also generally optimistic about business conditions and the job market.
Consumer spending drives two-thirds of the country’s economy. And the third stimulus check, along with excess pandemic savings, has increased people’s spending power. An improved financial position generally also raises optimism in the future. The ongoing vaccinations, which will continue to allow the economy to safely reopen, certainly help. All that additional spending, along with the release of pent-up demand, should lead to more jobs as companies hire to address consumer needs. With the economy opening up and continuing to improve, a fourth round of stimulus checks loses much of its urgency.
In Nersisyan’s view, “let’s see if people still need more assistance. Let’s see how the economy’s doing as things keep opening up and the vaccination rates go up and things go back to some sense of normal. And let’s see where the unemployment numbers are. Are people still running behind on their rents and mortgages and so on? And based on that, let’s decide whether we need to inject more spending into the economy. I would say wait and see right now.”
The American Rescue Plan Act passed along party lines. Republicans were not interested in spending anywhere close to $1.9 trillion, though some did support the third round of stimulus checks. They termed the package a “blue state bailout,” claiming it went well beyond the scope of COVID and would increase the deficit, leading to inflation.
The Democrats used a process called reconciliation to pass the bill in the Senate without Republican support. That allows budget-related matters to proceed with a simple majority rather than the filibuster-proof 60 votes. Generally only one reconciliation bill can pass per fiscal year. But a subsequent ruling by the Senate parliamentarian, who interprets the legislative body’s rules, opened up an avenue for additional spending legislation. Without reconciliation, any bill would need at least 10 Republican votes, along with every Democratic vote.
But the Biden administration has other priorities. One of its biggest is passing the recently introduced infrastructure plan, which also faces Republican opposition. The American Jobs Plan, worth over $2 trillion, aims to rebuild roads, repair bridges, do away with lead pipes, extend broadband, modernize the country’s electric grid and much more. It does not include another stimulus check. One could, in theory, be added at a higher price tag. Republicans oppose the plan, in part, for its reliance on higher corporate taxes. They would be disinclined to support an even larger corporate tax hike to fund another payment.
The American Families Plan, focusing on childcare, education and paid family leave, would cost another $1.8 trillion. Another stimulus check is not included in the current version of this plan either, though one could theoretically still be included. According to the administration, funding for the American Families Plan would come from higher taxes on wealthy individuals. Republicans will likely oppose these tax increases too.
Plenty of negotiating and possible paring down seems inevitable before either plan comes to a vote. And Biden will face an uphill battle attracting 10 Republican supporters in the Senate in both cases. As a result, Democrats may very well be anticipating the need to use reconciliation again to push through these broad pieces of legislation. But Joe Manchin of West Virginia, among the most centrist Democratic Senators, has warned against overusing the process. He is also apparently unwilling to do away with the filibuster, which would lower the number of votes needed to pass legislation to 51. With bipartisanship a seemingly faint dream, that places the Biden administration in a tough spot. It also reduces the odds of them using reconciliation to pass a fourth stimulus check outside of a larger package.
What Other Aid Is Coming?
While a fourth stimulus check is unlikely, more direct payments to Americans have already been signed into law. The American Rescue Plan Act includes an improved Child Tax Credit and extended unemployment benefits.
Under the revised Child Tax Credit, the Internal Revenue Service (IRS) will pay out $3,600 per year for each child up to five years old and $3,000 per year for each child ages six through 17. Payments will be issued automatically on a monthly basis from July to December of 2021, with the remainder issued when the recipient files their 2021 taxes. (IRS Commissioner Charles Rettig recently confirmed a July launch “with payments going out on a monthly basis.”) The benefit will not depend on the recipient’s current tax burden. In other words, qualifying families will receive the full amount, regardless of how much — or little — they owe in taxes. Payments will start to phase out beyond a $75,000 annual income for individuals and beyond $150,000 for married couples. The more generous credit will apply only for 2021, though Biden has stated his interest in extending it through 2025.
The American Rescue Plan Act also extended the weekly federal unemployment insurance bonus of $300 through Labor Day. Recipients with household incomes below $150,000 will not have to pay taxes on the first $10,200 in unemployment benefits. Those eligible for Pandemic Emergency Unemployment Compensation (PEUC), which covers people who have used up their state benefits, and PUA will also see their benefits extended through early September. PEUC runs out after 53 weeks. PUA expires after 79 weeks. The Act also added $21.6 billion to the Emergency Rental Assistance Program, which is being distributed to states and local governments, who then assist households.
The far-reaching American Jobs Plan includes some elements not traditionally associated with infrastructure. Those range from $213 billion earmarked for affordable housing to $100 billion set aside for workforce development among underserved groups. The plan also looks to increase pay for caregivers who tend to the elderly and disabled. Each of these efforts would mean more money for those affected. On a broader scale, the plan also has the potential to create many jobs across a wide swath of the economy.
The American Families Plan includes 12 weeks of paid family leave that could reach as high as $4,000 per month, depending on a worker’s income. It also boosts the Child and Dependent Care Tax Credit and places a ceiling on the cost of childcare for many families. The plan sets aside $200 billion for universal preschool. In addition to helping working parents pay for childcare, the plan hopes to allow more parents to return to the workforce.
Much of this additional money in people’s pockets is still hypothetical, of course. Both plans must first find their way through Congress.