We Now Know What’s In The Second Stimulus Package. It’s Not Enough.

We Now Know What’s In The Second Stimulus Package. It’s Not Enough.

After long months of negotiations that moved at a snail’s pace, Congress has finally agreed on a second stimulus package, as part of the Consolidated Appropriations Act

The deal comes as many of the safety nets passed by the CARES Act in March, including expanded unemployment benefits, are set to expire at the end of the month. 

Last week, President-elect Joe Biden said this relief package is the first part of what’s to come when he takes office in January.

“… It’s a down payment, an important down payment on what’s going to have to be done beginning the end of January into February, but it’s very important it get (sic) done,” Biden told reporters in Wilmington, Delaware. 

But the gulf between what the package provides and what Americans need is vast. The stimulus checks, and enhanced unemployment aid are significantly less than what was provided in the CARES Act in March. 

The rollout of these reduced stimulus benefits comes at the worst time: 19 million Americans are on unemployment benefits of some kind; nearly 8 million Americans have fallen into poverty since the summer, and about 12 million renters will owe an average of $5,850 in back rent and utilities by January, according to analysis by Moody’s Analytics.

Here’s what the bill includes (and just as importantly, what is left out). 

What’s In the New Stimulus Package Bill

The new stimulus package includes funding for another round of stimulus checks, continued enhanced unemployment benefits, funding for small business aid and the Paycheck Protection Program, among other categories. Congress still needs to vote to approve the package, and then it will be passed to President Donald Trump to be signed into law. 

$600 Stimulus Checks

The new stimulus package includes another round of economic impact payments, also referred to as stimulus checks, to Americans. The new bill provides $600 for individuals who meet specified income requirements and an additional $600 per qualifying child. 

The payment amount will decrease by $5 for every $100 made above the income thresholds of $75,000 for individuals, $150,000 for married couples filing jointly and $112,500 for heads of households. These income thresholds will be based on 2019 tax information. Individuals making $87,000 or more won’t receive a check; neither will married couples filing jointly making $174,000 or more, or heads of households making $124,500 or more.

These checks will be notably smaller than the ones provided by the CARES Act, which provided $1,200 for individuals, $2,400 for married couples filing jointly and an additional $600 per dependent, before income thresholds phased out the amounts. 

Another major caveat of the next round of stimulus payments: Only children will qualify as dependents eligible for the additional $600. This leaves out 13.5 million adult dependents including college students who are still being claimed on their parents’ taxes but could benefit from the aid. It also leaves out adults who might qualify as dependents due to disability. Stimulus payments will also be given to families in which one of the parents is not a citizen.

Secretary of Treasury Steven Mnuchin said on Monday that the next round of stimulus checks will start being sent out next week, according to Politico

Extended Enhanced Unemployment Benefits

The federal government will provide an up to additional $300 in unemployment benefits per week through March. 

The boost is half of what the CARES Act provided but will undoubtedly be a welcomed lifeline for Americans. The most recent jobs report revealed over 19 million Americans are currently on unemployment aid and job growth numbers are stagnating

Gig workers, freelancers and the self-employed will continue to be eligible for unemployment benefits, as initially provided by the CARES Act.

Read more: Collecting Unemployment? Take These Steps To Avoid A Tax Bill Next Year

Housing Assistance

The new bill provides two housing assistance provisions: An extension of the CDC eviction moratorium through January 31, and $25 billion in emergency assistance funds for renters that can be used to pay past-due rent, future rent and utility bills. 

Renters may qualify if: 

  • They have a household income less than 80% of their area’s median income; 
  • One or more household members can demonstrate that they’re at risk of experiencing homelessness or housing instability due to a past due utility or rent notice, an eviction notice or living in unsafe or unhealthy living conditions; 
  • One or more household members qualify for unemployment benefits or are experiencing financial hardship due to Covid-19

In some cases, renters will have to provide a written attestation swearing they meet the stated requirements.

Though the funds for housing assistance were long sought after by Democrats, the CDC eviction moratorium has been heavily criticized as a superficial form of assistance. Under the moratorium, any rent owed is still due; renters are just protected from being evicted if they can’t make their payments—but there are reports of evictions continuing despite the ban. Experts say more will need to be done in order to prevent housing insecurity among low- and moderate-income households that are struggling the most during the pandemic.

Paycheck Protection Program Funding

The Paycheck Protection Program, also referred to as PPP, will receive another $284 billion in funding. The program provides loans up to $10 million to businesses and can be forgiven if businesses use the funds for specific criteria, including using at least 75% of it to continue paying employees or rehiring employees that were furloughed or laid off as a result of the pandemic.

Read more: Here’s What You Can Do Now To Ensure Paycheck Protection Program Loan Forgiveness 

Special ‘Lookback’ for Earned Income Tax Credit and Child Tax Credit

The stimulus bill will allow you to use earned income from the 2019 tax year to determine your Earned Income Tax Credit (EITC) and refundable portion of the Child Tax Credit. A summary of the bill states, “This will help workers who experience lower wages this year, due to the pandemic, to get a larger refund that is consistent with their earnings from prior filing seasons.” 

What’s Not Included?

The new stimulus bill largely leaves out additional relief for borrowers who hold federal student loans. 

The CARES Act provided federal student loan forbearance, without interest, until September 30 of this year; President Donald Trump extended the forbearance period twice—Once through December 31, and again until January 31, 2021.

Leaving out an extended forbearance period in the new bill is notable. A recent bipartisan stimulus proposal would have extended the forbearance period through April 30, 2021. 

President-elect Biden has expressed support for $10,000 of federal student loan forgiveness in response to the coronavirus pandemic. Congress could be betting on the next president to handle what’s next for student loans.

It also leaves out broader state and local funding. Democrats included aid for states in their HEROES Act passed by the House in May, and it became a major source of contention during recent negotiations. States, many of which were already struggling, have been plunged into financial crises during the pandemic. The CARES Act provided $150 billion in aid to state and local governments, and many experts correctly predicted it wouldn’t be enough to make up for budgetary shortfalls due to the pandemic.  

Republicans, especially President Trump, have largely fought back against the notion of giving states more financial assistance. Trump has used state funding as a political weapon, saying that certain states run by Democrats shouldn’t be given more help.

Bottom Line

The next stimulus package provides necessary assistance to struggling Americans right now, but falls short in some aspects. The House and Senate are both expected to vote on the bill Monday, which means President Donald Trump could sign it into law soon.

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