As congressional leaders meet with Treasury and White House negotiators, they are hoping to hammer out an agreement on phase four of the coronavirus relief package. As of Friday, August 1, negotiations were stalled in a partisan stalemate. Democrats want to continue the $600 unemployment payment, plus another $1 trillion to state and local governments: “But that’s something we’re not going to do,” said Treasury Secretary Steven Mnuchin.
Democrat House Speaker Nancy Pelosi seemed in no mood to compromise on the $600 unemployment payment. Republicans will agree to $200 and are feeling the pressure as schools begin to open and supplemental unemployment benefits expire.
Another Stimulus Payment Is on the Way
Meanwhile, Senate Republicans rolled out their own package, which, among other things includes another $1,200 economic impact payment to taxpayers. The second round will be similar to the first, and the stimulus checks won’t have to be repaid.
The good news is that most Americans still will not have to take any action to get their payment. Those Americans still waiting on their check might need to look into the IRS non-filers tool if they filed no tax returns during 2019 or 2018. That would include single people who earned less than $12,200 (married couples, $24,000) and who don’t receive federal benefits like Supplemental or Social Security income.
More good news is that it looks like both Democrats and Republicans agree that another round of direct payments to Americans is almost a certainty.
You will qualify for the stimulus payment if you earned a gross adjusted income of up to $75,000 ($150,000 for married couples). People earning more will have their checks reduced by $5 for every $100 they earned past those limits, with complete phaseout past $99,000 and $198,000.
One change affects families with dependents over the age of 17, who received no benefits for those older dependents. The new stimulus package includes an extra $500 for each dependent child, regardless of age. So, a married couple with two dependents will receive up to $3,400.
What’s Holding up the Agreement
The main bone of contention over the package is that the Democrats want to focus on getting money to the states to fight the virus and getting schools open. Republicans, on the other hand, want a more measured approach and an incentive to get people back to work. People should not receive more in government benefits than from their regular job.
Where’s the Money Coming From?
Then there’s that $2.4 trillion in unbudgeted coronavirus federal spending. The federal government is on track to rack up a $3.5 trillion deficit for 2020, levels not seen since World War II.
How can we sustain that without an economic collapse? Aren’t we mortgaging our children and their children’s economic future?
It’s complicated, but it has a short answer: the federal government sells that debt to investors by means of Treasury notes, securities, etc. The debt is underwritten by the public in private investment portfolios, in the stock market, through state pension funds, by foreign investors, etc.
The Federal Reserve creates those trillions of dollars through electronic deposits, which sustains the process of continuing to underwrite the national debt. The value of those securities is maintained on the basis of faith in the U.S. Government and the Fed’s power to rescue financial markets at the first sign of trouble.
Featured Image by Lisa Brewster
