Stimulus Check

Stimulus Proposal Update: Will we get a second check?

Stimulus Proposal update: Will we get a second check?

Stimulus Proposal Update

This is a stimulus proposal update for May of 2020. I summarize the details of the proposals that will provide cash directly to Americans. Currently, there are two popular proposals that will be detailed below with links to news articles, .gov sites, and youtube videos on the topic.

I compiled everything I could find that helps us understand if we will get a second stimulus check anytime soon. If you would like to read my last post on this topic, you can find it here

 

Summary of Last Stimulus Proposal:

In March of 2020, President Trump signed the largest economic stimulus package in US history. The Coronavirus Aid, Relief and Economic Security (CARES) Act includes support for unemployment programs, small businesses, and American households.

Part of this $2.2 trillion package includes $300 billion set aside for direct payments to Americans. Those that qualify, are receiving direct payments of $1,200 over the next several months.

The Good Part:

Over 80% of Americans receive their tax refunds from the IRS via direct deposit. That means that most of us were able to get our $1,200 stimulus payout within 3 weeks of this bill passing! According to CNN, more than half of eligible Americans have already received their stimulus checks.

As an American abroad, it was a relief to receive this money with no hassles since I had already filed my 2018 tax forms via FreeTaxUSA. Many of my friends and family received this money around the same time with no issues.

Perhaps the best part of this stimulus check is that you do not have to pay taxes on it. And your 2019/2020 refund will not be smaller because of it either! This money is yours, free and clear.

The Bad Part:

Where to even begin? I know! Let’s start with deliverability issues.

Turns out there were various IRS glitches for those trying to update their account information, check the status of their payout, or filed via a third party.

People filing via TurboTax, H&R Block, or Jackson Hewitt who elected to receive IRS refunds faster via an advanced payment experienced delays.

Other Initial Stimulus Proposal Issues:

Though most people got their money fast, those that need it the most were disproportionately impacted by delays.

Low-income people who may not usually need to file would have to take action and reach out to the IRS with their bank account information to receive their payouts. Many college students who are desperately in need of money for rent were ineligible due to being claimed as a dependent on their parent’s taxes.

Payouts were delayed for those who have not filed taxes in the last two years. Meanwhile, checks were also accidentally sent out to dead people and other out of date bank accounts!

Many people who are self-employed owe the government taxes every year and so the IRS often does not have bank account information on file for these taxpayers. Unfortunately, freelancers and self-employed are being highly impacted by the decline in the economy due to COVID-19.

2 New Cash Stimulus Proposals Being Discussed:

Stimulus Proposal 1: Emergency Money for the People Act

$2,000 monthly for every American

Brought to you by Representatives Ro Khanna and Tim Ryan, who proposed the first stimulus plan that gave Americans the initial $1,200 (CARES Act).

This Act would provide monthly, $2,000 payments to eligible Americans for up to 12 months. If the employment-to-population ratio is greater than 60% by the end of month 6 payments would stop.

The Good Part:

People need money and security during these uncertain times. And this would be a way to make sure they have something to count on every month that would cover the basics like rent and food. Plus, the eligibility criteria is wider so that some of the groups that were overlooked in the initial package would qualify for this payout.

Payments would go out via methods such as check and direct deposit. Another option is receiving via “electronic transfer application that can be used on mobile devices to receive cash payments”. That’s right the US Gov. may finally be getting hip and is considering sending you payments via CashApp, Venmo, Paypal, Zelle, etc.!

The Bad Part:

Wow, this would be expensive. It would cost $448 billion dollars…. Every. Single. Month. Just to keep this program running.

In just the first 6 months it would cost 2.6 trillion dollars, which is just a mind-blowing number. Especially considering our total deficit for 2020 was initially projected to be 1 Trillion before Corona hit!

Stimulus Proposal 2: Automatic Boost to Communities (ABC) Act

Initial $2,000 pre-paid debit card plus monthly payouts of $1,000

Brought to you by Congresswoman Rashida Tlaib, this bill would give most Americans a pre-loaded debit card for immediate use. The debit card would be funded with an initial $2,000 that would be topped up every month with an additional $1,000 for up to one year after Coronavirus ends.

The ABC Act also has a very broad qualification of who would be eligible. This bill explicitly aids citizens abroad (me!), non-citizens, temporary citizens with stays of 3+ months, etc. 

The funding for this would come via two $1 trillion platinum coins issued by the U.S. Mint under directions from the Treasury Secretary. Then there are some financial gymnastics involved before it is finally distributed to the American people.

The Good Part:

YAY Money!

Once we are over the initial hurdles of getting these cards out, it would be a pretty straightforward process to top them up with new funds. This would cost less than the Emergency Money for the People Act and seems like it would help smooth over future fund distributions.

Other than this, the bill is not much different than the other stimulus proposals we have seen. From an individual perspective, as far as the positives go, money is money!

The Bad Part:

Boo Debt! This bill is also very, very expensive for the nation and there would likely be massive deliverability issues.

For me, this would be a challenge because I am no longer located in the United States and have no idea how I would physically obtain this debit card. And I’m sure many Americans will have similar issues receiving a physical card due to address changes over the last 1-2 years. Or even in the last few months as people are unable to pay rent and have recently moved in with their families!

Many people will need to cash out via ATM so they can have money in the bank for automatic bills and those who don’t have addresses on file would need to pick them up in person. Which sounds quite the opposite of staying at home! And let’s not get started on people stealing these cards from mailboxes.

This also sounds like it would be a massive use of paper and plastic. It would probably take forever to send out and cost quite a lot to produce. What happened to the whole Venmo/Cash App idea from the other proposal?!

Stimulus Proposal Video Recap:

If you would like to learn more, I highly recommend Graham Stephen’s Youtube videos. He covers the two proposals discussed here, the Emergency Money for the People Act and the ABC Act. He also goes over other proposals such as the Rent and Mortgage Cancelation Act and the Payroll Tax Cut/ Get Americans Back to Work proposal. 

No New Stimulus Proposal?!

If the states are able to reopen their economies quickly, then there may no longer be a need for a new stimulus bill. It is likely we will have more updates on this in just a week or two as things are still developing rather quickly.

The cash in most of the other stimulus packages has already dried up. It is still very likely that we could see another stimulus proposal passing through the Senate in just a few weeks. 

Again, Graham Stephan also breaks this proposal, or lack thereof, down in his video, ” White House Wants to Cancel Stimulus | My Response“.

The Good Part:

This is for sure the cheapest option. Yay?

The Bad Part:

I want cash.

But seriously, a lot of Americans can’t afford to go several months with little to no cash assistance from the government. Even those that qualify for unemployment are seeing significant delays as the offices are overwhelmed by requests.

Even if the economy is rebounding, those who were already low-income will need something to help them restart their lives. And that’s not even getting to non-tangible losses. For example, the various opportunity costs associated with quarantine. Missing raises, delaying degrees, mental health struggles, etc. are already resulting in long term financial impact across the globe.

Unless there are drastic improvements in the next few weeks, I think we will see another bill be passed. The big questions are how much will we get, for how long, and what will the long term ramifications be for our deficit?

Kathryn Rucker is a sales consultant and content writer. With 7+ years of sales experience, she is passionate about helping businesses and individuals grow their sales pipelines by improving their online presence.

She has been traveling full-time since 2018 thanks to the location and financial independence she has gained from her business, Rucker Sales Consulting. You can connect with her on Linkedin!

Kathryn Rucker is a sales consultant and content writer. With 7+ years of sales experience, she is passionate about helping businesses and individuals grow their sales pipelines by improving their online presence.

She has been traveling full-time since 2018 thanks to the location and financial independence she has gained from her business, Rucker Sales Consulting. You can connect with her on Linkedin!

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