Second coronavirus stimulus check under consideration: How did first $1,200 payment affect economy?
The stimulus checks and sweetened jobless benefits are projected to provide up to $500B in income transfers in 2020
White House Press Secretary Kayleigh McEnany says Democrats should come to the table and negotiate an infrastructure and stimulus plan.
As the White House explores sending another stimulus check to Americans still reeling from the coronavirus pandemic, new research suggests the first cash payment and expansive government aid was vital in preventing a rise in poverty.
A study published by the Center on Poverty and Social Policy at Columbia University last week found that without the passage of the $2.2 trillion CARES Act, the one measure of the nation's poverty level would have surged to 16.3 percent from 12.8 percent pre-crisis. During the 2008 financial crisis, the poverty level peaked around 16 percent, according to the U.S. Census Bureau.
But the massive government response to the outbreak of the virus and subsequent economic lockdown helped the poverty rate to remain mostly unchanged at 12.7 percent, the researchers said.
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The CARES Act, signed into law at the end of March, expanded unemployment benefits by $600 a week through the end of July, established the Paycheck Protection Program and — perhaps most notably — sent one-time payments of $1,200 to individuals earning less than $75,000, and $2,400 to couples earning less than $150,000. The payments were tapered for higher-earners and phased out completely for individuals earning more than $99,000, and couples earning more than $198,000. Children under the age of 17 also received a check of $500.
The stimulus checks and sweetened jobless benefits are projected to provide up to $500 billion in income transfers in 2020, according to the researchers, more than the total amount of all spending on non-retirement income transfers in 2019. An individual is considered to be living under the poverty line if they earn less than $12,760 per year. For a family of four with two kids, the threshold is $26,200 per year, according to the Department of Health and Human Services.
The researchers' calculations are based on the assumption that there was "medium access" to the money -- meaning that 70 percent of the eligible individuals received a check and 60 percent of out-of-work Americans got the broadened unemployment aid. At the beginning of the month, the IRS said it had doled out roughly 159 million checks worth some $267 billion.
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While the bill has been a "critically important anti-poverty measure," the researchers, Zachary Parolin, Megan Curran and Christopher Wimer, noted that some individuals have been excluded from the virus relief.
An estimated 30 million people are unable to receive the stimulus money because of eligibility rules, they said. That includes 15 million dependents who are over the age of 17 who are still claimed by their families as dependents, as well as 15 million members of immigrant families where at least one adult files their federal taxes with an Individual Taxpayer Identification Number, rather than a Social Security number.
"The CARES Act has potential to return the annual poverty rate to pre-crisis levels, but only if an adequate number of families can actually access the CARES Act benefits," they wrote.
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The extra $600 in unemployment benefits is set to expire at the end of July. The lockdown of the nation's economy pushed close to 47 million Americans onto the jobless roll, with the nation's unemployment rate surging to 14.7 percent in April, a post-World War II record. Last month, it unexpectedly edged down to 13.3 percent.
"The CARES Act benefits are concentrated in the first half of 2020, leaving many families with little or no income support after July 2020 unless they ration their benefits from the early part of the year," they wrote. "If the crisis and its effects on the labor market are prolonged, the regular provision of income support to low-income families will likely be needed throughout the crisis to prevent future increases in poverty."
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The report comes as Democrats and Republicans debate a fourth relief package. Although both parties broadly agree that additional aid is needed to help workers and businesses still hurting from the worst economic downturn since the Great Depression, they're divided on specific policy measures that should be included.
Last week, President Trump signaled that a second stimulus check is on the table for some Americans -- a proposal that could face opposition from some White House advisers, Republicans and Democrats.
Asked during an interview by Scripps reporter Joe St. George whether he plans to give another stimulus check to some Americans, Trump said: "Yeah we are. We are."
"We will be doing another stimulus package," he added. "It'll be very good, it'll be very generous."