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Third stimulus check: Will you get a $1,400 check?

Some key benefits in third stimulus bill
Some key benefits in third stimulus bill 06:06

President Joe Biden's $1.9 trillion coronavirus relief plan would provide a third round of federal stimulus checks to millions of Americans. Yet while lawmakers on both sides of the aisle have expressed support for the proposal, there is less agreement on exactly who should qualify for the $1,400 direct payments.

Congressional Democrats are moving forward with Mr. Biden's relief plan through a process called budget reconciliation, which would allow the Senate to approve the effort without any Republican support. As the process moves forward, House and Senate committees will discuss spending priorities before drafting and voting on legislation. 

House members could approve the bill by the end of this week, according to Goldman Sachs analysts Jan Hatzius, Alec Phillips and David Mericle in a February 23 research note. Next, the Senate will take a look at the bill and potentially dial back some provisions, they added. 

"This might include the income thresholds for stimulus payment eligibility and/or the child tax credit, the amount devoted to state and local fiscal aid, and a third round of payments to states for education-related costs," the Goldman analysts noted. 

Earlier this month, the Senate approved a bipartisan plan introduced by Democratic Senator Joe Manchin and Republican Senator Susan Collins to block "upper income citizens" from the next round of stimulus checks. Notably, however, the plan doesn't define "upper income." The measure would ensure that "the struggling families that need it most" would receive the checks, Collins said in a statement. 

The amendment adds "uncertainty whether all the Senate Democrats will support President Joe Biden's full plan, with Joe Manchin already expressing doubts about the need to send $1,400 stimulus checks to those that might not need the money," Paul Ashworth, chief U.S. economist at Capital Economics, told investors in a research note.

Biden pushes ahead with stimulus plan 01:40

Collins on Tuesday suggested that the income limit for the next round of direct payments could still be part of negotiations. Asked if she is still talking with Democrats about some aspects of the relief bill, she noted, "Yes, and I'll give you an example, and that is putting a lower cap than the House put on for the stimulus checks — not trying to reduce the $1,400 check, but saying the House bill would allow households with an income of $200,000 to receive a partial check."

On Wednesday, 150 business leaders urged lawmakers to support Mr. Biden's $1.9 trillion relief package, including BlackRock CEO Laurence D. Fink and Google CEO Sundar Pichai. "Previous federal relief measures have been essential, but more must be done to put the country on a trajectory for a strong, durable recovery," they wrote in the letter.

"Pockets of pain"

In a virtual event hosted by the New York Times on Monday, Treasury Secretary Janet Yellen advocated for Mr. Biden's stimulus plan, and pushed back against the notion of limiting the stimulus checks to fewer households. 

"The truth is, there are pockets of pain that go beyond what can be reached in those highly targeted ways," Yellen said.

Yellen has previously argued that some government statistics aren't accurately reflecting the economic reality for millions of U.S. households during the pandemic. "We have an unemployment rate that, if properly measured in some sense, is really close to 10%," Yellen told CNBC earlier this month. "In addition to over 9 million people unemployed, we have 4 million who've dropped out of the labor force, another 2 million who have seen reduced hours."

While there are signs of economic improvement, Federal Reserve Chair Jerome Powell told lawmakers on Tuesday that the coronavirus-battered economy is far from healed. "The path ahead is highly uncertain," Powell stated in written testimony. That is adding to the argument that the economy, despite positive trends, such as a boost in consumer spending in January, will need more stimulus to regain its footing in 2021.

Data suggests that hardship remains elevated across the nation, almost a year since the pandemic shuttered the economy. People who lost their job during the pandemic were 2.6 times more likely to say they've burned through their savings, according to a new survey from the Financial Health Network, a nonprofit that focuses on financial health and literacy. 

Worries about food and housing insecurity are especially high among families of color. For instance, nearly 1 in 4 Black and Hispanic survey respondents said they have worried about paying their rent or mortgage since the pandemic started, compared with 1 in 7 White respondents, the survey found. 

Are stimulus checks helping the economy?

The U.S. economy continues to struggle with higher-than-normal layoffs and other setbacks. Almost 800,000 people applied for jobless benefits in the week ending February 6, a dip from the previous week, the Labor Department said. And new economic data released on February 17 indicates that the second stimulus check is working to stoke the economy, with retail sales jumping 5.3% in January, or five times higher than expected.

"Those outsized gains in big-ticket discretionary items suggests the $900 billion fiscal stimulus passed late last year is working as intended — with most Americans receiving $600 per person stimulus checks early in the month, while monthly unemployment insurance payments were increased," noted Michael Pearce, senior U.S. economist at Capital Economics, in a report.

At the same time, it's clear that millions of households are still suffering from income and job losses. The number of Americans applying for jobless aid rose last week to 861,000, reversing several weeks of steady declines, the Labor Department said on February 18. The latest jobless numbers "paint a bleak labor market picture," Oxford Economics economist Lydia Boussour observed in a research report.

Advice on 2020 tax returns and stimulus check... 05:53

"The economy remains weak, the jobs recovery has lost momentum, and there are nearly 10 million fewer jobs than in February of 2020," the Center on Budget and Policy Priorities said on Thursday. It added that millions should be helped by Mr. Biden's proposed stimulus package. 

Here's what the experts are saying about the next stimulus check and who may be eligible.

Why are income limits an issue?  

The first two government stimulus checks — $1,200 for the first round and $600 for the second round — also set income thresholds that made higher-income households ineligible for the payments. In both earlier rounds, single people who earned up to $75,000 and married couples who earned up to $150,000 received the full payments.

People with higher earnings got smaller payouts as their incomes rose, until the payments cut off entirely for higher-income families. In the first round, the phaseout stood at $99,000 for single people and $198,000 for married couples.

In the second round, the phaseout was slightly lower — $87,000 a year per single person and $174,000 per married couple. But that was a function of the smaller size of the checks, given that the law reduced both checks by 5% for every $100 earned above the income limits for full payments.

Recent economic research indicates that finances have stabilized for many middle- and higher-income families who have managed to work from home during the coronavirus pandemic. That is stirring debate among lawmakers and experts over whether the direct aid should be targeted toward lower-income households, who are more likely to feel the ongoing economic impact of COVID-19 and its spread. 

How U.S. can pay for Biden's relief plan 10:44

Households earning under $78,000 annually quickly spent their second stimulus checks after receiving them in January, while those with incomes above that level socked away most of the money, according to research from the Opportunity Insights Economic Tracker, a nonprofit group led by Harvard economics professor Raj Chetty. 

"Since the middle of June, the recession in jobs for higher-income households is over — employment has been just like it was before the pandemic" because their jobs can be done remotely, Michael Stepner, an economist with Opportunity Insights, told CBS MoneyWatch. 

Are there new income limits to get a check?

Not yet, as nothing has been decided. Still, Mr. Biden has expressed a willingness to negotiate, with the president saying he would insist on $1,400 checks while suggesting he was willing to direct the checks to people who need the most help. 

That could result in Democrats lowering the income threshold to qualify for a payment to single people who earn $50,000 or less and married couples with income of $100,000 or less, according to the Washington Post. If that occurs, millions of households who received the prior two stimulus checks likely wouldn't qualify for the third. 

For instance, the IRS said it sent 30 million payments to households earning more than $75,000 during the first round of stimulus checks. Under the income thresholds reported by the Washington Post, it's likely many of those households wouldn't qualify for the full $1,400 check.

But on February 8, House Democrats pushed back on those lower limits, proposing to keep the income thresholds at the same level as for the previous checks. That would ensure the full $1,400 relief payments would go to individuals making $75,000 or less, while couples earning $150,000 would be entitled to $2,800 relief payments. The payments would ratchet down for incomes above those levels, phasing out entirely for single people earning $100,000 and couples earning $200,000.

First-time unemployment claims rose last week... 08:43

"There is a discussion right now about what that threshold will look like. A conclusion has not been finalized," said White House press secretary Jen Psaki.

At a CNN event on February 16, Mr. Biden emphasized his commitment to a large stimulus effort. "The overwhelming consensus is, in order to grow the economy a year, two, three and four down the line, we can't spend too much," Mr. Biden said. "Now's the time we should be spending. Now is the time to go big."

What do the experts say?

Wall Street analysts aren't banking on many changes, with Goldman Sachs expecting the same income thresholds as with the first checks — $75,000 for individuals and $150,000 for married couples. 

Some lawmakers are pushing back against limiting the payout to a smaller group of households, such as Senator Bernie Sanders, an independent from Vermont.

"It is absurd that some Democrats think we should tell a worker making $52,000 a year that they are 'too rich' and cannot get the full $2000 benefit we promised," he wrote February 7 on Twitter. 

The ranks of adults experiencing financial hardship in January was little changed from December, despite the rollout of the second round of stimulus checks, according to Morning Consult economist John Leer. Most of the struggles were experienced by people earning less than $50,000 in annual income, he said. 

A third round of $1,400 checks would allow 22.6 million adults to pay their expenses for more than four months without going into more debt or eating into any savings they may still have, his analysis found. 

COVID-19 pandemic takes toll on jobs 11:37

"Low-income households and parents were the most desperate to receive their second stimulus checks and are the most likely to need additional stimulus going forward," Leer wrote in his analysis. "According to a survey conducted at the beginning of February, Americans with annual household incomes under $50,000 already spent roughly 67 percent of money they received."

By comparison, households earning more than $100,000 spent about 50% of their stimulus checks, his analysis found.

When would I get a $1,400 check? 

It's possible the checks could arrive as soon as mid- to late March, if the bill is passed by Congress and assuming the relief package directs another round of direct payments to households. The bill appears to be on track to be passed in the first half of March, according to Stifel's Brian Gardner.

"As of now, we do not see enough centrist defections to derail or meaningfully alter the bill so we expect a bill close to $1.9 trillion will probably pass sometime in the first two weeks of March," he wrote.

Democratic lawmakers have said they want to pass a new relief bill before the current $300 in weekly additional jobless aid expires on March 14. 

Once the relief bill is passed, it must be signed by Mr. Biden. After that, the IRS would direct stimulus checks to eligible households. Based on past payment schedules, checks could arrive via direct deposit within a week of Mr. Biden signing the bill. 

However, people who don't have banking accounts or payment information on file with the IRS would likely have to wait longer for paper checks or prepaid debit cards to arrive in the mail.

With reporting by the Associated Press.

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