The $ 1,200 stimulus checks that were handed out under the CARES Act served as a lifeline for cash-strapped Americans who were immediately affected by the COVID-19 crisis. But as useful as these payments may have been, for many people they are long gone. And like our current recession continues to rage, many Americans remain desperate for some follow-up relief.
In fact, 49% of Americans say a second stimulus check is very important to their finances, according to SimplyWise July 2020 Confidence in Retirement Index. Meanwhile, 25% say a follow-up dunning check is somewhat important to them.
Given that most Americans expect our current recession to last until 2021, this sentiment makes sense. But it remains to be determined whether there will actually be a second stimulus.
Lawmakers met with relief
Democratic lawmakers introduced a bill called the HEROES Act in May that provides, among other things, for a follow-on stimulus payment that would cap at $ 1,200 per eligible person. But Republican lawmakers backed off. Their main arguments are:
- A second stimulus check will cost too much.
- A second stimulus check is not necessary to reopen the economy.
- A second stimulus is not as vital since unemployment has fallen.
But here’s why these arguments don’t hold up. First, while a follow-up stimulus is indeed expensive, the cost to our economy could be enormous if Americans not get that relief. More and more rents and mortgage payments will be in arrears. Invoices will be missed. Those who lived on paychecks before the pandemic may be forced into debt that they ultimately do not fix. And without more money to pump into the economy, businesses won’t get the income they need to stay afloat.
Second, while it is true that a large part of the economy To reopened since the introduction of the HEROES Act, it is clear that many states have reopened too soon, as evidenced by the recent wave of COVID-19 cases which greatly worries public health officials. In fact, some states are already slowing down reopening plans and imposing new restrictions, which could ultimately bring the economy back to its April level.
Finally, while it is true that the unemployment rates in May and June were lower than the disastrous ones in April 14.7% unemployment rate, the numbers are still very high. The unemployment rate in June was 11.1%, which is a far cry from the 3.5% unemployment rate that existed in February, before the pandemic. Additionally, as more states impose lockdowns, we could see increased job losses – especially in already hard hit industries like restaurants and retail.
Obviously, there is a good argument for a second stimulus check, but we won’t know if we’re in the cards until lawmakers start to clear the air once again. returned to the Senate on July 20 after an extended suspension. At this point, there may be additional stimulus proposals to consider besides the HEROES Act, which Republicans have expressly opposed.
Even though there is is a second stimulus payment, there is no guarantee that it will mimic the $ 1,200 that the CARES Act allowed. But given the number of Americans who are in desperate need of an influx of cash, all a lump sum payment is surely better than no stimulus at all.