Last updated on February 23, 2021 2:27 pm
By CBS- Watch Video
A third stimulus check is a key component of President Biden’s $1.9 trillion economic relief package. The $1,400 direct payment has support from both Democrats and Republicans and is likely to remain in the final version of the bill. The American Rescue Plan, in its current form, also includes higher unemployment benefits, an improved child tax credit and added aid for millions of Americans facing economic issues brought on by the ongoing COVID-19 pandemic. While a third check seems destined for bank accounts, the actual timeline is still a little unclear.
When Could My Stimulus Check Arrive?
The administration’s goal is to sign the American Rescue Plan into law by March 14. That is also when the current $300 federal unemployment benefit bonus expires. Assuming President Biden is able to sign the relief package on March 14, direct deposits would likely start the week of March 22, with checks beginning to arrive the week of March 29.READ MORE:Third Stimulus Check: Will Your Next Relief Payment Be $1,400?
But the House seems set to pass the American Rescue Plan this week without changes. House Speaker Nancy Pelosi recently reiterated her more aggressive timeline, stating that the bill could pass by the end of February. The Senate could then pass it next week on a straight party-line vote. If they do, the stimulus package could leave Congress by March 5 and be signed into law on March 8. Direct deposits would start arriving in bank accounts by March 15, and checks would start being mailed on March 22. Either timeline could be extended for any number of reasons.
What Could Delay My Stimulus Check?
One possible speedbump for the next stimulus check is the ongoing disagreement over the $15 minimum wage. Because of budget reconciliation, Democrats can sidestep the filibuster in the Senate and pass the stimulus package with a simple majority. That means 51 votes instead of 60, with Vice President Kamala Harris casting the tie-breaker. But Democratic Senator Joe Manchin of West Virginia believes that more than doubling the federal minimum wage (currently $7.25 per hour) would pose an undue burden on rural states. He has instead proposed raising the required hourly rate to $11. Kyrsten Sinema, a Democratic Senator from Arizona, has also pushed back. Without Manchin and Sinema’s votes, the American Rescue Plan is unlikely to make it through the Senate. No Republicans have come out in support of the stimulus package.
It’s also unclear if the $15 minimum wage proposal can even be included in the bill, given the rules surrounding reconciliation. The process requires that all provisions be related to the budget. And a conceivably valid argument can be made for or against. The Senate parliamentarian, who rules on these matters, will advise as to whether the minimum wage hike qualifies. Democrats can then accept or disregard the ruling.
What Could Reduce My Stimulus Check?
The federal minimum wage increase could be removed in the interest of passing the broader package. But that isn’t the only sticking point. The idea of lowering the annual income requirement to receive a stimulus check has gained some steam. In early February, Manchin and Republican Senator Susan Collins of Maine proposed an amendment aimed at “targeting economic impact payments to Americans who are suffering from the effects of COVID–19, including provisions to ensure upper-income taxpayers are not eligible.”
The previous two stimulus checks phased out for individuals with an adjusted gross income (AGI) over $75,000 per year and married couples with an AGI over $150,000. (AGI is the total of your wages, interest, dividends, alimony, retirement distributions and other sources of income minus certain deductions, such as student loan interest, alimony payments and retirement contributions.) For every dollar of income over the threshold, the previous two stimulus payments went down by five percent. So the $1,200 payment from the CARES Act shrank to $0 for incomes over $99,000 ($198,000), and the $600 from the second stimulus shrank to $0 for incomes over $87,000 ($174,000).READ MORE:Stimulus Check Latest: Parents Could Receive Monthly Payments With Expanded Child Tax Credit
Late last week, Treasury Secretary Janet Yellen assured CNBC that Biden is looking “to make sure that [the next stimulus check is] appropriately targeted so they go to people in need. You know, not to very high-income people who don’t need it.”
To that end, the Biden administration has considered lowering the income threshold to $50,000 ($100,000). Assuming the same five percent formula applied to the first two checks, a $1,400 ($2,800) payment would actually be $700 ($1,400) at an annual income of $64,000 ($128,000) and $0 at an annual income of $78,000 ($156,000).
The goal of lowering the income threshold is to ensure that more money gets spent in the broader economy rather than saved. According to a survey from the Federal Reserve Bank of New York, the average percentage of the first stimulus payment that a household spent on essentials decreased as income increased. The average percentage of the first stimulus payment that a household saved increased as income increased. Households heads taking in $40,000 or less annually spent 22.3 percent on essentials and saved 31.2 percent. Household heads taking in over $75,000 annually spent 14.7 percent on essentials and saved 40.8 percent. A survey from last summer projected that the second stimulus check would see that gap between spending and saving widen. The same dynamic could play out with the third check, should income limits not be reduced.
Why Do We Need Stimulus Checks?
The economy shrank by 3.5 percent in 2020, the largest single-year decline since the end of World War II. Weekly unemployment figures remain historically high, with 861,000 people applying for unemployment insurance for the first time last week. An additional 516,000 sought Pandemic Unemployment Assistance. (A typical pre-pandemic week saw about 250,000 new unemployment applications.) At the end of January, approximately 18 million people were receiving unemployment benefits of one kind or another. That’s one out of every nine workers. While the official unemployment rate is 6.3 percent, the actual rate is probably closer to 10 percent, given all the people who have dropped out of the labor force.
An economic bounceback depends on the widespread distribution of a COVID vaccine. But efforts to inoculate the public have proceeded somewhat sluggishly. Shortages and winter weather have forced some areas to temporarily close vaccination centers and scale back administering the vaccine in recent weeks. Many who qualify have faced problems in scheduling appointments. On the bright side, the federal government started distributing the vaccine to certain pharmacies earlier this month. And Dr. Anthony Fauci, the country’s top infectious disease expert, believes vaccination will be open to everyone by July, when demand will no longer for outpace supply. But mask-wearing and a general lack of normalcy could continue into 2022. Currently, domestic COVID cases exceed 28 million, while deaths have surpassed 500,000.