Millions of Americans will receive direct payments from the federal government thanks to a $2 trillion federal funding package that was agreed to early Wednesday morning.
The bill, which could be signed by President Donald Trump later Wednesday, is in response to the coronavirus pandemic, which has shuttered non-life sustaining businesses nationwide and led to thousands if not hundreds of thousands of new unemployment claims.
Here are the details you need to know about when, and how much, you might receive.
When will the money go out?
According to CNN, relief may still be a couple of months away, as the outlet reports that checks or direct deposits might not go out until May.
“First, the IRS will have to calculate each person’s payment amount,’ CNN writes. “Then, it will need the correct direct deposit information or mailing addresses.
“To get the money to people who don’t usually file tax returns, it might have to request that information from the Social Security Administration or Veterans Affairs. In 2008, those people were required to file a return anyway in order to get their rebate.”
That, of course, will take time, and keep in mind that the IRS is still receiving tax filings, as well, even if the federal government and also Pennsylvania, among many other states, have pushed back the deadline to file.
For those looking for an optimistic timeline, mid-April seems to be the absolute earliest that checks could go out.
More: Pa. unemployment claims skyrocket to 540,000 since statewide coronavirus shutdown, shattering records
How much will I get?
Here is what the New York Times says:
“A $1,200 payment for each adult — and $500 per child — in households that earn up to $75,000 per year for individuals or $150,000 for couples. The assistance phases out for people who earn more.”
CNN has more details on what the phase-out threshold might look like.
“The payments would start to phase out for individuals with adjusted gross incomes of more than $75,000, and those making more than $99,000 would not qualify at all,” CNN writes. “The thresholds are doubled for couples.
“Qualifying income levels will be based on 2019 federal tax returns, if already filed, and otherwise on 2018 returns.”
What happened the last time this happened?
This package marks the third time since 2000 that the federal government has approved payments to citizens based on special circumstances.
As CNN notes, it took six weeks for checks to go out under a 2001 plan for tax rebates that were authorized by then-president George W. Bush. Checks during the ‘Great Recession’ of 2008 didn’t go out for three months, however.
Experts believe that an increase in electronic tax filing and the use of direct deposit for refunds could lead to expedited payments this time around, and those who have that set up are likely to receive their money faster than those who will be waiting on a check.
More: These central Pa. businesses are still open during the coronavirus pandemic
Where is the money coming from?
Syracuse.com has details:
“Taxes, essentially,” its Geoff Herbert writes.
“CNBC reports it’s unclear whether the money will be considered a loan or a gift, in which case some of it may have to be paid back.”
Why only one check?
Previous proposals that were discussed as the spread of COVID-19 continued to hurt the economy mentioned the possibility of two checks being sent out, but the agreement reached Wednesday calls for just one. It’s possible that a second round could go out, however, if schools and businesses must remain closed into the summer.
How will businesses be helped?
This part of the package is still being finalized, but Yahoo reports that the Small Business Administration will handle some requests while a new, still-to-be-named agency will handle others, likely for larger businesses and corporations. It was referred to as ‘a big credit facility’ by Pennsylvania senator Pat Toomey over the weekend.
“The facility will have two components: One will be administered by the Treasury Secretary with direct loans for a short list of “seriously distressed and absolutely essential companies,” likely including airlines,” Yahoo writes.
“The second component will be much bigger and be “a broad-based credit facility that will be available across categories, across sectors and industries.” Toomey said this program will give loans that will have to be repaid. “None of this is grant money,” he said.”
More of PennLive’s coronavirus coverage:
Why social distancing works, as demonstrated with Skittles
Pa. school districts prepare for possibility of students not returning to classrooms
Governors, still trying to flatten the coronavirus curve, balk at Trump’s Easter Sunday timeline
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Even The Stock Market Doesn’t Want “Sleepy Joe” Biden As President
Add “bad for the stock market” to the long list of reasons why nobody wants “Sleepy Joe” Biden to win the election in November.
Biden has said he would partially reverse the Tax Cuts and Jobs Act put into place by President Trump. He would also enact other measures like higher taxes on capital gains and dividends for high earners and changes in non-tax regulatory policies.
In 2017, the Tax Cuts and Jobs Act lowered the US corporate tax rate. It went from the highest in the world, at 35 percent, down to 21 percent. Analysis by the Tax Foundation shows that Biden’s plan would increase the corporate tax rate to 28 percent.
According to David Kostin, chief U.S. equity strategist at Goldman Sachs, the Tax Cuts and Jobs Act has reduced the effective tax rate of S&P 500 companies by 8 percentage points to 19 percent while also boosting S&P 500 earnings by 10 percent.
Biden’s plan to raise the corporate tax rate will act as a bucket of cold water on the stock market. It would do so by dragging down corporate earnings.
Michael Wilson, the chief US equity strategist at Morgan Stanley, says “Extrapolating current multiples on that kind of earnings decline makes 100-150 points on the S&P 500 a baseline for the impact of a tax cut rollback, all else equal.”
“Of course, any impact on investor confidence that drags the multiple lower, or business investment, that drags economic growth lower could compound this effect,” Wilson added.
Higher corporate taxes also further burden companies that are still struggling to recover from the economic lockdowns due to COVID-19.
Expectations are for our country’s output to fall as much as 50% in the second quarter due to the restrictions. This comes with a 20-30% rebound in the third quarter and a modest 5-10% rebound in the fourth quarter. All this assumes that we don’t experience a second outbreak this fall.
“Although the coronavirus has caused the sharpest decline in economic activity on record, in some ways tax policy represents a larger risk to earnings and consequently to equity prices,” added Kostin.
Greg Valliere, chief U.S. policy strategist at Ontario, Canada-based AGF Investments, shared a warning. He says that if that Biden wins the November election, he shouldn’t be in a rush to raise taxes. He deems this idea bad, given the uncertainty of our economic recovery.
Valliere says Biden “needs to be careful in talking about a big tax increase early next year. I’m not sure a tax increase is a good idea in early 2021 as the jury will still be out on the extent of the recovery.”
Matt Gertken, a geopolitical strategist for BCA Research, says you can watch the market over the next month or two. Doing so will let you have an idea of who Wall Street thinks will win the election.
“Either the market sells off in the short run to register the currently likely victory of Joe Biden, who will hike taxes, wages, and regulation, or the market rallies all the way till the election, increasing the chances of President Trump’s reelection, which would revolutionize the global system, especially on trade, and would require a selloff around December.”
Trump Changes Course, Shows Support For More Stimulus Checks
There’s some positive news for the tens of millions Americans who are still struggling to make ends meet as the coronavirus pandemic lingers for the third month.
It appears President Trump has changed his mind, and is now in favor of sending out an additional round of stimulus checks to help Americans get through the economic uncertainty created by the coronavirus pandemic.
When asked about the likelihood of additional checks, the President replied, “I think we will. I think we’re going to be helping people out. We’re gonna be getting some money for them during the artificial — cause it really is it’s an artificial closure — and now we’re gonna be able to open it up,” Trump told reporters while he was in Michigan touring a Ford factory.
“I would say there could be one more nice shot. One more nice dose,” Trump said about a potential stimulus bill as the country struggles to recover from historic job losses and businesses are faced with an uncertain future.
Trump’s comments were echoed by White House staff, including economic advisor Kevin Hassett, who said during a CNN interview that another round of checks is “pretty likely,” and says “it’s coming sooner rather than later” before adding that if there are indications the economy is recovering quickly as more states reopen, the White House may look at other relief options.
Also supporting Trump’s outlook is Treasury Secretary Steven Mnuchin, who said Thursday that there’s a “strong likelihood” the U.S. will send out another round of stimulus checks.
“I think there is a strong likelihood we will need another bill,” he said during an online event hosted by The Hill newspaper, but added that the stimulus may not be needed immediately.
“We’re going to step back for a few weeks and think very carefully if we need to spend more money and how we’re going to do that,” Mnuchin said.
The change in course comes after Republican lawmakers were originally hesitant to continue adding to the deficit while attempting to generate an economic recovery. But with job losses continuing to climb every week and estimates for the second quarter GDP to plunge as much as 40%, the Senate GOP leaders are warming to the idea of an additional stimulus package.
While Democrats have pushed a $3 trillion plan through the House, Senate Majority Leader Mitch McConnell reportedly told President Trump last week any stimulus bill should not cost more than $1 trillion.
McConnell has also openly opposed the Democratic plan to extend the $600 per week additional unemployment benefit by six months when it expires in July.
Republicans have also shown little interest in the Democrat’s proposal of nearly $1 trillion in aid for state and local governments to offset increased costs and lower revenues due to the pandemic, mainly citing that the budget issues the cities and states are facing pre-date the pandemic and relief funds shouldn’t be used to fix old problems.
The White House and Republican leaders would also like to pass liability protection for businesses that reopen, shielding owners from lawsuits should an employee claim they contracted the virus while on the job. Democrats, however, have opposed the idea.
Trump Advisor: Pelosi’s ‘Bodacious Plan’ Only Helps Her Left-Wing Interest Groups
As we mentioned Wednesday, House Speaker Nancy Pelosi unveiled the Democrats’ latest stimulus plan, and it carried a hefty $3 trillion price tag.
According to Stephen Moore, the bill seems to be nothing more than a way for Pelosi to bail out her favorite special interest groups.
Pelosi had mentioned to reporters last week that one of her motivations for being in politics is to make sure children are fed, saying “One in five mothers report that their children are not getting enough food. Three times the rate during the Great Depression.”
She added, “So in addition to putting money in people’s pockets – direct payments, unemployment insurance, some other tax credits, etc. – we really also have to put food on the table.”
Moore says Pelosi seems more interested in putting food on the tables of the wealthy than the poor she says she is motivated to protect.
Putting Food On The Wrong Table
Moore’s spending plan is a “goodie bag” that “pays off nearly every imaginable left-wing interest group,” she says. This includes teacher unions, trial lawyers, arts groups, environmental activists, postal employees and even super-rich Democratic donors.
He added, “This is a bodacious plan, preposterous in its financial irresponsibility, but the speaker and her colleagues see in this terrible disease the opportunity for a fiscal sweepstakes. She seized the moment.”
Amazingly, even a $3 trillion price tag isn’t enough for some of the more liberal Senators in Washington.
Bernie Sanders says the bill should be revised to “adequately” help Americans get through the crisis.
“[T]he Senate must improve this legislation if we are to adequately address the two most urgent needs facing working families right now: health care and economic security,” Sanders said in a statement.
Moore takes particular offense to certain items in the bill. He says none of them have anything to do with the coronavirus. He also believes that they don’t have anything to do with providing relief from the effects of the ongoing pandemic.
The list includes:
- Some $1 trillion for blue state budget repairs and pension bailouts.
- $50 million for “environmental justice grants to prevent, prepare for, and respond to coronavirus.”
- Restoration of the state and local (SALT) tax deduction for blue state millionaires and billionaires. This would be the biggest tax cut in history for the top 1 percent in income.
- $20 million for the National Endowment for the Arts and the National Endowment for the Humanities
- Extension of the $600 unemployment insurance supplement (on top of 100 percent replacement of wages through direct UI benefits. This is the scandal-ridden program that in some 30 states pays people more money to stay unemployed than to get back to work.
- $100 million for OSHA funding — we should be deregulating not increasing regulation
- Extending unemployment benefits and financial aid to illegal immigrants
- A postal service bailout.
Congressional Republicans and President Trump should “unanimously and loudly denounce this New New Deal scam,” Moore also says. He adds that these “would pad the wallets of those who are funded by programs that have zero to do with the virus itself. Coronavirus didn’t create the $100 billion Illinois and New Jersey pension deficits.”
What would help this country recover isn’t a massive payment to special interest groups. Instead, the country needs to come up with a solution for the working man, according to Moore. This includes “a payroll tax holiday that will most benefit low-income workers, deregulation, and lawsuit shields for workers and employers.”
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