Mitch McConnell wants to restrict future stimulus checks to incomes of $40K or less

Salon asked economists to weigh in on the socioeconomic impact of means-testing pandemic relief checks

By Matthew Rozsa

Staff Writer

Published July 7, 2020 5:26PM (EDT)

Senate Majority Leader Mitch McConnell | Economic Stimulus Checks Printed (Getty Images/Salon)
Senate Majority Leader Mitch McConnell | Economic Stimulus Checks Printed (Getty Images/Salon)

A recent remark by Senate Majority Leader Mitch McConnell suggests that, if another round of individual stimulus checks are approved by Congress, they may only be issued to Americans who earn less than $40,000 per year.

Speaking at a series of events in Louisville, McConnell struck an initial positive note for struggling Americans hard-hit by the economic shutdown.

"I can't comfortably predict we're going to come together and pass [a second bill] unanimously like we did a few months ago — the atmosphere is becoming a bit more political than it was in March," McConnell said at one point. "But I think we will do something again. I think the country needs one last boost."

Yet McConnell also argued that "I think the people who've been hit the hardest are people who make about $40,000 a year or less," including those who work in the hospitality industry. The previous, sole stimulus check that went out to Americans as part of the CARES Act sent up to $1,200 per adult, with an income cap of $99,000 for single taxpayers and $198,000 for couples. That bill also included major tax breaks for the super-rich. 

Economists that Salon spoke with were divided on the socioeconomic effect of putting a lower  income cap on the next round of relief checks.

"Means testing this relief will slow down the rollout of the program, though it will target the help to the neediest and reduce the costs of the program," Gabriel Mathy, a macroeconomist at American University, told Salon by email regarding the possibility of focusing on people who make $40,000 a year or less. "Politically, this kind of targeting has the potential to provoke resentment among those not receiving the payouts, which was not the case for the first round of checks that went out to most Americans."

Another economist who spoke to Salon had a slightly different take.

"The data show that the hardest hit groups are, indeed, low income people," Austan Goolsbee, who served on President Barack Obama's Council of Economic Advisers, told Salon by email. "They had by far the worst hit on their employment and they had the lowest margin for error before this began. The thing to remember, though, is that this is not a normal stimulus in the sense of giving money that you want to get out the door and jumpstart the economy. This is really just relief to keep people from being evicted and having their gas shut off."

In addition, McConnell made it clear that the new legislation could include provisions that, if implemented, would make it easier for institutions to urge or even compel people to come back to work, regardless of whether that was advisable from a public health standpoint. McConnell discussed "narrowly crafted liability protection" for businesses, universities, schools and health care providers, saying that he can "guarantee" those measures would be included. These measures would presumably protect those institutions from COVID-19–related lawsuits. Democratic leaders oppose those measures.

There are also reports that the new stimulus legislation could include back-to-work bonuses, or proposals ranging from a $450 weekly bonus to a one-time $1,200 payment that would incentivize workers to return to their jobs. This bonus could help further reduce the unemployment rate, which already saw unexpectedly steep declines in May and June.

When the new congressional session convenes later this month, legislators will discuss a possible new pandemic relief bill, but it is unclear what form the final legislation will actually take. In May, House Democrats passed the HEROES (Health and Economic Recovery Omnibus Emergency Solutions) Act, though McConnell has stated publicly that the bill would be "dead on arrival" in the Senate. The HEROES Act, which would spend $3 trillion, includes key provisions such as providing households with checks worth an average of $2,170 (as opposed to a $1,729 average under the previous bill). That includes $1,200 checks to individual taxpayers with a maximum adjusted gross income of up to $75,000 and married couples whose maximum adjusted gross income does not exceed $150,000. The payment amounts would then be gradually reduced as income brackets increased until eventually they disappeared entirely for individual taxpayers making as much as or in excess of $98,000 or married taxpayers making as much as or in excess of $199,000.

Unlike the first stimulus bill, the CARES (Coronavirus Aid, Relief and Economic Security, or CARES) Act, the HEROES Act would provide $1,200 payments for each child in a family up to three children and would include 17-year-olds and 18-year-olds. The CARES Act, by contrast, only provided $500 payments for children and established a cutoff age of 17. The HEROES Act also includes provisions to help college students whose parents claim them as dependents and Americans who are married to immigrants who don't have a Social Security number.

It is considered unlikely that congressional Republicans would support the HEROES Act in its current form, given its price tag and general conservative opposition to generous welfare programs. Because Republicans control the Senate and the White House (under President Donald Trump), House Democrats will almost certainly need to modify core provisions in their legislative package in order for a second round of stimulus to be passed.

By Matthew Rozsa

Matthew Rozsa is a staff writer at Salon. He received a Master's Degree in History from Rutgers-Newark and was awarded a science journalism fellowship from the Metcalf Institute in 2022.

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