Stimulus checks can get through. But who gets it, and what they get is the key

In recent days, Dems in Congress have overcome GOP obstruction to take the key steps to open the path for stimulus passed later this month.

The Senate approved a budget resolution early Friday morning to speed passage of President Joe Biden’s pandemic aid plan without the need for Republican buy-in.

After nearly 15 hours of amendments during the endurance run known as “vote-a-rama,” the Senate voted 51-50 to adopt the measure, unlocking reconciliation — the budget tool Democrats are readying to enact the president’s $1.9 trillion coronavirus relief proposal with just 51 votes in the Senate. Vice President Kamala Harris cast her first tie-breaking vote just after 5 a.m. on an amendment to the budget measure.

Once the House approves the Senate’s tweaks, a total of 25 committees across both chambers will get to work writing the legislative flesh to enact Biden’s plan to send out a new round of $1,400 stimulus checks to Americans, boost the weekly federal unemployment benefit to $400 through September and more than double the federal minimum wage to $15 an hour, on top of hundreds of billions of dollars in aid to states, communities and schools.

That at least gives a resolution that can now be reconciled to the details in the stimulus bill. But now the question becomes what will the details be?

And among the biggest details to haggle over is in regards to who will get the checks, and how much will they be? Not as much about whether some checks will reach $1,400, and combine with checks in the December package to reach $2,000 (or even more, if some have their way), but who will get a check at all, and how do we determine who is eligible?

Let me give an illustration of how it worked for the two checks that went out in 2020 bills ($1,200 single/$2,400 joint filers in Spring, $600 single/$1,200 joint in December), and how it would work for checks of both $1,400 and 2,000, using the same reductions of $5 per $100 of income that hit at $75,000 for single filers and $150,000 for joint filers (I will use the joint income figures for these charts).

You can see how higher incomes become more likely to get checks the larger that the check is. Along those lines, what has been discussed by GOPs and some Dems who believe in (the outdated theory of) calculated centrism is an idea to cut off people at lower levels of income.

So I wanted to illustrate how that might change things. I'll keep the recent $600/$1,200 checks on the chart, but also give items that start phasing out the $1,400 checks at $50K single/$100K joint (as has been discussed), and how the larger checks could be phased out at the same $174,000K level that joint filers got cut off at recently.

In a way, this is more progressive, giving larger checks to lower-income people. But it also is a recipe for more resentment to be driven against lower-income people by the type of upper-middle class voter that switched toward Biden and Dems in US suburbs in the Trump era. Not that many of people in those income levels really need a check if they've been able to survive the COVID World with large incomes, but unless it is followed with tax relief given to those earners (SALT CAP REPEAL), you can see where GOPs will try to play both sides of things for 2022 in a cynical attempt to get those voters back.

I'll add that the Chair of the Senate Budget Committee thinks that it's a bad idea to phase out checks at $50K single/$100K joint, as has been floated.

Budget Committee Chairman Sen. @BernieSanders tells CNN's @jaketapper that Democrats "have got to do the right thing" and reject calls to limit the next round of stimulus checks to people making $50,000 a year or less. https://t.co/lm6oiD3xH0

— State of the Union (@CNNSotu) February 7, 2021

"Well, I think what we have done in the past and what we have promised the American people, we have said two things in the last month," Sanders, chairman of the Senate Budget Committee, told CNN's "State of the Union." "We said we're going to get you $2,000. And that's $600 plus $1,400. And what we're going to do is say that everybody, a single person, individual $75,000 or lower, and a couple of $150,000 or lower, will be eligible for that full $2,000, $600 plus $1,400."

"Now, when people said, 'we don't want rich people to get that benefit,' I understand that. I agree," Sanders continued. He added, "But to say to a worker in Vermont or California or anyplace else that, if you're making $52,000 a year, you are too rich to get this help, the full benefit, I think that that's absurd."

And Biden's Treasury secretary also seems to support a higher phase-out level than $100K.

U.S. Treasury's Yellen: Americans earning $60,000 should get stimulus checks https://t.co/nwm78QFmpw pic.twitter.com/FVWBPFFrOq

— Reuters (@Reuters) February 7, 2021

Yellen cited police officers and teachers who make $60,000, and said those individuals were worthy of a full check. But she also gave indications on the upper bounds of who should get a check.

The White House has said it is open to negotiation on who should be eligible to receive the proposed $1,400 checks, and has declined to specify where it thinks the income cutoff should be.

“President (Joe) Biden is certainly willing to work with members of Congress to define what’s fair and he wouldn’t want to see a household making over $300,000 receive these payments,” Yellen said, without offering further detail.

Based on the charts and phase-outs that I showed above, I don't see how a couple making $300K or even $250K would get a check, anyway (so STOP LYIJNG, Susan Collins and the rest of you GOPs). But it does illustrate that the Biden Administration is not planning to give everyone a check, which I suppose is noteworthy, as it indicates means-testing is still in place (for good and for bad).

The other question is "what are the income levels based on"? Right now, the last records the IRS has for most people is based on their 2019 tax returns, which doesn't account for all the craziness of 2020, and the (ahem) changes in income that might have happened to millions of Americans.

The pandemic hit in 2020. We should not use 2019 income to determine relief eligibility.

— Alexandria Ocasio-Cortez (@AOC) February 7, 2021

So do we want to get the checks out fast, but possibly see them reduced to people that really need it (which is more likely to happen if we use 2019 incomes to base the size of the check)? Or are we OK with delaying those checks and/or having the Social Security Administration use wage data for 2020 to base the checks on? Or do try to have everyone rush their tax returns if their incomes dropped, so their 2020 tax return is the latest one on the record when the checks come out?

One idea making the rounds is to assume everyone gets a check, and if they end up making too much, have them send it back when they file next year. This is a post from a random Twitter guy, but it sums up the idea well, and I've seen it tossed around elsewhere.

like, why not say "here's a relief payment, and we will make you pay it back in your 2021 taxes if you didn't actually qualify"

worse than just not doing onerous means testing in the first place, but, failing that, far better than basing it off of two year old income!

— Manish (@ManishEarth) February 7, 2021

This basically makes the stimulus check an advance tax credit on your 2021 taxes, and then if you got paid too much or too little, it adjusts when you file this time next year. Seems easy enough to me, but we'll see how they figure this out.

As you can see, there's plenty of detail figure out, and not a lot of time to lose, if we want to avoid millions of unemployed and otherwise stressed Americans from falling into further financial distress in the coming weeks. And you can bet that Republicans in Congress will try to bog this popular package down as much as possible with stupid minutiae, so it's important to get this done fast.

But getting the details right will likely be a major reason that decides whether our economy stabilizes and heads back toward full employment in 2021, or if it stagnates and causes more concern and anger to rise for the many Americans that are already on the edge.