A second round of stimulus checks could cost up to a staggering $10 trillion.
The COVID-19 crisis shut down the American economy in an unprecedented manner. The closure of non-essential businesses, schools, and public gatherings have forced over 30 million workers into unemployment since the middle of March.
The government responded quickly to the financial impact of the COVID-19 emergency by passing the CARES Act, which included a $1,200 stimulus check and expanded unemployment benefits that provide an additional $600 weekly payment. Other programs helped taxpayers defer student loan payments or mortgage payments, or provided money for small businesses.
These programs have been a tremendous help to taxpayers and small businesses. But there have been consistent calls from many people for additional financial assistance. Help may be on the way, but it won’t be cheap.
These 3 Stimulus Proposals Would Pay $2,000 Per Month
Members of Congress have proposed three separate stimulus bills – each of which would provide a $2,000 monthly stimulus check for a set amount of time. One of these bills would also provide an additional $1,000 monthly stimulus check for one year after the conclusion of the $2,000 monthly payments.
Here are the current proposals:
These bills each have a few differences. Let’s offer some quick highlights and run some numbers to estimate how much each of these bills would cost compared to the one-time stimulus payments under the CARES Act.
Assumptions for Estimating Costs of Current Stimulus Proposals
The stimulus payment made as part of the CARES Act provided stimulus payments to over 150 million Americans. This program has more restrictive age and income eligibility requirements of any of the programs that are currently being proposed. So the minimum number we will use is 150 million payments per month.
We will use Social Security Wage Statistics to estimate the number of taxpayers who would be eligible for payments under the proposed bills. Because we do not know the number of married couples filing jointly or the number of dependents, we will assume all taxpayers are single with no dependents. In other words, we are only estimating a baseline cost for each program. The actual numbers would be significantly higher.
Finally, this is not an exact science. Even the IRS had trouble rolling out the stimulus payments, as millions of people still have not yet received their payments and thousands of payments were issued to deceased taxpayers. Those payments need to be returned, by the way.
Stimulus Check Under the CARES Act – Cost: Over $250 Billion
The best place to start a comparison is at the beginning. The CARES Act provided eligible taxpayers a one-time $1,200 Economic Impact Payment, which is also commonly referred to as a stimulus payment.
- Stimulus Payment Amount – $1,200 (Individuals) or $2,400 (Married Couples) plus an additional $500 per child under the age of 16.
- Who is Eligible? – Taxpayers with a Social Security Number who can not be claimed as a dependent on another taxpayer’s tax return and who meet income eligibility requirements; Dependents under the age of 16.
- Income Eligibility – AGI of $75,000 or less (Individuals); AGI of $150,000 or less (Married couples). The stimulus payment amount is phased out for incomes between $75,000 – $99,000 (Individuals) and $150,000 – $198,000 (Married Couples).
- Estimated Number of Checks Sent Out – Over 150 million
- Estimated Cost of Program – Over $250 billion
Note: The IRS has been working hard to send checks to everyone since the program was announced. Over 130 million payments have been made to date, but it could be months before they are able to mail checks to everyone who has not yet received their stimulus check.
Automatic Boost to Communities (ABC) Act – Cost: Upwards of $10 Trillion
The Automatic Boost to Communities (ABC) Act was introduced by Congresswomen Rashida Tlaib (D-MI) and Pramila Jayapal (D-WA). It is the most generous proposal on the table and would provide monthly payments to all taxpayers, including their dependents. It calls for $2,000 monthly payments to be made for at least 12 months during the payment period, with an additional $1,000 monthly payment to be made for 12 months following the cessation of the $2,000 monthly payment period.
- Stimulus Payment Amount – $2,000 per eligible individual, including dependents.
- Who would be Eligible? – U.S. citizens, residents, and nonresident aliens who have been in the U.S. for more than 3 months, beginning on December 13, 2019. Under this program, dependents would also be eligible for the full payment.
- Income Eligibility – There are no income-based eligibility restrictions.
- Duration of Program – The payment period would last one year after the termination of the declared COVID-19 emergency, or the later of a date based upon employment numbers. An additional $1,000 per eligible recipient would continue for one year after the end of the payment period. At a minimum, this program would last over two years.
- Estimated Number of Eligible Individuals – Over 168 million wage earners (again, we are leaving out dependents and non-working spouses).
- Estimated Cost of Program – Over $336 billion per month during the payment period of at least 12 months, followed by $168 billion per month for an additional 12 months. Total estimated cost for individual taxpayers: in excess of $6 trillion. However, this program could easily cost over $10 trillion when you add non-working spouses, dependents, and the open-ended timeline.
Emergency Money for the People Act – Cost: Upwards of $4.5 Trillion
The Emergency Money for the People Act, proposed by Representatives Ro Khanna (D-CA) and Tim Ryan (D-OH), would provide a $2,000 monthly payment to every qualifying American over the age of 16 for up to 12 months.
- Stimulus Payment Amount – $2,000 per month; $500 per additional child for up to 3 children.
- Who would be Eligible? – Every American age 16 and up, even if they can be claimed as a dependent on another taxpayer’s tax return.
- Income Eligibility – AGI of $130,000 or less (Individuals); AGI of $260,000 or less (Married couples).
- Duration of Program – Up to 12 months.
- Estimated Number of Eligible Individuals – 158.5 million people, or 94.53% of wage earners.
- Estimated Cost of Program – Over $316 billion per month (keep in mind, this excludes dependents). 12 months of this program could cost in excess of $3.8 trillion. Adding children and dependents could easily push this program cost to more than $4.5 trillion.
Monthly Economic Crisis Support Act – Cost: In Excess of $3 Trillion
The Monthly Economic Crisis Support Act is the most recent proposal. It was introduced by Senators Kamala Harris (D-CA), Bernie Sanders (I-VT) and Ed Markey (D-MA). This is a tax rebate program that would provide monthly stimulus payments of $2,000 to eligible recipients, including up to three dependents.
- Stimulus Payment Amount – $2,000 per month per eligible person; $2,000 per additional child for up to 3 children.
- Who would be Eligible? – All taxpayers other than any nonresident alien individual or anyone who can be claimed as a dependent. Taxpayers could also claim up to 3 children.
- Income Eligibility – AGI less than $100,000 (Individuals), $150,000 (Head of Household), and $200,000 (Married Couples). There is a phase out for incomes above these levels.
- Duration of Program – Payments would be retroactive to March 1, 2020, and would end three months after the end of the COVID-19 emergency, as declared by the Secretary of Health and Human Services. If passed in May, this program would run a minimum of 6 months, provided the COVID-19 emergency ended in May. We cannot estimate the exact duration of this program at this time.
- Estimated Number of Eligible Individuals – Over 152 million
- Estimated Cost of Program – Over $304 billion per month for a minimum of 6 months. The total cost would be at least $1.8 trillion. However, the actual amount would most likely be close to double this when accounting for married couples, dependent children, and the unknown timeline.
Will Any of These Bills Be Passed?
The sheer cost of these bills is enormous and coming at a time when the government is dealing with many other competing issues. Members of Congress have proposed additional funding for states and local governments, infrastructure, rent and mortgage holidays, student loan deferments or cancelations, hazard pay for essential workers, and other issues related to the COVID-19 emergency.
The sticker shock of these programs will certainly be a major factor in whether or not one of these bills will be passed. In addition, very few bills make it through Congress without significant changes. If one of these bills were to be passed, it would likely be significantly altered prior to being passed.