Will There Be A Second Stimulus Check?

With many of the emergency measures created to aid the coronavirus pandemic set to expire, people have begun to worry. Will there be a second stimulus check? House Democrats have already passed a measure containing additional aid, but Republicans have been hesitant. That hesitation appears to be waning.

President Trump has come out in the past week in support of additional stimulus checks for Americans. He even stated they would be quite generous. Senate Republicans have now followed suit, stating another round of checks is likely for July.

The Economics

The coronavirus has already led to trillions of dollars of extra government spending and an explosion of the yearly deficit. However, without government aid, the damage was likely to be even more catastrophic. A month-long shutdown led to historic levels of unemployment and an economic downtown, unlike anything we’ve ever seen.

July is a particularly important month economically. At the end of the month, the enhanced unemployment benefits will run out for millions of Americans. As part of the CARES Act, the unemployed were receiving an additional $600 on their unemployment check from the federal government.

Other measures, such as a moratorium on evictions, are also coming to an end. The recent surge in coronavirus cases in large states like Texas, Florida, and California is also putting downward pressure on the economy.

All of these factors are a threat to the V-shaped economic recovery many in government were hoping for. Health experts warned this was the danger in opening too fast without a good plan.

Are Stimulus Checks The Right Answer?

Many question the wisdom is handing out another round of one time checks. Some Democrats would like the checks to recur monthly until the pandemic ends. This would essentially be a form of universal basic income or UBI.

Some Republicans don’t want to give out money at all, claiming it will disincentivize work. This was the same argument they made against enhanced unemployment. They also cite the massive deficit we have already accumulated this year.

If the problem is not addressed it could snowball into something catastrophic. Wall Street is already warning that the market could tumble up to 20% without further aid. More layoffs are almost a certainty at this point as PPP loan money begins to run dry. Previous government aid merely put off the inevitable when it comes to facing the consequences of a month long shutdown.

We are in uncharted territory where good answers are hard to come by. As the old saying goes, we are trapped between a rock and a hard place. On the one hand, we generally want to encourage people to find jobs and go to work. On the other hand, we are trying to encourage people not to go out in public so much to slow the spread of the coronavirus.

Will there be a second stimulus check? The answer is probably yes. However, I wouldn’t count on it to come as quickly as the first did. With the country open this time around, Congress will not have the same impetus to act quickly like they did back in the spring. I expect the negotiations to more tense and partisan this time around.