Personal Finance

Postal service battles could also mean delays for those second $1,200 stimulus checks

Stimulus checks: How budget cuts at the Post Office might delay your next payment
Stimulus checks: How budget cuts at the Post Office might delay your next payment
Key Points
  • Millions of Americans are eager to hear one phrase when it comes to their stimulus payments: "The check is in the mail."
  • But Washington Democrats are concerned that efforts to reform the U.S. Postal Service will delay crucial deliveries Americans are counting on. That could include a second round of stimulus checks, if Congress authorizes them.
  • Any holdups would likely take up to a week, according to one tax expert, a short amount of time compared to some of the bigger issues that have faced the government as it works to get money to Americans quickly. 

Capitol Hill lawmakers have been deadlocked on a new stimulus package.

But another issue — sweeping changes to the U.S. Postal Service — now has both parties clashing again.

The crux of the argument: whether changes that would improve the balance sheet of the country's mail service would deny Americans' their right to vote and receive stimulus money in the mail.

House Speaker Nancy Pelosi, D-Calif., has called House lawmakers back from summer recess to vote on a bill that would block the changes for now.

Meanwhile, Senate Democrats have also expressed concerns about changes initiated by new Postmaster General Louis DeJoy.

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"Mr. DeJoy appears to be engaged in a partisan effort, with the support of President Trump, to delay and degrade mail service and undermine the mission of the United States Postal Service," a group of seven Democratic senators wrote in a letter to the USPS Board of Governors.

That includes cutting back hours at some locations, denying overtime pay and eliminating some sorting machines and mailboxes.

The changes threaten Americans' ability to vote in the election and their access to Social Security, Veterans Affairs and other benefits, as well as prescription medications, the senators said. Signees include Senate Minority Leader Chuck Schumer, D-N.Y., as well as Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt.

The letter, however, does not name stimulus checks, another form of payment for which Americans may have to wait.

Congress authorized a first round of stimulus checks with the CARES Act this spring. That included payments of up to $1,200 per individual or $2,400 per married couple, plus $500 per child under age 17 to those who met certain income qualifications.

Stimulus checks: How much you'll get
Stimulus checks: How much you'll get

While about 160 million of those payments have been sent, there are still millions of checks outstanding.

Meanwhile, Congress has discussed a second round of checks in the next stimulus package. At this point, the money may not be approved until September, provided lawmakers come to an agreement. Actual payments may not start until October.

President Donald Trump on Monday reaffirmed his commitment to sending more money directly to Americans while defending changes to the Postal Service.

"We want money to go to the people that need it," Trump said.

Noam Galai | Getty Images

"I have encouraged everybody to speed up the mail, not slow the mail," he said. "And I also want to have a Post Office that runs without losing billions and billions of dollars a year, as it has been doing for 50 years."

Approximately 80% of the second stimulus checks would be made through direct deposit, according to Mark Mazur, director at the Urban-Brookings Tax Policy Center.

However, the remaining checks may be subject to delays caused by postal service changes.

"My sense is that the delays are relatively short-lived, and so it would be a matter of a few days or a week delay, not months delay," Mazur said.

Still, any delay could add to the financial burden of families who are counting on the cash.

"Stimulus checks are one more important item that could be affected by any sort of mail delay," said Kris Cox, senior tax policy analyst at the Center on Budget and Policy Priorities. "And those delays affect people in all 50 states and D.C., so this is a pretty universal concern."

While just about 20% of people received paper checks in the first round of payments, that represents 35 million people. "This is a significant group of people that might be affected," Cox said.

Still, that does not include an estimated 12 million who are eligible for checks but who would not receive them automatically, according to the Center on Budget and Policy Priorities' estimates. Those people need to take action to get their information to the IRS in order to receive their payments. 

Meanwhile, many people have anecdotally reported that they are still waiting for their first stimulus checks, and are confused as to why they have not received the money.

Lack of stimulus will worsen the recession for low-income workers
Lack of stimulus will worsen the recession for low-income workers

While the IRS has set up a phone line to provide help with questions on the payments, it can be difficult to get through to send the correct information to the agency.

Up to now, the delays some Americans have experienced in receiving the payments is unrelated to the Postal Service, according to Mazur.

"For taxpayers who haven't gotten a stimulus check yet, the largest reason by far is that they were unable to substantiate that they were entitled to the payment that they thought they should have gotten," Mazur said.

"It's not the Postal Service holding back the delivery of the check, but rather the IRS being able to confirm that this household was eligible," he said.

The high rate of unemployment and the difficulty people are having making rent payments or paying for food suggests that lawmakers need to act on the next stimulus package, Cox said, which would likely include another round of one-time checks.

"We're in the middle of a pandemic and a global crisis. People can't wait," Cox said. "Their rent, their food costs are not on hold."

Correction: An earlier version had the wrong title for Sen. Chuck Schumer. He is the Senate minority leader.