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Lawmakers continue to wrestle. Will the next Covid relief bill contain $600 or $1,200 stimulus checks?

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Key Points
  • As Washington lawmakers continue to wrestle over how to get more financial aid to millions of Americans, a new push for second stimulus checks has emerged.
  • President Donald Trump has entered that debate with a proposal for $600 stimulus payments, half of the amount sent the first time around.
  • How soon the money gets delivered will depend on Congress to green light it and how the IRS integrates those payments into tax filing season.
Image Source | DigitalVision | Getty Images

As Capitol Hill lawmakers continue to work on the next round of coronavirus relief, a big question remains: Will there be a second round of $1,200 stimulus checks?

Based on one new plan, lawmakers for and against those checks could split the difference and send $600 one-time payments instead of the $1,200 sums that were sent out to millions of Americans this past spring.

The proposal, which was put forward by President Donald Trump, would include $600 payments per individual, or $1,200 per couple, plus $600 per child.

Meanwhile, other leaders including Sen. Bernie Sanders, I-Vt., are pushing for the sums to stay at $1,200.

"Today, 1 in 4 workers are unemployed or make less than $20,000. Congress must provide direct payments to the working class NOW! At least $1,200," Sanders tweeted this week.

The new push for more one-time payments comes as recent proposals, notably the $908 billion bipartisan plan, have excluded stimulus checks.

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More stimulus checks could push that total beyond the $1 trillion mark, with either roughly $300 billion for $1,200 checks, or about $150 billion if those payments were cut in half for adults.

The Trump administration proposal would cost about $916 billion with the $600 stimulus checks. But it would slash unemployment funding from $180 billion to $40 billion.

"That is unacceptable," Senate Minority Leader Chuck Schumer, D-N.Y., and House Speaker Nancy Pelosi, D-Calif., said in a joint statement.  

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While lawmakers like Senate Majority Leader Mitch McConnell, R-Ky., have said they want to keep the total cost down, there is still a possibility that a second round of checks could end up in a final deal.

"When you start looking at areas where you could get compromise, this is always in play," said Ed Mills, Washington policy analyst at Raymond James.

The support for second stimulus checks does not necessarily break down along party lines, he said.

"Members of Congress are going to want to turn to the average constituents and have an answer to 'What was in this for me?'" Mills said.

A $600 sum is in line with past stimulus payments, notably when former President George W. Bush sent money to Americans at the beginning of the financial crisis, he said.

Still, there are a couple of hurdles that will determine how quickly those one-time payments could actually get out.

"This is a roller coaster," Bill Hoagland, senior vice president at the Bipartisan Policy Center and former Senate staffer, said of the relief negotiations, which coincide with lawmakers' efforts to keep the government funded.

Tenants and housing activists in Brooklyn, New York, protested in a Bushwick park on July 5.
Erik McGregor | Getty Images

New sticking points like stimulus checks could dash hopes for a deal to get through this week.

"What it means is we're not looking at a package until the 18th at the earliest," Hoagland said.

Much of whether or not more direct payments are included will ultimately come down to whether McConnell is willing to include them in the next package, Hoagland said. This week, the Senate majority leader reportedly told the White House he supports $600 checks.

How soon Americans receive the money will depend on when they are approved. If Congress okays them this month, the checks likely will not reach Americans until around the Jan. 20 inauguration of President-elect Joe Biden, Hoagland said.

The timing could be tricky for the IRS to handle because it coincides with the start of the tax filing season, said Janet Holtzblatt, senior fellow at the Urban-Brookings Tax Policy Center.

December is typically when the agency gets its systems ready for the coming tax season. If they also have to send more payments in December and early January, that could conflict with the start of the filing season in late January, she said.

"The timing in terms of the IRS workload is not great," Holtzblatt said.

A more preferable way to distribute the payments would be to include them in the 2020 tax returns and then encourage people to file early electronically, she said. That could also help target the payments based on people's financial situations in 2020, she added.

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If the government were to pursue that strategy, they would also have to suspend a hold on earned income tax credits and refundable child tax credits that often delays some refunds.

Changing the amount to $600 from $1,200 would not affect how quickly the payments are processed.

But changing qualifications for the checks — such as making it so that all dependents are eligible, not just children under 17 — could make it more difficult to reach some people quickly, Holtzblatt noted. Non-filers, in particular, would likely need to submit additional information to the IRS in order to get full payments including dependents.

The transition of one White House administration to another also prompts another question: Whose name will appear on the stimulus checks? The first round of $1,200 payments had Trump's name printed on them.

The likely answer: The secretary of the Treasury, whose name has traditionally appeared on those kinds of payments.