A Second Stimulus Round: How it Will Happen and When to Expect It


Although the number of Americans decreased slightly in the past week, the pressure on individuals and families running out of benefits under the CARES Act only increases as the economy continues to grind toward recovery. And the recovery itself might not be as strong as first expected. Growth in the retail sales sector, for instance, slowed much more than expected in August.

Recognizing that the headwinds associated with the ongoing pandemic crisis have not weakened over the past weeks, the President has voiced growing support for a second stimulus package. Notably, the dollar figures mentioned are closer to the $1.5 trillion stimulus plan brought forward by a bipartisan group of House lawmakers than the recently proposed $1 trillion that Senate Republicans brought forward in the proposed in July’s HEALS Act. That said, the $1.5 trillion trial balloon currently afloat is a long way from the $2.2 trillion line in the sand seemingly drawn by the Democrats in the proposed HEROES Act.

Of course, any final package will likely be tinkered with substantially before receiving Senate approval, but here are a few things that you need to know about how a second stimulus package might happen and when it might be expected.

The Final Decision

There are two critical drivers of when the Senate might finally move to pass some form of a second stimulus package: the reality that the economy is not going to recover as quickly or robustly as expected and, of course, the November elections.

Although a second stimulus package seems very likely, the timing is far from clear. Congress has returned from its August recess, but the two parties remain firmly entrenched in their positions. The Democrats would like to see a $3.4 trillion package and the Republicans saying that anything over $1 trillion is unlikely to get enough Senate votes to pass. Just this week the Senate failed to reach the necessary 60 votes that would put in place a $500 billion “skinny” plan proposed as a bridge between the CARES and second stimulus package.  Add to these fractious politics that fact that there is a bloc of about twenty Senate Republicans unlikely to support any stimulus package, and the timelines begin to wobble even more.

What the majority of Republicans and all Democrats to agree on is that qualifying Americans should receive another direct payment similar to those approved under the CARES Act. Even though Democrats have vowed to delay the October 2 Congressional recess until an agreement is reached, there has been no progress of note in the past weeks. Some prominent politicians, like Senator Ted Cruz, are less than optimistic that the impasse will break before Election Day.

All of which returns us to the two drivers mentioned earlier. If jobs fail to materialize and economic indicators continue to show a less-than-robust rebound from the pandemic, both parties will begin to feel the growing pressure of election day. Republicans currently own a slim, three-seat majority in the Senate and many pundits agree that a swing of as many as eleven seats is a possibility. Strategically, the Democrats need to net four Senate seats in November to get the required majority that might break the current standoff around a second stimulus package.

Distributing the Funds

Some good news. When a second stimulus package is approved, Treasury Secretary Steven Munchin has said that mobilization would take only about a week. That said, it is likely that the IRS would keep the same basic distribution system in place for a second round of payments as it did for the first. This process means that the Get My Payment tool will likely remain in place for registering for direct deposit.

What is less clear is if the IRS will adjust the order by which payments were distributed in the first round. If you recall, the initial distribution model (which started on April 15) saw some people receive checks weeks before others. What we did learn from the first round is that individuals who had filed 2018 or 2019 tax returns and had provided direct deposit information were the first to receive payments. Those individuals waiting for paper checks or the 4 million who received Economic Impact Payment (EIP) debit cards were dealt with much later in the process.

The Waiting Game

So, for now we wait. Watch this blog for stimulus package updates as they happen and for further explanation of what to expect and when to expect it.


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