Each year I help over 500 clients file their Canadian and US tax returns as well as plan for both their Canadian and US investment accounts. I also regularly help new US clients plan for their move to Canada.
As we all recover from Thanksgiving dinner and look ahead to the holiday season, discussions around the second stimulus package continue. However, a decision (and second stimulus payment) is far from imminent. Here is a brief update of what might be ahead as we move toward 2021.
Treasury Secretary Steven Mnuchin offered a $1.62 trillion COVID-19 relief proposal in talks with Speaker Nancy Pelosi. Still, talks stalled before the Election with reports coming out that while the pair “discussed further clarifications on amounts and language, but distance on key areas remain.” Officials in both parties were growing increasingly pessimistic, as were financial markets as to whether the distance can be closed in the coming days as are financial markets. Forbes magazine went so far as to note that: “It’s possible that even if negotiations go well, we won’t see a new stimulus package on the voting schedule until after the election.”
November 27 sees talks around a second stimulus package reviving as President-elect Biden has “issued an urgent plea” for both parties to set aside partisanship and reach consensus on a relief bill:
“The refusal of Democrats and Republicans to cooperate with one another is not due to some mysterious force beyond our control,” Mr. Biden said in remarks on the economy after meeting with business and labor leaders. “It’s a conscious decision. It’s a choice that we make.”
Throughout his campaign, Biden advocated for a massive economic aid package that would include a second round of stimulus checks, but he remained vague on substantive details of the timing, conditions, or amounts of the payments.
Although the expectation is that lawmakers will eventually put partisan politics aside, questions remain as to the size and timing of the second relief package. Senate Majority Leader Mitch McConnell has indicated a sense of urgency to get the package finalized by the end of the year but given the Senate and House are both in a so-called “lame-duck” session, the total amount committed to relief is likely to be far below the $2 trillion that Democrats have been pushing. (Lame-duck refers to the session between an election and the post-election opening of the new Senate and House in January.)
The Vaccine Factor
Some analysts wonder if the recent announcements by Pfizer and Moderna around vaccines that are reportedly over 90 percent effective might impact decisions around the second stimulus package. The belief is that the vaccine will reboot the economy, boost hiring and rehiring, and restabilize household incomes, all of which would allow lawmakers to reduce the overall cost of any stimulus plan.
Critics of this line of thought contend that even with a proven vaccine in place, the rollout would take months, leaving millions of Americans without the additional government support they need. Walmart CEO Doug McMillon has stated his belief that it is “imperative” for elected officials to work together to pass more stimulus funding sooner rather than later:
“The increase in [COVID] cases will put more pressure on small businesses that have been heavily impacted by the pandemic,” McMillon said. “As various governments around the country tighten up to help keep people healthy, it will be imperative that elected officials in Washington work together to deliver the help, so many businesses need to get through this next phase of the pandemic.”
Watch this blog for regular updates and analysis as discussions around the second stimulus package continue.