Next Senate Relief Bill May Include More Direct Payments. But That’s Not Enough.

Tired waitress reading notes about orders and tips at the end of working day

Press reports recently indicated that Senate Republicans are considering including a second round of direct payments to individuals in their draft of the next COVID relief package. Senate Majority Leader Mitch McConnell has suggested limiting those payments (called Recovery Rebates in the CARES Act and Economic Impact Payments by the IRS) to individuals and families with incomes under $40,000.

Families with lower incomes, and especially those with low levels of cash on hand, definitely benefited from receiving Economic Impact Payments. Research indicates that these families quickly spent payments they received on food, nondurable goods, rent, and bills. Families like these continue to struggle to meet basic needs as infections rise, unemployment rates threaten to surge again, and augmented unemployment insurance benefits and rent and utilities moratoria are scheduled to expire.

But here’s the thing: another round of Economic Impact Payments* would help families who are struggling and is not nearly enough.

The COVID-19 crisis has exposed the deep and interrelated cracks in our economy. Our broken systems resulted in women and people of color being hit disproportionately hard by the virus, who are overrepresented among essential workers putting their health at risk without commensurate pay and protection, and facing even higher unemployment rates. Fixing inequitable results and preventing widespread hardship is no small task. Getting the virus under control for the most vulnerable populations, providing the resources needed to safely open schools and businesses for the workers most at risk, and ensuring that the people who are struggling the most can meet their basic needs are all necessary and interconnected elements of COVID relief.

Yet Republican Senators have specifically said that they oppose extending expanded unemployment benefits, and are lowballing the amount of fiscal relief they think is needed for states in the next relief package. Moreover, they want to limit the size of their next legislative package, leaving little room to fund child care, education, health care, nutrition assistance, or housing assistance at the level of need. (But limiting employer liability and throwing in more corporate tax breaks – those are priorities.) So, while another round of Economic Impact Payments is welcome news, it must be part of a robust and comprehensive relief package in order to make a difference.

* In addition to another round of payments, it’s important to make improvements to the Economic Impact Payments in the CARES Act so that families with lower incomes can get this needed relief. The CARES Act left out over 20 million dependents as well as people who file their taxes using an Individual Tax Identification Number. What is more, households whose incomes are too low to have to file tax returns are in danger of missing out on the first round of payments without aggressive state outreach. By the way, why are we stopping at one additional payment when red danger signs are flashing for the economy?