Here’s the Problem (NEGOTIATION LEVERAGE)

This is my stimulus update for Tuesday, August 11.

First Stimulus Eligibility Update from the I.R.S.

One brief update on the first stimulus payment before we talk about second stimulus.  The IRS updated its guidance to answer the question of what happens if a taxpayer filed a 2018 tax return, and the IRS when they were determining eligibility for the stimulus check looked at the taxpayer’s 2018 tax return and based on the 2018 tax return determined they were not eligible for a stimulus check because say their income was too high.

Now let’s say the individual files their 2019 tax return and say they’re now in 2019 under the income thresholds, will the IRS now look at their 2019 tax return and send them a stimulus check?  The answer is no.  If the IRS has already made a determination based on 2018, they’re not going to change their determination for stimulus check purposes.

That individual can, however, claim a credit for the stimulus amounts on their 2020 tax return based on their 2020 tax return, the one they file next year in 2021.

This thinking also works in your favor though, because remember let’s say you qualify for a stimulus based on 2018 or 2019 and your 2020 income is really high (somehow, despite the pandemic) such that you wouldn’t qualify for the stimulus based on your 2020 income, that’s fine, you don’t have to pay it back.

Little strategy here says if somehow your income is really high in 2020, but you haven’t filed your 2018 or 2019 tax return yet that would qualify for you for the stimulus, file those ASAP so the IRS sends you a stimulus check this year.

Status of Trump’s Stimulus Actions

So right now the only “stimulus” that has been enacted recently is Trump’s executive orders, which are not ideal, for example with the unemployment memorandum, some states have already expressed that they don’t think they can pull it off as a result of either budgetary concerns and/or logistics in the state unemployment system.

For example, in my state, California Governor Gavin Newsom, a Democrat, who previously wanted to send stimulus money to undocumented immigrants, said yesterday regarding Trump’s proposal that “there is no money sitting in the piggy bank of the previous CARES Act to be reprioritized or reconstituted for this purpose.  Simply, it does not exist.”

This is a bit confusing to me because in late July Democratic lawmakers in California proposed making up the difference between the now-expired $600 weekly benefit under the CARES Act and whatever benefits the federal government ended up sending for weeks ending after July 31.

Now, other governors, largely democratic, have expressed similar sentiments to Newsom’s about their own state, while other state governors have responded positively to Trump’s unemployment proposal.

For example, the Republican governor of West Virginia, Jim Justice, said yesterday that, “West Virginia is going to pay it…we cannot let our people that are sitting out there with no jobs wondering what in the world they’re going to do, sit out there and wilt on the vine.”

I believe that some of these statements from both Democratic and Republican governors are truly indicative of the reality in those states, but I also suspect that some of those statements that governors of both parties have made are probably politically-tinged as well.

The Problem With Stimulus Negotiations

What we really want is a Congressional stimulus deal, a real deal, and there’s pretty much no movement on that front that I can discern, we’re still in a standoff.

And here’s the problem with moving forward: both sides think they have the leverage right now in terms of negotiations.

Many Republicans are saying, “Well, look, our guy Trump came in and saved the day.  We don’t need you, Democrats, to help the people.  Once you get serious and come down from Cloud 9 or Cloud $3.4 trillion or $2 trillion, whatever, we’ll be waiting.” , but did Trump really come in and save the day?  Review my previous videos over the past few days to see just how shaky these executive actions are.

Yet the Democrats are pointing out, “Well, these executive actions, they’re absurd, they’re not going to do anything, they will be challenged and held up in court and the unemployment memorandum will be all but impossible to roll out at the state level, Republicans need to come groveling back to us to negotiate on a real deal.”

So both sides are sitting right now, arms crossed, waiting for the other side to cave because they both think they have the leverage right now.

Neither side wants to look weak with November 3 a mere twelve weeks away.  And guess what?  While the Senate is technically in session this week, many Senators are back home doing what?  Working on those reelection campaigns.

These Senators will be called back to the Senate on 24 hours’ notice to vote on something, but as of right now, there’s nothing to vote on.

Party leadership is more or less in D.C., and the two party leaders in the Senate, Republican Mitch McConnell and Democrat Chuck Schumer, had somewhat of a heated exchange on the Senate floor yesterday.

McConnell said, “From the beginning, our side has tried everything possible to find common ground and deliver more help. But Democrats said no. At least the American people know the score.”

Schumer said, “After days of arduous negotiations, Speaker Pelosi and I continued to run into Republican intransigence. … Let’s meet in the middle, we said. In the middle. That’s how negotiations occur. That’s how you get something done. The White House said no. It was difficult for us to offer that compromise.”

Treasury Secretary Steven Mnuchin said that he and Republicans are still very much interested in negotiations and that he had spoken with several Democrats since Friday but of course not the negotiators Pelosi and Schumer.

Today, Mnuchin and Meadows did have a conference call with Republican senators, and one of the senators, Chuck Grassley said, he’s “pessimistic about getting back to negotiations.”

$2,000 Per Month Stimulus Twitter Beef

I want to talk about some stimulus barbs that were traded on Twitter yesterday.

So you remember the Kamala Harris, Bernie Sanders bill called the Monthly Economic Crisis Support Act, one of those $2,000-a-month stimulus bills along with the Emergency Money for the People Act.

Well, there was a third senator on that bill, Ed Markey of Massachusetts, and yesterday Senator Markey tweeted, harkening back to that $2,000 a month bill, “Give every person in our country $2000/month for the duration of the pandemic, $2000/month for 3 months after that, and $2000/month retroactive to March.”

And Ted Cruz, Republican senator from Texas, retweeted this tweet with a comment, saying, “Why be so cheap?  Give everyone $1 million a day, every day, forever. And three soy lattes a day. And a foot massage. We have a magic money tree — we should use it!”

Then Senator Markey retweeted Cruz, commenting, “It’s not a G.D. joke, Ted.  Millions of families are facing hunger, the threat of eviction, and the loss of their health care during a pandemic that is worsening every day. Get real.”

I think this Twitter exchange is somewhat analogous to the situation we’re in right now: Democrats coming up with an over-the-top proposals, Republicans ridiculing that proposal, Democrats trying to push their over-the-top proposal as something that should be taken seriously, and of course nothing getting done.