IRS Chief Questioned About Stimulus Checks

This is my stimulus update for Wednesday, July 1st.

IRS Chief Talks Stimulus Checks

Yesterday in the Senate, senators asked IRS Commissioner Charles Rettig about various issues that happened during the first round of stimulus checks and how the IRS would do better if there is a second round of stimulus checks.

Senator Debbie Stabenow, Democrat from Michigan asked the IRS Commissioner, “When we’re talking about another COVID package, one of the things on the table is an additional $1200 payment, which I hope will actually happen. Given that, what should we be doing in the current round in terms of getting people the payments that they deserve? In any future rounds, what should the strategy be with Congress?”

The IRS Commissioner says that “The IRS definitely learned some lessons when it comes to the first round of stimulus payment.”

He said that “The IRS is making it a priority to reissue checks in cases where payments were sent to incorrect bank accounts.”

The Senate Finance Committee Chairman Chuck Grassley, Republican Senator from Iowa asked Rettig about a finding in a recent GAO report. And I told you about this report right here in the channel that hundreds of thousands of people did not receive the $500 payment for their children.

Commissioner Rettig says “the IRS plans to issue additional payments to this group over the summer.” That is consistent with that GAO report that I told you about last week.

Rettig noted that many of these people received social security benefits as well.

Grassley and Senator Maggie Hassan, democratic Senator for New Hampshire asked Rettig about whether social security recipients who miss the deadline in April to use the non-filers tool for their dependents under the age of 17 to get the extra $500 for them, if they will have another chance this year to get the stimulus payment this year.

Charles Rettig, the IRS Commissioner says that “the IRS doesn’t have anything like that planned as of right now. At this point, the only way for them to be able to get the $500 for their dependents would be to file a 2020 tax return.”

However, Rettig said, “The IRS is examining the issue of social security recipients who missed the deadline to use a non-filer tool, but he couldn’t yet make a commitment about how the IRS would handle people in that situation.”

He said, “We have some limitations on abilities and capacities to move things through, but we’re sympathetic. We’re trying to get as much funds out to as many people as possible, as quickly as possible.”

Grassley also asked Commissioner Rettig about the issue of stimulus checks going to dead people.

The IRS commissioner said, “The IRS first followed the procedures it used for stimulus payments it had issued in 2008. But after it had been issuing payments for three weeks, the Treasury Department issued guidance indicating that deceased people shouldn’t be getting payments. So the IRS has changed its processing.”

That’s consistent with that GAO report that I told you about last week.

Mnuchin’s and Powell’s Testimony

Yesterday in Congress, Treasury Secretary Steven Mnuchin and Federal Reserve Chairman both testified regarding the state of the economy.

They had somewhat different views. Mnuchin’s testimony was more or less optimistic as how I would characterize it while Powell’s testimony was maybe a little more pessimistic or reserved.

For example, Treasury Secretary Steven Mnuchin said that “He expects the economy to improve significantly in the second half of 2020 after adding 2.5 million jobs in May.”

He said, “We’re in a strong position to recover because the administration will work with Congress on a bipartisan basis.”

Meanwhile Powell said, “While this bounce back in economic activity is welcome, it also presents new challenges notably the need to keep the virus in check.

He said, “A full recovery is unlikely until Americans feel comfortable with gathering in large numbers and close spaces.”

He warned of daunting obstacles still ahead after the country has suffered a level of pain that is hard to capture in words.

You remember, Powell is always the guy who is calling for big stimulus. He says, “Think big about stimulus” and that inspired Democrats like Nancy Pelosi to come up with the $3 trillion HEROES Act. They certainly thought big there.

Senate Recess

Senate will be out of town shortly before the July 4th recess.

They’ll be returning on July 20th and hopefully there’ll be more news about what’s going on in the Senate with respect to another coronavirus relief bill then.

Main Street Lending Program Updates

The Main Street Lending Program, a lending program that is for companies that are larger than companies eligible for the PPP; Paycheck Protection Program, but they’re not like the huge Coca-Cola’s of the country.

But with those companies, it seems that the Main Street Lending Program is off to kind of a rough start.

The companies that need the cash the most are not likely to be approved for the program, while more creditworthy borrowers are likely to find similar or better terms on their own.

So that’s kind of the issue going on with that.

Paycheck Protection Program Updates

In the world of small business, I told you that the deadline for the Paycheck Protection Program; PPP loan application was June 30th.

However, yesterday, the Senate passed a bill that would extend that deadline to August 8th. I believe the House will very likely pass this bill and the president will likely sign it as well, but we’ll have to see.

That’s just my take on it. So if you’ve been late, if you haven’t gotten around to submitting your application for the Paycheck Protection Program and you’re a small business owner, you might have a little grace now, but we’ll have to see about that.

Senator Rick Scott, Republican Senator from Florida did try to change the bill to include a requirement that any new loans would have to go to businesses that have seen a downturn in revenue due to the coronavirus, but that amendment did not go through.

Unemployment Updates

Let’s talk about unemployment. Because something happened in Congress yesterday in the Senate having to do with unemployment as well.

But first of all, the US private sector businesses added nearly 2.4 million workers in June, according to ADP.

Chief Economist Mark Zandi at Moody’s Analytics said, “It looks like an economic recovery began in June. This reflects rehiring of workers and industries hard hit by the pandemic, including the leisure and hospitality industry, retail, healthcare, construction, and manufacturing.”

That said, the real news regarding unemployment is coming tomorrow with that June jobs report. That will be a very important document that I think will frame and shape many congressmen and congresswomen’s perspective on the amount and scope of the next stimulus relief bill.

So tomorrow is a very important date. Hope the senators are going to get the report tomorrow and hope they spend the next two weeks while they’re out on vacation to look it over, and think very closely about what’s going to happen after the unemployment benefits run out on July 31st.

Especially because new research by the Economic Policy Institute indicates that about 11.9 million Americans who are unemployed as a result of COVID-19 have no hope of returning to their old jobs, while 5.7 million workers expect to get called back to work but probably won’t.

So that’s over 17.5 million Americans who probably won’t return to their pre-COVID-19 jobs. That is extremely frightening.

Younger Americans and those at lower levels of education are expected to have a higher rate of permanent job loss along with minorities and women.

American Workforce Rescue Act

So speaking of unemployment, what did the Senate yesterday do?

Well, not the Senate, but what did Senate Democrats do yesterday with respect to the looming end of the federally mandated unemployment benefits specifically the extra $600 a week on July 31st?

Well, yesterday Senate Democrat Chuck Schumer is a minority leader in the Senate and Senate Finance Committee ranking member Ron Wyden introduced the American Workforce Rescue Act.

This would extend the $600 federal increase in weekly unemployment benefits beyond July 31st.

However, once a state’s unemployment rate reaches certain thresholds, that dollar amount is reduced by a $100 per week.

So this proposal would extend the $600 increase in weekly unemployment benefits passed July 31st until a time when a state’s three months average total unemployment rate falls below 11%.

So the benefit was started at $600 per week, but it would drop by a $100 per week for every percentage point decrease in the state’s unemployment rate below 11%.

If the state’s unemployment rate is 11% or above, people at unemployment there get the additional $600 a week.

Once it drops between 10–11%, that amount is reduced to $500 a week between 9–10%, $400 a week. Between 8–9%, $300 a week. Between 7–8%, $200 a week. Between 6–7%, $100 a week.

And then once the state’s unemployment rate goes below 6%, the FPUC, the additional weekly federally funded unemployment benefit would go away. And that is based on a three month average, total unemployment.

Schumer said that, “If we failed to renew the $600 per week increase in UI, millions of American families will have their legs cut out from underneath them at the worst possible time in the middle of a pandemic when unemployment is higher than it’s been since the Great Depression. Nearly every state currently has the unemployment rate above 8% and many are in the double-digit range.”

This proposal would also extend the pandemic emergency unemployment compensation program until March 27, 2021.

That’s the additional 13 weeks of unemployment that get on top of there. Because normally States, they limit the unemployment benefits of a certain number of weeks, in many cases, 26 weeks.

This part of the CARES Act would tack 13 more weeks on top of that, but it would actually beef it up. It would actually make it for that additional weeks to actually be longer than just 13 weeks.

So if a state’s unemployment rate is above 8.5%, people without work in those States would be eligible for up to 52 weeks of the Pandemic Emergency Unemployment Compensation.

Laid off workers in a state with an unemployment rate between 7.5% and 8.5% would be eligible for 39 weeks of additional compensation.

Those in States with an unemployment rate between 6.5% and 7.5% get additional 26 weeks.

Those in States with an unemployment rate between 5% and 6.5% would get the 13 weeks that exist right now.

Ron Wyden said, “Supercharged unemployment benefits need to be extended and tied to economic conditions on the ground.”

Now I wouldn’t be surprised if there’s some stimulus YouTubers out there today who refer to that proposed extension of the $600 a week as $2400 stimulus checks. So just keep that in mind today.

But to be honest, I’m not sure what the Senate Republicans will think about this. Now, they will likely like this better than just simply extending that $600 a week to everybody until 2021, right?

They acknowledged that there probably will need to be some kind of additional unemployment benefit of the federally funded level beyond July 31st. Just not the full $600 a week.

So who knows? They might actually go for something like this, or maybe at least a modified version of it. We’re going to have to see.

Infrastructure Updates

Well, what Republicans certainly don’t like is, the Democrats $1.5 trillion infrastructure bill.

Mitch McConnell has some more things to say this morning about it.

He said, “So naturally this nonsense is not going anywhere in the Senate. It will just join the list of absurd house proposals that were only drawn out to show fealty to the radical left.”

He said that, “The Moving Forward Act (the infrastructure bill), is a 1000-page cousin of the Green New Deal masquerading as a highway bill. This so-called infrastructure bill with siphoned billions in funding from actual infrastructure to follow into climate change policies.”

Pelosi fired back and said, “As you know, the grim reaper (referring to McConnell) said nothing is ever going any place in the Senate.”

But she said, “There is tremendous interest in the country in building the infrastructure.” I like to see those cats go back and forth. They’re pretty funny sometimes.

COVID-19 Updates

Let’s talk about COVID-19 briefly.

Yesterday, Dr. Anthony Fauci, our nation’s top infectious disease expert told members of Congress that, “The US it could possibly reach 100,000 new COVID-19 cases daily if the country doesn’t get a handle on the pandemic.”

He said, “I would not be surprised if we go up to 100,000 cases a day if it does not turn around. So I am very concerned.”

He said, “The country is headed in the wrong direction. As the average number of daily cases continue to go up.”

He said that “We need to do something about that and we need to do it very quickly.”

The US is currently recording approximately 40,000 new cases per day, surpassing previous record set in April.

There are now more than 2.6 million confirmed cases in the US including 126,000 deaths. And people are feeling it. People are more afraid now.

A late June Reuters poll found that 80% of surveyed adults said they were very or somewhat concerned about COVID-19, the most since a similar poll was taken May 11th through 12th.

Still a very scary time and I do wish that our leaders, especially those in the Senate would be doing more about it. But hopefully they’d take this time off to seriously consider what our country needs right now.