Kudlow Says Targeted Stimulus “Hasn’t Been Decided Yet”

This is my stimulus update for Monday, July 13th.

Kudlow on the Next Stimulus Bill

A week from today, July 20th, is when the senate is back in session. Hopefully next week, we’ll be getting some firmer confirmations on what exactly will be in the next stimulus relief bill.

Larry Kudlow was talking to Stuart Varney this morning about the next stimulus relief bill. Here’s the clip.

Stuart Varney: As promised, right on time, Larry Kudlow, top White House economic adviser. Larry, welcome back to the show. It’s good to see you again. We’ve got a rip roaring rally going on here. Part of the reason, I suspect, is this next stimulus package which you’re putting together. Can you be specific and tell us what we’re likely to see?

Larry Kudlow: Well, I don’t know that I can be totally specific. We’re looking at a lot of things, it’s pre-decisional, formal talks haven’t really begun. But look, certain things the president has said, for example, he wants a payroll tax holiday, that would give about a 6.5% increase to after tax wages for people either going back to work or have been working all the time. We’d like to see some unemployment reforms. We like return to work type bonuses of a modest nature, we don’t want to give people disincentives not to work.

There may be extensions to PPP, that’s to be decided. There may be some targeted, directed assistance from direct mail checks to individuals and families, that hasn’t been decided yet. There may be a capital gains holiday. There are a number of items that we’ve talked about publicly, and the president has mentioned. So, at the moment, that’s kind of the grab bag.

So, this is kind of the same old thing we’ve heard for a while. Anything is possible right now. Kudlow’s talking about the payroll tax holiday, unemployment, return to work bonus, extensions to PPP, stimulus checks.

He said there may be targeted, directed assistance for direct mail checks to individuals and families.

The part that bums me out, is what he says right after that. He says, “That hasn’t been decided yet.”

Larry Kudlow: There may be some targeted, directed assistance from direct mail checks to individuals and families, that hasn’t been decided yet.

Now, I’m not sure exactly what he’s talking about here. Does that mean that the White House isn’t fully onboard with another round of stimulus checks yet? That hasn’t been decided? I sure hope not.

I mean, Trump has basically expressed his full support for another round of stimulus checks. Does this mean that perhaps there’s still some negotiations right now between the White House and the senate on what exactly needs to be done?

I’m not sure, because Kudlow also said that formal talks haven’t begun, this is all pre-decisional right now.

Or was he talking about, is the aspect of the next round of stimulus checks being targeted, is what hasn’t been decided yet?

Are they debating between having another blanket round of stimulus payments, similar to the same recipients under the CARES Act?

Or are they thinking about doing something more targeted, is that the aspect that hasn’t been decided yet? I’m not sure, he doesn’t really elaborate.

He also talks about a capital gains holiday, et cetera, et cetera. And then after this question, Varney asked Kudlow to commit. Here’s the clip.

Stuart Varney: But we’re going to get something? I mean, there is going to be a new package? You’ve got to agree with the Democrats, I understand all of that. But we’re going to get something? You’re going to say that conclusively? We’re going to get something.

Larry Kudlow: I will, I’ll say that conclusively. I think as you read the reports and talk to people on both sides of the aisle on the Hill, it is increasingly clear that there will be an additional package. And again, we’ll try to make it targeted, we’ll try to incentivize not just work, although work is crucial, and going back to work. We want to incentivize investments, we want a pro-growth package that will not only get us through this year, even with a V shaped recovery and a strong second half at 20% growth, we want to go forward into 2021, make it a big bang year.

So yes, I think it’s safe to say at this point, all sides agree there will be a package.

So, Kudlow basically says… He commits to another stimulus package. And I think that could be pretty much assumed at this point that there will be another stimulus package, it’s just what is going to be in there, is the big question.

Kudlow does maintain his optimistic look for the economy for the rest of the year. He’s talking about that V shape recovery, that kind of thing.

Kind of backpedaling a little bit from some of the White House statements earlier this year about a rocket ship, an I-shape recovery. But hey, a V shape recovery is probably the best we can hope for at this point.

He’s thinking into the future about 2021 to make 2021 a big bang year. And the thought process here is that, the economy needs a boost right now to ensure that we have that “transition to greatness” that President Trump has been wanting for the last half of 2020 and going into 2021.

$5,000 Child Tax Credit Advance

Another proposal that at least one Republican senator wants to see in the next stimulus relief bill is the Advancing Support for Working Families Act.

What this would be, would basically be a $5,000 advance on 10 years worth of child tax credit.

So as you know right now, the child tax credit is up to $2,000 refundable, up to $1,400 non refundable.

What this idea would do, proposed by Senator Bill Cassidy, would be say, “Okay, we’re going to reduce your child tax credit over the next 10 years by $500 per year, and pay you that $5,000 in advance right now, to cover things like childcare as well as pay for time off of work.”

Cassidy said, “One thing that I’m hearing from moms is that they’re having to stay at home, and some of them have had a problem with employment. And so, I think this would be an appropriate part of a COVID bill, just recognizing that young families in particular can be particularly stressed out right now.”

Critics say this idea provides no new net financial help for families. They’re simply essentially borrowing from future back tax benefits to get a benefit today.

Maybe this isn’t the brightest idea, the greatest idea in a stimulus package, but a dollar today is probably going to be worth more than a dollar 10 years from now, right?

So, take it or leave it. I’m not thrilled one way or the other on this bill. The critique is accurate, this doesn’t provide any new money, this is just borrowing from your future self.

But regardless, Ivanka Trump has said that her father the president would support this legislation. We haven’t really heard a lot of other folks in DC talking about this, with respect to another COVID bill, but who knows. They may surprise us with what’s in there.

Unemployment

Let’s talk about unemployment for a little bit. So, unemployment claims are still really backed up in several states.

In Wisconsin, 13% of claims remain unprocessed. In Pennsylvania, 15% of claims were still in review as of last month.

Oklahoma has only approved 235,000 out of 590,000 claims, that’s less than 50% with about 2,000 still under review as of the end of last month.

Nevada has also had issues processing gig worker jobless claims, fulfilling only 74% of the over 100,000 PUA claims as of the middle of last month.

Interesting thing, my company got a notice from the EDD here in California that somebody filed an unemployment claim saying that my company is their employer, and I have no idea who this individual is.

I just got that piece of mail this past week. So, I sent the piece of mail back to the EDD and I said, “Look, I don’t know who this individual is. I think this is a fraudulent claim.”

So, I don’t know if that was a fraudulent claim or it was a mistake at the EDD, so I hope they respond to that and process that, because I don’t want this unemployment claim claiming my business as the employer, when I don’t know who the heck this person is.

And that’s a little scary to me, a little concerning.