Hundreds of jobless people wait outside the Kentucky Career Center for help with their unemployment claims on June 19 in Frankfort, Kentucky.
John Sommers II/Getty Images
As President-elect Joe Biden prepares to take office on Jan. 20, one of his first priorities is getting $2,000 stimulus checks approved.
A third round of higher payments looked like a sure thing after Democrats won both Senate seats up for grabs in Georgia last week.
That was until Sen. Joe Manchin, D-W.Va., said he may oppose the payments.
His message: “If the next round of stimulus checks goes out, they should be targeted to those who need it.”
Other Democrats may still be deciding whether the checks should be a priority, Brian Gardner, chief Washington policy strategist at Stifel, wrote in an analyst note.
More from Personal Finance:
You may have to apply for some extra unemployment benefits
The unemployment labyrinth may have killed this musician’s dream
Colleges scrap plans to reopen for the spring semester
While some Democrats want those checks put through fast, that could hinder negotiations with Republicans for more coronavirus stimulus aid, Gardner wrote.
Some Republican lawmakers have echoed Manchin’s views that the checks could be better aimed at individuals and families who need it most.
When the House of Representatives passed a bill authorizing the $2,000 payments, Rep. Kevin Brady, R-Texas, said he was concerned the extra money would “go to pay down credit card debt, or savings, or even make new purchases online at Walmart, Best Buy or Amazon.”
The stimulus checks have largely been determined by past tax returns. Thus, people who had their income drop in 2020 might not receive a stimulus check reflecting that lower figure. On the other hand, those who lost no income due to the pandemic may also qualify for the money.
Experts say there are ways to make it so the $2,000 checks better reach those in need.
Full payments for both previous stimulus checks have gone to individuals with up to $75,000 in income and married couples who file jointly earning up to $150,000.
The checks gradually phase out for those with incomes above those levels.
Based on the phase-out schedule applied to the previous payments, $2,000 checks would let singles who earn up to $115,000 and couples with up to $230,000 get a portion of the checks, according to Janet Holtzblatt, senior fellow at the Urban-Brookings Tax Policy Center.
Lawmakers could instead opt to reduce the thresholds for full payments from the $75,000 and $150,000 limits for individuals and couples.
Such a move wouldn’t necessarily get more money to low- and middle-income households, according to Holtzblatt.
“But it would prevent or limit the amount that people with incomes above that threshold get any payment at all,” she said.
That would also help lower the total cost, Holtzblatt said, which some politicians have cited as a reason for their opposition.
Alternatively, lawmakers could opt to change the rate at which the payments are phased out (which is $5 per every $100 in adjusted gross income over the thresholds for full payments).
That would prevent higher earners from receiving the aid.