Moneybox

Republicans Found a Way to Mail Checks and Still Screw People Over

Pure trash, Mitch.
Alex Wong/Getty Images

Senate Republicans have now released their hotly anticipated proposal to send families direct cash payments, as part of a wider economic aid package aimed at combating the coronavirus crisis. And hoo boy is it disappointing.

Advertisement

Under the plan, the government would provide households an early tax rebate worth up to $1,200 for an individual or $2,400 for a married couple, with an extra $500 for each of their children. (So far, so good). The payments will be based on a household’s 2018 tax return, or if it didn’t submit one, their 2019 filing.

But the checks will shrink for both low and high earners. Americans with little to no tax liability (aka, poor folks) will only receive a minimum payment of $600, unless they earned less than $2,500, in which case they get zilch. Low-wage workers who don’t have a federal tax return for 2018 or 2019—adults generally aren’t required to file one they if earn less than the standard deduction—also won’t qualify for the early rebate. (They could still get it next year if they file taxes for 2020, but by that time it will be a bit late.) Meanwhile, the payments phase down for workers who make more than $75,000 and drop to zero for those making $99,000 and above (double those numbers for joint filers).

Limiting these payments for the upper middle class and up is defensible, even if it irritates commentators who’d prefer a more comprehensive approach that mimics a universal basic income. Penalizing the poor during a pandemic, however, is beyond the pale. We’re in the midst of a planned shutdown of the economy that will disproportionately harm low-wage service workers, yet Republicans are concerned about properly rewarding people for work. It is a crass joke.

It’s worth emphasizing that the GOP’s new plan only calls for a single payment. The Trump administration had said its plan called for up to two, with the first arriving on April 6 and a second landing in mid-May if the crisis continued. This is not a proposal designed to provide ongoing support during an extended downturn—it’s essentially just a somewhat larger version of the tax rebate George W. Bush passed in his 2008 stimulus package. The bill does include a large loan program aimed at helping small businesses keep their workers on payroll, which, if successful, could reduce the number of Americans who end up under financial stress. But the bill is, overall, fairly stingy with direct support for workers.

Advertisement

There was a lot of commotion this past week about how Republicans appeared to be embracing the idea of unconditional cash payments to all Americans, and even some anxiety on the left that, by insisting on means testing that would cut off the very rich, House Speaker Nancy Pelosi and the Democrats were being outflanked by the GOP on this issue. Those concerns seem to have been premature.

Update, March 19, 2020, 10:12 p.m.: This post has been updated to note that low-wage workers without a 2018 or 2019 tax return could still receive the rebate if they file federal income taxes for 2020, which they would do next year.

For more on the impact of the coronavirus, listen to this week’s What Next: TBD.