Treasury Secretary Steven Mnuchin signaled that a second round of stimulus checks might be included in the next coronavirus relief bill that the Senate will likely tackle when it returns from its July 4th recess.
As reported earlier today by the Wall Street Journal, Mnuchin said on Thursday that a second round of stimulus payments is “something that we’re very seriously considering,” during an online question and answer session with reporters.
Mnuchin said that he and President Trump have had conversations about additional stimulus payments to Americans, but that “no decision had been made yet on whether to advocate for them in the next bill.”
White House Will Play Pivotal Role
Positions on a second round of stimulus payments among Congress have been relatively clear. House Democrats included an expanded proposal in the HEROES Act, but Senate Republicans have been strongly aligned against it. President Trump has equivocated, initially indicating support, but then moving on to new proposals, like a much-panned payroll tax cut. It now seems as if Trump is reconsidering a second payment.
The White House will have enormous influence over the provisions in the next relief bill. While Senate Majority Mitch McConnell has taken a wait and see approach that has paid off with a surprising May jobs report. he has consistently indicated that he would only move forward in lockstep with Trump and the White House. “We’re basically assessing what we’ve done already. I’m in constant communication with the White House and if we decide to go forward we’ll go forward together,” McConnell told reporters in May. “The president and Senate Republicans are going to be in the same place.” he added.
It’s important to call out that the odds of a second stimulus check remain low given the strong opposition by Senate Republicans; however, if Mnuchin’s comments foreshadow new support from the White House, they could prove to be an inflection point.
Cost of Second Stimulus Check Could Be Contained
While McConnell has indicated that he will be fully aligned with the White House, he has also worked to put guardrails in place proactively before negotiations begin in earnest in the Senate on the next relief bill. He stressed that the next coronavirus relief package will be narrowly focused and much smaller than the CARES Act. Furthermore, he has told President Trump that the bill cannot exceed $1 trillion.
Proposals advocating for a recurring $2,000 stimulus check would clearly run afoul of McConnell’s $1 trillion line in the sand, but others would not. For example, simply replicating the stimulus payment provisions contained within the CARES Act cost $268 billion. In other words, if Trump wanted to push for a second stimulus payment, a provision could be crafted to satisfy his demand, but stay within the broad framework that McConnell has outlined.
Trump Has Incentive To Advocate For Second Stimulus Payment
With poll numbers dropping and ambiguity about how quickly the economy can recover, President Trump has incentive to consider a second stimulus payment in the run up to the November election.
The coronavirus pandemic has wreaked havoc on the US economy. The Congressional Budget Office (CBO) has estimated that Covid-19 will inflict long-term damage on the U.S. economy, shrinking it by $7.9 trillion over the next decade.
However, it also highlighted that economic loss due to Covid-19 was partially offset by the CARES Act and other legislation enacted between January and May. “Recent legislation will, in CBO’s assessment, partially mitigate the deterioration in economic conditions,” CBO Director Phillip Swagel wrote in a recent analysis requested by Senate Democrats. Swagel also indicated that, “if lawmakers enact additional pandemic-related legislation—then economic outcomes will necessarily differ from those presented here.”
In other words, a strong fiscal response would not only help millions of Americans and the economy as a whole, but it could also help Trump’s re-election chances. Perhaps that motivation will be the turning point and increase the likelihood of a second stimulus check.