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.
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.
Lower the thresholds
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.
Base checks on 2020 tax returns
The first $1,200 stimulus checks were mostly based on either 2018 or 2019 tax returns (though people who don't typically file because their incomes are too low also qualified for the payments).
The second $600 payments authorized by Congress are based on 2019 returns.
Now that tax season is about to kick off, a credit is available for those who missed either all or part of the money.
A new round of payments could be based on 2020 tax returns, which would directly reflect what individuals and families experienced this past year.
Depending on how soon third checks are authorized by Congress, they could be integrated into this tax filing season, Holtzblatt said.
There are a couple of downsides to that, which is how soon you get the money would depend on how quickly you file your tax return and the IRS processes it.
Plus, payments for those who are eligible for either the earned income tax credit or refundable child tax credit, who tend to be low income workers, would not be sent until after Feb. 15, as per a law passed in 2015.
"That would slow delivery to those people who potentially need the money most," Holtzblatt said.
Get payments out faster
The first $1,200 stimulus checks took months to go out. The second $600 payments will mostly be deployed by Jan. 15. If you don't receive the money by then, the IRS urges you to plan to file a tax return and claim a credit.
However, the money could be deployed at a much faster rate, according to Aaron Klein, senior fellow of economic studies at the Brookings Institution.
In Singapore or England, for example, the governments are able to deploy payments in a matter of hours, he said.
"We are light years behind, and the cost of our lack of progress are felt by those with the least," Klein said.
There are ways the U.S. can improve its systems, according to Klein.
The Federal Reserve has the legal authority to mandate that Treasury funds be made available faster.
In addition, a bill proposed in Congress, the Payments Modernization Act, includes changes that would expedite the checks. Notably, it would not cost the government more money, Klein said.
It could mean a difference between getting the money on Dec. 30 versus Jan. 4, which is crucial for those who need to pay monthly bills, Klein said.
"I would like to believe that the new administration will prioritize this," Klein said.
Boost unemployment insurance
Of course, the purpose of the stimulus aid is to help those who are most financially affected by the COVID-19 pandemic.
"The target population are people who lost their jobs," Klein said.
The latest coronavirus aid package includes an extra $300 per week in federal unemployment benefits through mid-March. Those benefits were previously $600 per week for some time in 2020, though they ran out. The new top-up is not retroactive.
Programs that extend the length of time of unemployment payments and provide checks to self-employed and part-time workers were also renewed.
"One way to target people with more need is stronger unemployment insurance, which the Republicans objected to," Klein said. "If you want to target greater need, start with the unemployed."