Will the economy rebound without more stimulus? White House economic adviser Kevin Hassett seems to think so. He said yesterday that “it’s possible that we will see a strong-enough economy that we don’t need a phase four” stimulus package. He, like other White House officials, says the US should assess the impact of existing relief bills before discussing another package. In March, when he was not in the administration, Hassett said the economy could fall into depression without widespread testing. Meanwhile, Federal Reserve Chairman Jerome Powell told 60 Minutes Sunday night that the economy will not likely fully rebound before 2021.
Speaking of impact: Few emergency stabilization loans so far. The Coronavirus Aid, Relief, and Economic Security Act (CARES) established the $500 billion Emergency Economic Stabilization Fund that Treasury was supposed to distribute through Federal Reserve lending facilities. But only $37.5 billion has gone out the door, according to a congressional oversight committee report. The airline industry has received none of the funds set aside for it. The report questions how the agencies will assess the program’s success. Treasury Secretary Steven Mnuchin, who has broad authority to distribute the loans, and Federal Reserve Chairman Jerome Powell may be answering questions at today’s Senate Banking Committee hearing.
You can call the IRS again. While the IRS has been distributing CARES Act stimulus checks, it has been impossible to contact the agency with questions—except by fax. Many staffers were sent home due to the pandemic and the agency had no way for operators to handle calls remotely. Yesterday, the agency announced it has brought in 3,500 operators to answer calls. Trouble is, about 130 million payments have already been distributed.
How to strengthen EITC during recessions. TPC’s Elaine Maag and Donald Marron, in their new brief, examine how to modify and expand the Earned Income Tax Credit to make it more effective during economic downturns. Accelerating the credit phase-in (or eliminating it entirely) would reduce the decline in credit amounts during slowdowns. Increasing the size of the credit and expanding eligibility would provide one-time stimulus. Advancing credit payments could provide faster financial assistance to beneficiaries.
In case you missed TPC’s Chartbook of Tax Incentives for Retirement Savings… TPC’s Eric Toder, Surachai Khitatrakun, and Aravind Boddupalli show how tax incentives for retirement savings provide the largest benefits as a share of income to upper-middle-income taxpayers. The chart book explores the implications of current-law income tax incentives for retirement savings, illustrates alternative ways of measuring their tax benefits, and analyzes the distributional impacts of alternative retirement saving incentives.
Illinois GOP lawmakers: Nix the graduated income tax. Two state representatives want the legislature to repeal the state’s graduated income tax it passed last year before it goes before voters on November 3. They argue that the levy would make it harder for small businesses to reopen after the pandemic.
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at email@example.com.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
- © Urban Institute, Brookings Institution, and individual authors, 2020.