Mitch McConnell’s Dirty Double-Cross On Stimulus Checks

If something sounds too good to be true, it probably is.

This week began with Congressional Democrats proposing a $750 billion stimulus package to mitigate the damage being done to the economy by the shutdowns (soon to be, lock-downs) over COVID-19, the Coronavirus.

A day later, President Donald Trump and Treasury Secretary Steven Mnuchin upped the ante with a stimulus proposal of $850 billion which they quickly expanded into a package in excess of $1 trillion.

By the end of the day on Tuesday, the proposal had reached $1.2 trillion.

On Saturday, the Wall Street Journal reported that final package being negotiated in the Senate could exceed $2 trillion.

READ MORE: Why The Stimulus Package Just Won’t Stimulate Us

At various times throughout this back-and-forth, direct payments to suffering Americans have been $0, $1000, two checks of $1000, and most recently, $1200.

That final figure is the one referenced in the package the Senate appears to be coalescing around.

The proposal, first unveiled by Senate Majority Leader Mitch McConnell (R-KY) on Thursday would issue payouts of $1,200 to individuals, $2,400 to married couples and $500 per dependent child.

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But here’s the part that most Americans did not see coming.

The McConnell proposal calls for giving Americans that money as an advance on a future tax refund.

In other words, this is not a giveaway, or socialism, or some act of generosity.

READ MORE: Dark Days For Airlines and Cruise Lines Spark Pleas For A Massive Taxpayer Bailout

The government is not giving you money; it is giving you an advance on the tax refund you would be expecting in 2021.

For example, say you’re a married couple with no children and you receive a check for $2,400 now. Next year, if you’ do your taxes and you’re supposed to get a refund for $2,500, the tax form would have a line where you list the stimulus payout you received in 2020. The IRS would deduct that $2,400 and give you the net difference of $100 as your 2020 refund check.

This is also how the process worked as part of the Economic Stimulus Act of 2008, although the advances then were $300 for individuals or $600 for couples.

READ MORE: All You Need To Know About The Stimulus Checks

The government could choose to issue the payments as a gift, but even gifts come with strings attached. The checks would be considered taxable income and recipients would owe taxes when filing their 2020 tax returns. For a married couple with two children (receiving a $3,400 gift), would incur a tax hit of nearly $750 if their household income was $80,000.

The McConnell proposal effectively loans taxpayers their own money, a loan that will not come due until after both McConnell and President Donald Trump have stood for re-election in November.

If they win, why would they care about consequences? The 2020 cycle is certainly the last time either will appear on a ballot (Trump is term limited; McConnell would be turning 84).

If they lose, the incoming Democratic President and Senate Majority Leader will be left holding the bag.

UPDATE 3/25/20 9:30 AM

Early Wednesday morning, Senate and White House leaders reached agreement on the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act for short.

The legislation included payments of $1,200 for individuals or $2,400 for married couples, with addition payments of $500 per child.

While it remains unclear whether the legislation will categorize the funds as a loan (advance against future tax returns) or a gift (and thus taxable income), the legislation closely mirrors the 2003 and 2008 stimulus efforts which provided the payments as an advance.

The legislation is due for a Senate vote on Wednesday with a House vote expected in coming days.  If it passes and is signed by President Trump, direct deposits could start hitting as early as April 15th, with paper checks taking longer.

More information on what made it in to this revised version of the package can be found here.

UPDATE 3/27/20 9:00 P.M.

President Trump signed the CARES Act into law Friday evening after passage by the House and Senate. A full explanation of the stimulus for taxpayers that made it to the final revision can be found here.

36 thoughts on “Mitch McConnell’s Dirty Double-Cross On Stimulus Checks

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  1. WE SHOULD ALWAYS EXPECT A KICK IN THE FACE FROM RETHUGS–MOST PEOPLE WON’T REALIZE WHAT WILL HAPPEN COME TAX TIME AND BE CAUGHT UP SHORT–MANY PEOPLE USE THEIR TAX CHECKS TO PAY FOR IMPORTANT THINGS LOKE CAR INSURANCES OR TO PAY THEIR TAX BILLS

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  2. Vote all republiklans out of office. Set term limits to all political offices. Same insurance as the general populas gets. No lifetime benefits or salaries. Just Do It

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    1. Not so much political parties but yes to the term limits and lifetime benefits.
      I feel both parties,Democrat and Republican have ripped off the taxpayers for the last 40 to 50 years, just my opinion.

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  3. This is just awful we are supposed to be a land of opportunity and caring for our neighbors this is an example of neither one I make less than $35,000 a year and the stimulus check was going to make sure me and my child and not starve now I have says:

    This is just awful we are supposed to be a land of opportunity and caring for our neighbors this is an example of neither one I make less than $35,000 a year and the stimulus check was going to make sure me and my child and not starve now I have no chance to get ahead if they take away my taxes next year

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  4. I’ll pay tax on it when all the big bail out companies finish paying back the money that was given to them as a gift a few years back. Especially all the bonus money given to the top execs….

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    1. I agree. I hope people take your advice. Every member of the House is up for re-eelction in November as are more than 1/3 of the Senate. The President and Vice President are on the ballot for a seonnd term, and people shoudl also be paying attention to how well their governor and state legislator are handling the crisis. These people work for us, and they need to do a better job.

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  5. Dismayed but not a bit surprised. Our government thinks social security is an entitlement—like Medicaid and food stamps. Certainly not something that flat out belongs to us Why would we ever think for one second that they would be on the side of families who were just scraping by BEFORE there was a deadly virus with HUGE LAYOFFS and now are facing financial ruin? Why would they care. They make $160,000 per year. Free health care. Free travel. Etc etc. they won’t suffer for a single minute.

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  6. I’m wondering if there’s a way to opt out of this, it’s not fair and we should be given a option to not take it, I’m gonna call Andy Beshear office and ask tomorrow.

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    1. I am not sure. My guess would be that if you do not cash the check, you would not have to report it on next year’s taxes, so that might be a way of “opting out” but things will be clearer once the final version passes and Trump signs it.

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    1. So far, I have not seen any provision for that. It was part of the 2008 stimulus package though, and I doubt either party would leave out a group as critical as seniors in an election year.

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  7. Addressed to the author: Of course they are loaning us OUR money. It is OUR money no matter what. The government doesn’t have ANY money that isn’t OUR money. Pay now or pay later. This is a basic principle. Write about the topic, sure. But write about it in an educated way.

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    1. Than you for the feedback, even if you are arguing a point I had not included in the article. There is a difference between the way an advance on nest year’s tax refund is OUR money and piling onto the national debt is OUR money. It is the same as you making a major purchase when your paycheck deposits and making a purchase on your credit card when you are unemployed. Still your obligation either way, but clearly not same-same, right? The point of the article was not the source of the funds, but rather that the public is not being told honestly and upfront the source of the funds.

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  8. This is so unfair. By tax time next year a large percentage of people will still be having a hard time recovering to where they are today.. Some will never recover. T his is going to hit people so hard.. They will need all if their tax refund What about people that get no refund..

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    1. I agree. People need money now, but so many American scount on that refund every year. And if they wind up bankrupt or with ruined credit, their lives only get more difficult as they will be forced into a cash-only lifestyle and not have cash.

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  9. I can believe it thats why the world needs a wake up call I believe when its over the people in power will be more fair. If they dont get it they will have to learn the hard way God is tired

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  10. So if the house passes it then know about it right? After all who controls the purse? I think the country as whole has more to worry about than a few bucks. Both sides have been doing this way before most of us were even born. It’s called government not one side or the other.
    It’s about time we Americans send both parties a warning and remind them that this is our country!

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    1. I mostly agree. There is always some fluff in these packages to grease the gears, and in an election year, both sides want a package they can brag about more than a package that will be effective. Where I disagree is that these officials, especially in the Senate, are making this a one-side-or the-other kind of fight instead of doing what is best for America.

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  11. So what the Democrats want is free money? It think the only people who need any money are people who lost their income(period).

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    1. Actually, the Democratic proposal does not call for free money. Quite the opposite. It calls for aid to small businesses who lost revenue due to shutdowns. It calls for a major (temporary) expansion of unemployment benefits. Simply put, it calls for helping exactly the sort of worthy people you describe. The Republican plan seems to be to loan people their own money without warning them of the tax implications in 2021, and to give hundreds of billions (maybe, trillions) in aid to corporations.

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  12. Are we even surprised by this? The Republucans give corporations trillions in corporate welfare but fuck the little guy. That has always been their Modis Operandi from Ronald Reagan on. Historically, when the poor and middle class have nothing left to eat, they eat the rich.

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  13. The government doesn’t give a shit about the people, what they do give a shit about is how they can keep putting money in there own pockets ,this virus and shutdown doesn’t affect most of them because they don’t have to worry about every day money problems , it’s the middle class and the poor that worry.. the only thing that counts right now is votes and who has the power.. so they will keep lying and people will follow them like sheep .

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  14. Do you have a link to the source document showing this is McConnell’s plan? Or are you just assuming it’s similar to previous stimulus checks? Please share your source as soon as possible.

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    1. Here’s the thing, the McConnell plan keeps changing. As does the plan from the Democrats, and from the White House/Treasury. The plan was to have the payouts mirror 2008. That is still the plan. It would take an overhaul of the tax code to change that as the payouts would either need to be an advance, or a cash gift. Even the government cannot give you or I something with no tax liability. One of the more recent proposals calls for the payback to be over three years instead of all at once next tax day. What complicates things is that what Republicans sought to pass in the Senate the last few days is what is called a “shell”. Rather than a fully-completed piece of legislation, a framework is passed and all the parts are filled-in later. Sort of like passing a bucket and then everyone gets to throw their parts in until the bucket overflows. As such, there is not a formal piece of legislation that can be indexed to say, “Here’s the deal.” The word “assuming” is not a fair choice. The article is based on public statements by McConnell and other Republicans. A conclusion is made based on the data available and based on other reports from credible sources. That is not really “assuming” but I get why you chose the word. Also, this article from Forbes discusses the past stimulus payouts and the tax necessity of this round being similar. Politico also wrote a piece with a similar discussion. https://www.forbes.com/sites/anthonynitti/2020/03/20/mitch-mcconnell-wants-to-give-everyone-some-cash-how-would-it-work/#40c0220521b2

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