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Senate Republican prefers stimulus check 2 over Trump's tax cut

(Image credit: Chip Somodevilla/Getty Images)

A top Senate Republican may encourage lawmakers to lean toward a stimulus check 2 over a payroll tax cut with negotiations for the next stimulus package underway. 

According to CNN reporter Manu Raju, Sen. Chuck Grassley (R-Iowa) said he prefers direct payments over small reductions in taxes taken out of worker paychecks.

“I think when a person has a check in his hand ... I think that's going to do more economic good than if we dribble out $30 every paycheck,” Grassley, who chairs the Senate Finance Committee, said on Monday. He also implied that cash payments are more likely to encourage people to spend. 

A payroll tax cut has been proposed by the White House, with Vice President Mike Pence voicing support for the proposal and White House economic advisor Larry Kudlow saying he expects a payroll tax holiday to be part of the next stimulus package. 

Kudlow has also stated that "direct checks are probably going to be part" of upcoming legislation. President Trump, meanwhile, told Fox News he may not sign a bill that doesn’t include a payroll tax cut.

One criticism of a payroll tax cut is that it doesn’t help people who are out of work and not currently receiving paychecks — arguably the individuals who need stimulus check 2 the most. Grassley also expressed concern about public perception that a tax cut would affect the Social Security fund. 

The Senate is expected to work on a stimulus package this week. While no concrete plan has been put forward, it’s possible that the bill will include another round of direct payments (though possibly limited to workers who make less than $40,000 per year) as well as ongoing federal unemployment benefits (though at a reduced rate).

Stimulus check 2 timeline

As of July 20, negotiations over stimulus check 2 are underway. If the Senate approves a bill before their next recess begins on Aug. 10, as Treasury Secretary Steven Mnuchin and House Democrats are urging them to do, Americans could see benefits sometime in August. 

However, if the debate stalls, it could be mid-September or later before another round of direct payments goes out or a tax cut takes effect. 

Find your first stimulus check

The first round of $1,200 direct payments provided by the Cares Act has been trickling out. If you still haven’t received yours but believe you're eligible, use the IRS's Get My Payment app to search the status or call a representative at the IRS stimulus check phone number