Stealing is one of those things that I just hate and cannot tolerate. When easy child was in 4th or 5th grade, she stole a ball she had asked for while I was grocery shopping. I said no, then noticed the ball in her backpack about 4 days later. I knew she had stolen it. She lied, said her friend lent it to her. I offered to take it back to friend on my way into work - she freaked and said no. I held onto the ball only to find it back in her pack again. That afternoon, I picked her up from daycare, left difficult child there and drove to the grocers. easy child asked what we were doing. I told her she was paying for the ball. We stopped at bank, had her take out $5 from her savings, went into the store and found the manager. Explained to the manager that my daughter had taken the ball without paying and paid for it. (the Manager said, "oh it's okay" but I persisted). After we left the grocery, easy child was thrilled that she had a ball. I took the ball and tossed it into a garbage can. The discipline was making her own up to stealing the ball and paying for it. The punishment was not getting to play with it. That was that - she never stole again. The humiliation was too much for her to bear.
difficult child was a bit of a cleptomaniac in her elementary years but then it seemed to go away as her new favorite habit settled in: lying. That is, until she was sexually assaulted at 15 yrs. At that time, her stealing amped up beyond our belief. Her counselor said it was a coping mechanism. We were to make her own up to the stealing but should not be surprised if she can't remember stealing said item. She stole my wedding band. Swore up and down she didn't have it, I even stood by while she searched her drawers. Then I searched her drawers and there it was under her things. When I pulled it out and looked at her face, I can tell you - the look of surprise could not have possibly been faked. She REALLY didn't recall stealing it. Many years later and lots of talks later, she still doesn't remember stealing my wedding band, one of H's rings, or easy child's other jewelry. Truly. At that time, it was a basic need to have some control over at least ONE part of her life.
IMVHO, I think that either your son stealing this $20 was just your typical 'let me see if mom will notice' stupidity OR him finding a way to get your attention. You said you were dealing with older difficult child's issues. Any chance that this could be your younger son's way of screaming out for attention from you?
In any event, the advice you've received is on target - make him pay it back AND make him work it off. I personally do not think you need to take away all his things or other privileges. To me, that's not teaching him what it means to you to lose $20 of your hard earned money. By having to pay it back AND work it off, he's learning the value of money and that in order to EARN money, he needs to WORK for it instead of LOSE something for it, Know what I mean??