Coronavirus Stimulus Package of 2020
Coronavirus Stimulus Package of 2020Compiled and Written By Accounting.com Staff
As the world responds to the coronavirus outbreak, governments have rolled out economic stimulus packages to aid individuals, businesses, and communities. Canada announced a stimulus package complete with income tax support, mortgage default management, and income supplements for workers and parents. Officials in the United Kingdom continue to negotiate the details of their economic recovery plan.
The coronavirus pandemic has brought local, regional, and national economies around the United States to a halt, prompting Congress and the White House to act. After a series of negotiations, the federal government agreed on a $2 trillion stimulus package to mitigate hardships like unemployment, lost revenue, and inability to make payments on loans.
Implementation of the stimulus package has prompted questions, speculation, and concerns as to exactly what Americans can expect. You can find details about the stimulus, what it means for you, and how it seeks to aid the economy below.
What Is the Stimulus Package?
President Donald Trump signed a $2 trillion economic stimulus package into law on Friday, March 27, 2020 called the Coronavirus Aid, Relief, and Economy Security (CARES) Act.
Though support for universal basic income measures to address the economic impact of the coronavirus grew in mid-March, the first attempts at a stimulus proposal failed to make their way out of the U.S. Congress. Senate Majority Leader Mitch McConnell responded with a $1 trillion package to "directly help American workers and families face this uncertain period," saying "particularly we're examining policy tools to put money directly and quickly into the hands of American families." This bill led to subsequent negotiations between Congressional Democrats and Republicans, which led to compromise with the passage of the CARES Act.
Secretary of the Treasury Steve Mnuchin praised the CARES Act, calling it "a very important bipartisan legislation that is going to be very important to help American workers, American business. […] We couldn't be more pleased. Spoken to the president many times today, he's very pleased with this legislation and the impact this is going to have."
The CARES Act will infuse $2 trillion into the economy, provide payouts to millions of individual Americans, supply loans to small businesses and large corporations, and offer crucial aid to public health entities around the country.
Described by Senate Democratic Leader Chuck Schumer as "the largest rescue package in American history," the CARES Act draws upon a strong precedent of government interventions into the economy. As seen in the New Deal legislation during the 1930s and 1940s and the 2009 American Recovery and Investment Act, government actions like tax cuts, subsidies, and payouts boost lagging and stagnant financial systems.
Why is the Stimulus Package Happening?
In the United States, more than three million individuals applied for initial unemployment relief during the third week of March 2020. Three weeks prior, only about 200,000 Americans filed first-time unemployment applications, indicating an overwhelming change to the economic landscape.
Unemployment numbers are one of several indicators of the toll coronavirus continues to have on the economy. The New York Stock Exchange lost the entirety of its growth from the previous three years in March 2020, only rebounding slightly as its volatility continues to unnerve investors.
Businesses and schools across the country have shut their doors, and college and professional sporting events have come to a halt. Disneyland, Las Vegas, and Broadway have all shut down. Economists now estimate the gross domestic product in the United States will fall more than 30% from April to June.
The CARES Act attempts to mitigate the downhill trajectory of the economy through direct payments to citizens, extended unemployment insurance, tax breaks, and loan programs. Along with assistance provided to households around the country, the economic stimulus targets the tourism and hospitality industries. Airline companies will receive $50 billion of $500 billion set aside for large corporations.
The coronavirus stimulus package also addresses the strain felt by local and state economies, especially in terms of public health funding. The government has allocated over $150 billion to hospitals, workforce and training programs, and to ensure the safety of healthcare workers.
The complexities of the CARES Act have prompted questions among the general populace. As Americans wait to see how the stimulus package benefits them, the details of the financial rollout are falling into place. Read on for details about who can receive the stimulus, along with specific amounts for different recipients.
- Who Gets What and When From the Stimulus Package?
Adults around the country will receive a one-time, tax-free payment of $1,200. This only applies to individuals who make less than $75,000 annually or married couples with under $150,000 in earnings each year. Individual workers who make up to $99,000 each year or couples making less than $198,000 will receive a prorated amount.
Heads of households with earnings up to $112,500 similarly receive the full payment amount. Individuals, couples, and households with children under the age of 16 will receive an additional $500 for each qualifying dependent.
According to the CARES Act, unemployment benefits will increase by $600 for claimants affected by the coronavirus. The overall benefit may vary by state. Self-employed and gig workers, previously ineligible for unemployment benefits, may now apply. Part-time workers can pursue additional unemployment resources previously unavailable as well.
- Who Will Be Affected by the Stimulus Package and How?
By aiding individuals, providing loans to businesses, and helping governments, the CARES Act serves as both an economic relief and a stimulus. Senate Majority Leader Mitch McConnell cautioned that "no economic policy can fully end the hardship so long as the public health requires that we put so much of our commerce on ice. [...] This isn't even a stimulus package. It is emergency relief. Emergency relief. That's what this is."
Millions of Americans have already experienced lost wages, making their benefits immediately essential. The government may need to offer additional aid in the coming months to further promote consumer spending and financial activity.