The coronavirus relief package: Complicated, expensive and necessary

The federal government recently approved a $3 trillion economic relief package to respond to the coronavirus crisis, and, despite the sticker shock, it seems to be a mostly good and necessary piece of legislation.

Democrats and Republicans alike deserve a round of applause for working together to get the package, officially called the CARES Act, passed. There’s a healthy amount of criticism that can be assigned to either side and to the president for the government’s slow response, but the relief package is a good start.

However, a start is all it is. Other countries are doing more to guarantee lost wages and stabilize their flailing economies, and I believe it’s only a matter of time before our federal government has to inject even more money into American households, especially as unemployment numbers soar and as the economy continues on a nosedive trajectory.

For now, government-issued stimulus checks will be coming to most Americans. The one-time check will depend on income, but single adults who have an adjusted gross income of $75,000 or less can expect $1,200. Married couples without children who earn $150,000 or less will receive $2,400.

Taxpayers who file as head of household and earn $112,500 or less can also expect $1,200. For every qualifying child age 16 or under, there will be additional payments of $500. The total check decreases for higher incomes and stops altogether for single people earning $99,000 or married people who have no children and earn $198,000.

The check will arrive within three weeks, and the amount will be based on 2019 or 2018 tax data. If you haven’t filed a 2019 return yet, it may be a good time to do so, especially if you’ve recently moved, updated other personal information or if your income has changed. The IRS will directly deposit funds to your bank if they have your account information on file.

The check comes with few strings attached, and you won’t be required to pay income taxes on the additional money. People who receive Social Security retirement and disability payments each month will receive a stimulus check, as will eligible unemployed people and veterans. The relief package also temporarily suspends most garnishments except for child support.

The CARES Act greatly expands unemployment insurance coverage. Self-employed and part-time workers are now eligible for benefits. People suffering from COVID-19 – or those caring for someone with the virus – are also eligible for assistance. Also covered under the package are parents who have seen their daycare provider close due to the pandemic.

The package also adds an additional $600 to the maximum unemployment insurance weekly benefit offered by each state. In Mississippi, the maximum weekly benefit is $235, meaning an unemployed worker in the state could receive $835 per week with the addition of the federal cash. The additional $600 weekly benefit can last up to four months.

Most Americans with student loans will benefit from the CARES Act. Loan payments are suspended until October, and interest is also suspended for the six-month period. These rules are for direct loans – or money borrowed from the federal government – and will impact 90 percent of student loans, according to the Institute for College Access & Success.

Another benefit is the more than $370 billion in government-backed bank loans that are now available for small businesses through the U.S. Small Business Administration. The loans are meant to help cover monthly expenses like payroll, rent and utilities, and businesses will not have to repay portions of loans used for these purposes.

The CARES Act also pushes $140 billion to the U.S. health system, including $100 billion directly to hospitals. The cash is meant to provide personal protective equipment to health care workers and also boost the supply of COVID-19 testing kits. Under the legislation, virus testing – and any potential vaccines – are to be covered at no cost for patients.

Additionally, evictions are temporarily suspended for renters whose landlords have mortgages backed or owned by federal entities. These landlords are also prohibited from charging any late fees for nonpayment of rent. Homeowners with mortgages backed by federal entities are protected from foreclosures for as long as 180 days.

If cash is needed to recover from the pandemic, the package temporarily suspends the 10 percent penalty on withdrawals from individual retirement accounts or workplace retirement plans and spreads any income taxes owed on withdrawn money over three years. Americans can also borrow up to $100,000 from their 401(k) or other workplace retirement plan.

The legislation has many other interesting – and impactful – provisions, including increased cash for the agricultural bailout program, a year-long extension of the REAL ID program, new rules for charitable deductions and billions of dollars for state, local and tribal governments. This money is to be used for local disaster relief funds, election security grants and even transit improvements. 

Of course, getting this piece of legislation passed was a politically charged process, and the final bill also includes a $454 billion emergency lending fund for businesses, states and cities. Within this provision is nearly $60 billion for airlines and $17 billion for companies “critical to maintaining national security,” such as Boeing and perhaps even the oil industry.

These payments do come with strings attached. Bailed-out corporations must keep most of their workforce, stop buying back shares of their own stock, cap the pay of their executives and end dividend payments to shareholders while receiving aid.

Like I said, the CARES Act is mostly good, but I could have done without billion-dollar corporate bailouts. I’m hopeful, though, that the aid provided to average Americans and to small businesses will prove that this relief package was necessary, and I hope the government will take additional steps if they need to do so.

Americans need to be financially empowered during this crisis, and our leaders must be ready to act before the crisis worsens – and not react, as they did this time.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s