Trillion Dollar Stimulus on the Way

March 27, 2020

On March 26, 2020, Lawmakers in Washington struck a compromise on a major fiscal stimulus package to help combat the effects of the COVID-19 pandemic. The bill, already passed by the Senate and awaiting House vote, packs in a lot, with upward of $2 trillion slated to provide important support for the economy, explains Raymond James Chief Economist Scott Brown. In comparison, the American Recovery and Reinvestment Act of 2009 was $831 billion.

The goal of the bill is to help cushion the economic downturn. Optimism regarding it helped the S&P 500 post its largest three-day rally (+17.6%) since April 1933.

Despite tense – and at times frustrating – negotiations, lawmakers put together this bipartisan package much more quickly than initially anticipated, considering the magnitude of the response. Key provisions to expand unemployment eligibility and benefits cannot come soon enough as Thursday’s unemployment report from the Department of Labor set a record high for initial jobless claims – rising by more than 3 million for the week of March 21, reflecting job losses in hospitality, entertainment, recreation, transportation, and warehousing, as well as manufacturing.

Lawmakers may still do more, depending on how long the pandemic lasts. They are already talking about another round of intervention in their phased approach. While it may take some time to see results of this broad-ranging stimulus, here’s a look at what you can expect in the near term, according to Washington Policy Analyst Ed Mills.

  1. A check – based on income and family makeup, about 90% of Americans can expect to receive $1,200 individually ($2,400 for joint filers) and $500 per dependent. Amounts phase out for those with adjusted gross incomes over $75,000.

  2. Support for small businesses – in the form of more than $350 billion, including forgivable loans to help keep the business afloat, a paycheck protection plan and grants.

  3. Expanded unemployment benefits – unlimited funding for Temporary Federal Pandemic Unemployment Compensation to provide workers laid off due to COVID-19 an additional $600 a week, on top of state benefits, for up to four months. This includes relief for self-employed individuals, furloughed employees and gig economy workers who have lost work during the pandemic. This key support could bring the bill’s value over the $2 trillion mark.

  4. Fortified healthcare – $150 billion is allocated to hospitals and community health centers to provide treatment and equipment to fight coronavirus, including updated OSHA standards for workers.

  5. Enhanced education – $30 billion to bolster state education and school funding, as well as a deferral of federal student loan payments through the end of September.

  6. State and local government funding – $150+ billion allocated to “state stabilization funds” to support reduced state and local tax receipts.

  7. Other provisions – provides a $500 billion buffer for impacted and distressed industries, including the airlines, mass transit, and the postal service.

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