Congress tries to ease pandemic pain
A pandemic lifeline has been flung from Congress. The crushing financial impact from the coronavirus crisis has prompted the government to provide a $2 trillion stimulus package. Congress voted to give individuals, small businesses, corporations and municipalities money to cope with the economic fallout from the pandemic. And there’s likely to be more ahead. President Trump on Tuesday urged Congress to pass a $2 trillion infrastructure bill as the next legislation to spur the economy.
For those getting money from the government, direct deposit is how it will arrive, if that’s how you got your tax refund. Treasury Secretary Steve Mnuchin said direct deposits should begin by April 17. Checks in the mail will come after that, but that will take longer, perhaps a few months.
Treasury also announced late Wednesday that Social Security beneficiaries who typically do not file a tax return will automatically get the payment. The move was a pullback from early last week when the IRS said everyone would need to file some sort of return, even those whose low incomes do not require them to file returns. That requirement drew anger from several members of Congress. Here are some highlights from the massive stimulus bill:
Individuals: Those with an adjusted gross income of $75,000 or less will be eligible for $1,200 ($2,400 for joint filers) and $500 for each qualifying child under age 17. The payments will start to phase out for those who earn more than $75,000 or $150,000 for a joint return.
Additionally, the government will enhance unemployment benefits, which are administered by individual states. Benefits are generally a percentage of income over the past year, up to a certain maximum of lost income (about 45%), and most states pay benefits for 26 weeks. The government will provide out of work Americans with an additional $600 per week on top of what state unemployment programs pay and will extend payments for four months.
Importantly, the emergency lifeline will expand unemployment eligibility to include self-employed — independent contractors, freelancers, gig workers, temporary and part-time workers, estimated to be 57 million of the U.S. workforce, or more than a third of the working population who collect $1 trillion in income.
Small businesses: The government will provide 30 million small businesses (those who have fewer than 500 employees) that employ 60 million workers with a pool of loans, including: $350 billion in the form of federally guaranteed loans that would be forgiven over time (if businesses keep workers on payroll during the crisis) and $17 billion for the Small Business Administration to cover six months of payments for small businesses with existing loans.
These loans will be made by banks and financial institutions to qualifying small businesses and would be guaranteed by
SBA. No one loan can be over $10 million and firms will need to certify employee retention.
Large corporations: The legislation will provide $450 billion in loans or in loan guarantees to eligible businesses, states and municipalities. Banks and financial services companies will become agents of the US Treasury to make the loans to qualified businesses. There will also be $58 billion in loan guarantees to U.S. passenger and cargo airlines, a portion of which could convert to a grant, and $17 billion for businesses important to maintaining national security.
Jill Schlesinger, CFP, is a CBS News business analyst. She welcomes comments and questions at askjill@jillonmoney.com.