D.C. Grinches may have hearts Why this stimulus matters
Nearly nine months after the $2.2 trillion CARES Act became law, Congress passed an additional $900 billion relief bill just before Christmas. The fate of the legislation hung in the balance for a week, after President Trump threatened not to sign it. But with benefits expiring and millions of Americans facing financial peril, Trump finally inked the deal on Dec. 27.
Like the ornery Grinch in the animated Christmas classic, the president and lawmakers’ small hearts seem to have grown three sizes in just the nick of time. The bill will provide relief to individuals, small businesses and the economy as a whole. Though not as large as the previous legislation, this round should help prevent some suffering and bridge the output gap between now and the time when widespread vaccination is available.
What made it
Another round of nontaxable, direct payments of $600 for individuals with income (wages, Social Security and/or pension) earning under $75,000 ($150K MFJ), plus $600 per child (up from $500 in the first round) under the age of 17.
The amount will phase out for those with incomes up to $99,000 ($198K MFJ).
Extension of supplemental federal unemployment benefits of $300 per week (on top of state unemployment programs) for an additional 11 weeks, at least through March 14. (The CARES Act had extended state benefits by 13 weeks, so the total will now be 24 weeks.)
Extension of pandemic unemployment assistance for self-employed, part-time, contract and gig workers for an additional 11 weeks.
Aid to small businesses, including the continuation of the Paycheck Protection Program ($325 billion).
Aid for vaccine distribution and schools ($82 billion).
Extension of eviction moratorium until Jan. 31. Home loan forbearance for federally backed mortgages is available for up to 180 days (after that, homeowners can ask for an additional 180 days). For Fannie and Freddie loans, there is no end date — the agencies will determine when to end their plans. Homeowners with FHA loans must contact their servicer and request an initial COVID-19 forbearance.
Airlines get $15 billion to encourage a return of furloughed workers to payrolls; Amtrak gets $1 billion; public transit systems get $14 billion; and $10 billion goes to state highways.
What didn’t make it
Aid for states and local governments and liability protection for businesses were absent from the bill. Without more money, state and local governments will have to absorb the double whammy of big spending amid the loss in sales and other taxes. Brookings Institute analysis found that state and local revenues, excluding fees to public hospitals and higher education institutions, will drop by $467 billion over three years.
The new stimulus is an important development, but there could still be millions of Americans who are struggling. According to the Census Bureau’s Household Pulse Survey covering Nov. 25 to Dec. 7, three data points underscore the need for help:
People experiencing food scarcity: 27.4 million or 12.7%
People experiencing housing insecurity: 12.8 million or 9.1%.
People who have difficulty paying for usual household expenses: 85.4 million or 35.6%.
Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com.