Stimulus: What you can expect from Washington
The recently signed economic rescue plan means a check from the federal government could be coming your way, said Tara Siegel Bernard and Ron Lieber in The New York Times— with some restrictions. You’re eligible for a payment of $1,200 a person up to an income of $75,000 for a single filer, or $150,000 for those who file a joint return. “Married couples with no children earning $150,000 or less would receive a total of $2,400.” There’s also a payment of $500 for each child under 16. The aid phases out gradually as income rises to $99,000 for an individual, or $198,000 for a couple. If the IRS has your bank information, the government plans to transfer money within three weeks. For urgent cash needs, the economic package, known as the CARES Act, lets you withdraw up to $100,000 from an IRA without penalty. There are also dramatic changes for those pushed out of work. The Act drastically widens the eligibility for unemployment benefits through July 31 to cover the self-employed, including gig workers and freelancers. For the same period, it adds a flat weekly “$600 of federal pandemic unemployment compensation” to regular state benefits. Even self-employed and part-time workers affected by the epidemic are eligible for that supplement.
Do the math on this, said The Wall Street Journal in an editorial: Many workers will get more collecting unemployment than they would get to work. With a $600 weekly benefit, Democrats have now achieved their goal of a minimum wage of “at least $15 an hour”—for not working. In places like Massachusetts, which already had high benefits, workers will now make as much as $35 an hour to sit at home. That’s the point, said Josh Barro in New York magazine. “We want many people to stay home, so if these benefits help them do that, that’s a feature, not a bug.” If employers are concerned they’re losing workers, they “have an option available to retain them: They can raise pay.”
That’s not an option for small businesses, for which this bill doesn’t provide enough, said Jordan Weissmann in Slate.com. Congress is allocating aid that lets businesses “borrow up to
2.5 times the size of their average monthly payroll” in special low-interest loans—as long as they don’t slash their staff. But the roughly $377 billion set aside is “only about half of what would be required to cover two and a half months of payrolls” for businesses with fewer than 500 employees. Small businesses at least need to show they are keeping on employees to get aid, said The New York Times in an editorial. Big corporations don’t even need to demonstrate that effort for their bailouts. Yes, the new unemployment benefits are more generous. But “we’d all be better off if the government had helped workers keep their jobs instead.”