Democrat and Republican Senate leaders and the White House struck a bipartisan deal early Wednesday on the most expensive bailout in U.S. history after days of intense negotiations. They came together to try and save the U.S. economy by flooding it with money as parts of the country shut down, the stock market crashes, industries face collapse and unemployment rises.
The bailout outlines a $2-trillion-plus stimulus package designed to ease the economic hit of the coronavirus outbreak. The Senate’s goal is to vote Wednesday on the bill.
However, the total bailout enacted by the federal government will reach $6 trillion, White House economic adviser Larry Kudlow projected on Tuesday, according to National Review.
Four trillion will come in the form of liquidity from the Federal Reserve, while the remaining $2 trillion will be part of the proposed Phase 3 Coronavirus Relief Bill. If the total assistance does reach $6 trillion, that will be about 30 percent of U.S. gross domestic product.
The deal came as the U.S. reported 64,769 confirmed coronavirus cases and 910 deaths.
Phase 3 of the legislative response to the pandemic that has killed thousands of people globally was unveiled Thursday by Senate Republicans.
Here are 10 takeaways from the proposed $6 trillion COVID-19 bailout.
U.S. stocks climbed on Wednesday as the Senate moved toward a final vote on the $2 trillion relief package. At the close of market on Wednesday, the
S&P 500 was up 1.2 percent, the Dow Jones industrial average was up 2.4 percent (496 points) and the Nasdaq composite was down 0.5 percent.
It is thought that banks will lend more freely because any losses will be absorbed by the Federal Reserve. There could be lower and more flexible lending standards by banks because the Fed is backing them up on loans to businesses.
Under the draft bill, single Americans will receive $1,200, married couples will get $2,400, and parents will get $500 for each child under age 17.
Lawmakers set aside $250 billion for the recovery rebates. About 90 percent of Americans are eligible for full or partial payments, according to estimates by the Tax Policy Center. Payments will start phasing out for individuals with adjusted gross incomes of more than $75,000. Those earning more than $99,000 will not qualify at all.
Qualifying income levels will be based on 2019 federal tax returns, if already filed, or otherwise on 2018 returns. (The deadline for filing taxes has been extended until July 15.)
President Donald Trump and Treasury Secretary Steven Mnuchin want to get the direct payments issued by April 6, a White House official told CNN. Experts say that’s unlikely. Based on previous programs in 2001 and 2008, “it is more realistic to expect them in a month or two,” said Howard Gleckman, a senior fellow at the Tax Policy Center.
This is designed to allow small businesses to keep making payroll while workers have to stay home. “Companies with 500 or fewer employees could tap up to $10 million each in forgivable small business loans to keep paychecks flowing,” the AP reported.
Federally guaranteed loans will provide eight weeks of assistance for qualifying employers who maintain payroll. Those who meet requirements would have costs forgiven such as utilities, mortgage interest and rent, Axios reported.
And this includes gig economy workers, Axios reported: unemployment benefits of $600 per week will be added to normal state benefits for up to four months with an extra 13 weeks of benefits — adding up to 39 weeks of regular unemployment insurance through the end of 2020. The coverage is effective Jan. 27.
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$242 billion will be set aside “in additional emergency appropriations to fight the virus and shore up for safety net programs,” per the AP. This will fund public health providers including hospitals, the CDC, child nutrition programs, food stamps and transportation agencies.
The final number for big businesses such as airlines is not settled, but Republicans want $500 billion in loans. Provisions against potential employer abuses are also still subject to negotiations.
Individuals can defer payment of their 2020 payroll taxes until 2021 and 2022.
State and local governments will get $150 billion, with $8 billion set aside for tribal governments.
