Quickie Overview of the Congressional Stimulus Package
It appears that the total package is $2 trillion, equal to 9% of annual GDP. This will have to be paid back over time. So we should expect future tax increases or budget cuts to reduce this increase in national debt over time. It is unclear as yet whether we are looking at a short and very steep recession or a long and deep depression; the goal is to avoid the depression and mitigate the impacts of the recession.
$300 billion is allocated for checks to all middle and low income Americans in the amount of $1200 per adult and $500 per child. The full amount is paid to an individual with annual income of less than $75,000 or a couple with annual income of less than $150,000; it is then phased down and out at $99,000 for an individual and $198,000 for a couple.
$250 billion is allocated to improve Unemployment Insurance (UI) on a temporary basis to include the gig workforce, the self employed and other components of the flex workforce and to increase the weekly benefits by $600 a week.
$350 billion is appropriated for loans to small businesses so they can keep staff on payroll during the economic shut down and resultant recession. If it is used to keep staff on payroll, rather than laying them off to qualify for UI it becomes a grant.
$500 billion is included for loans and grants to large businesses. For example, the US airline industry will get a large bail out. It is expected that tourism and travel and cruises will also be seeking bail outs. This is administered by Secretary Mnuchin with an oversight board, an Inspector General, and congressional oversight. There has been real fear that the President will be using these funds to help his allies and disfavor his enemies in order to assure his re-election. The oversight will be crucial. This cannot be used for stock buybacks or executive compensation packages. It will also provide $25 billion in direct financial aid to struggling airlines and $4 billion for air cargo carriers, two industries that have taken a big hit in the economic downturn. It also includes another $25 billion in loans for the airline industry.
$221 billion in tax benefits for businesses. This includes the ability to defer payroll taxes from 2020 to 2021 and 2022.
$48 billion for agriculture and nutrition programs.
The President, his family, the Cabinet and their families, Congresspersons and their families are not eligible to receive any of the bail out loans and grants.
Another $150 billion would go to state and local governments to help them weather steep drop-offs in tax revenue and their increased costs of fighting the pandemic.
Health care components include the following:
$100 billion in aid for hospitals
$20 billion for health care for veterans
$4.5 billion for the Centers for Disease Control and Prevention
The deal also provides $30 billion in emergency education funding, $25 billion in emergency transit funding.
Student loan repayments would be deferred until September 2020.
Prepared by: Lucien Wulsin
Dated: 3/25/20