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How Congress Relief Affects You, The Economy
On Wednesday, the Senate reached an agreement on a massive $ 2 trillion stimulus package that extends an extraordinary lifeline to Americans in virtually every circumstance that has been affected by coronavirus workers, the unemployed, the self-employed and entrepreneurs.
Meanwhile, large and small businesses would receive hundreds of billions of dollars in financial assistance in the hope of avoiding shutting down or laying off workers.
While the Senate is expected to pass the bill on Wednesday, a vote in the House will take place later and many details are still pending. From what we now know, this is how historic legislation would affect you and the economy.
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How much money would you get?
Under the latest proposal, adults would receive a lump-sum check of up to $ 1,200 ($ 2,400 for joint tax returns), and those with little or no tax burden would receive at least $ 600 ($ 1,200 for joint returns). Families would receive an additional $ 500 for each eligible child.
The payment would be gradually reduced for high-income people, starting at $ 75,000, or $ 150,000 for a joint declaration. The amount you receive would be reduced by 5% of your income over $ 75,000, and people earning more than $ 99,000 would not be eligible at all. For example, a single person with a salary of $ 85,000 would earn $ 700 after subtracting 5% from $ 10,000 or $ 500. The government will use your 2019 tax return, if you filed it, to decide if you are eligible and how much you receive. Otherwise, the determination will be based on your 2018 return.
When will the stimulus checks arrive?
Secretary of the Treasury Steve Mnuchin previously said that “as soon as Congress passes this, we will publish it in three weeks”.
However, specific dates would most likely change during the Congress supply process.
People who have set up a direct deposit with the IRS can expect the amount faster than those who have to wait for a checkin by mail.
The last time the federal government sent checks to the Americans was in 2008, under President George W. Bush. This stimulus plan was signed on February 13, 2008 and checks of up to $ 600 for individuals did not start coming out until the end of April.
Why is the government sending checks?
The economy is taking a huge hit from the coronavirus as Americans across the country stay away from restaurants, malls, cinemas, sports arenas and other gathering places, by choice or by law. Consumer spending represents about 70% of the economy.
The belief is that people, especially the working poor, who receive a financial boost will spend it on necessities like food and rent, helping them make these payments even if their hours are reduced. It is a huge injection of liquidity into the economy.
Job losses are increasing:It’s not just restaurants and cinemas that are cutting jobs. Layoffs of small businesses have spread.
What does the bill do for the unemployed?
Americans who lose their jobs due to the epidemic would see their weekly public insurance benefits, which average $ 400, increase by $ 600 for four months.
What about concert workers?
A new program would offer unprecedented unemployment benefits to the self-employed and entrepreneurs, who are generally not eligible. Concert workers would also be eligible for the $ 600 federal supplement.
In the United States, independent contractors, concert workers, temporary and part-time workers represent 57 million people, representing more than a third of the workforce and generating $ 1 trillion in income. They were frustrated that the initial coronavirus relief measures did not include them.
How would small businesses be helped?
The bill sets aside $ 350 billion in loan guarantees to the Small Business Administration for small businesses. According to the latest proposal, those who keep their staff would not have to pay back the money. However, some small businesses have already been forced to fire some or all of the workers.
All small businesses would also be exempt from having to repay existing loans for six months, at an additional cost of $ 17 billion.
How long does it take to get SBA loans?
It can take several weeks to several months, says Ami Kassar, CEO of Multifunding, a small business loan advisor. This means that small businesses may be forced to close before receiving money. That is why the bill also includes $ 10 billion in emergency grants of up to $ 10,000 to immediately ease the operating costs of small businesses.
Would big companies like airlines be bailed out?
Legislation provides for $ 500 billion in loans to larger industries, such as airlines and possibly cruise ships. The money would help keep businesses afloat now that incomes have gone down, helping them avoid layoffs or holidays. Some Democrats oppose this type of bailout for large companies, which tend to have more cash and larger lines of credit.
But after the government bailed out the banks in 2008 through the Troubled Asset Relief program, financial institutions repaid the money with interest, leaving the government with a profit.
More closures:Waffle House says 365 of its restaurants are closed
How would the bill help the economy?
The economy is almost certainly already in recession, with Moodys Analytics estimating that gross domestic product will decline at an annual rate of 2.2% in the current quarter. Without stimulus, the economy would contract by 28.4% more in the second quarter, before rebounding in the third quarter, assuming the epidemic subsides by the summer. But the blow to GDP is so massive that it could trigger a longer and deeper recession, said Moodys chief economist Mark Zandi.
With the stimulus, the economy would contract by 17.4% in the second quarter and the chances of a more devastating recession are greatly reduced, according to Zandi. His predictions are based on the assumption that the number of coronavirus cases in the United States, now around 56,000, will peak at 200,000 to 250,000 by the summer.
How would the bill affect layoffs?
Without help, more than 10 million Americans would be laid off this year, said Zandi. Unemployment would drop from a half-century low of 3.5% to more than 10%, he said.
With the bailout, about 7.5 Americans would lose their jobs and unemployment would peak around 8.6%, said Zandi.
Contributors: Josh Rivera and Jessica Guynn
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