Congress Passes Largest Stimulus Bill in American History

By March 27, 2020 May 19th, 2020 CARES Act
Congress Passes Largest Stimulus Bill in American History

Following a successful House vote on Friday afternoon, President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, H.R. 748.

It consists of a massive stimulus package of $2 trillion negotiated between the Trump administration and congressional leaders. The unprecedented aid package is designed to help the public and the economy rebound from the coronavirus pandemic. It provides direct help to American citizens, businesses, hospitals and state and local governments.

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Here are some of the provisions:

  • Big Businesses: A $500 billion fund for big businesses. This includes $425 billion for the Federal Reserve to leverage for back loans and assistance to help broad groups of distressed companies and $75 billion for industry-specific loans. For example, the U.S. airlines will receive assistance.
  • Small Businesses: More than $350 billion to establish lending programs for small businesses. However, the programs are only available for those who maintain a steady payroll through the crisis. Small businesses that pledge to keep their workers would also receive cash-flow assistance structured as federally guaranteed loans. If the employer continued to pay its workers for the duration of the crisis, those loans would be forgiven.
  • Hospitals: A $130 billion boost for hospitals and other healthcare providers for equipment and supplies.
  • Individuals: Direct payments of $1,200 to individuals ($2,400 for couples) making up to $75,000 per year ($150,000 for couples). Families would also receive $500 for each child. The amount decreases for those making more than $75,000 and completely phases out for individuals earning more than $99,000 per year. Sen. Schumer said checks would be cut April 6.
  • Unemployed: Unemployment insurance extension to four months, bolstered by $600 weekly. Eligibility would be expanded to cover more workers.
  • Restrictions on Business Aid: Any company receiving a government loan would be subject to a ban on stock buybacks through the term of the loan plus one additional year. They must also limit executive bonuses and take steps to protect workers.
  • Transparency: The Treasury Department would have to disclose the terms of the loans or other aids to companies, and a new Treasury inspector general would oversee the lending program. The bill calls for the creation of a 5-person oversight board to review loans for big businesses.
  • Congressional Restrictions: The bill includes a measure barring any business owned by President Donald Trump or his family from receiving loans from the Treasury. Businesses owned by members of Congress, heads of executive departments and Vice President Mike Pence would also be blocked.

Senate Majority Leader Mitch McConnell explained that the deal “will rush new resources onto the front lines of our nation’s historic fight and it will inject trillions of dollars of cash into the economy as fast as possible to help American workers, families, small businesses and industries make it through this disruption and emerge on the other side ready to soar.”

Lawmakers from both chambers have also acknowledged that it is likely other legislative measures will be needed in the coming months to counter the consequences of the pandemic.

Disclaimer: This material has been prepared for informational purposes only, and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional tax planner or financial planner. All information is provided “as is,” with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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