With job losses caused by the coronavirus pandemic reaching more than 36 million in just two months, the economy is in uncharted territory. Businesses across the country are shuttered and entire industries are in hot water. The House of Representatives passed the $3 trillion Heroes Act on Friday, in the latest attempt by the federal government to contain the damage. Before that bill reaches the Senate, here’s everything the government has done so far.
Emergency Money For Testing And Paid Leave
In mid-March, Congress passed two bipartisan bills in response to the rapidly spreading pandemic. The first allocated $8.3 billion for healthcare organizations and coronavirus treatment research. The second, worth about $100 billion, set up free testing, established paid emergency leave, and bulked up unemployment and Medicaid funding.
Tax And Student Loan Extensions
In March, Treasury Secretary Steven Mnuchin extended the deadline for tax payments (for both individuals and businesses) by 90 days, from April 15 to July 15. Student loan payments and interest accrual on student loans were also suspended for federally held student debt.
The $2.2 Trillion CARES Act
The historic rescue legislation package, signed into law by President Trump at the end of March, authorized the IRS to send out stimulus checks directly to Americans. It established the Paycheck Protection Program—a $350 billion program administered by the Small Business Administration to provide forgivable loans to cover payroll and overhead expenses, intended to keep mom-and-pop shops from folding. The CARES Act also included a $500 billion corporate bailout fund, expanded unemployment payments, aid for hospitals and healthcare providers, and $150 billion for state and local governments.
The $484 Billion ‘Interim’ CARES Act
This legislation package, passed by a scrambling Congress after the PPP exhausted its funding after just two weeks, added $310 billion for the PPP, with $60 billion of that money reserved for smaller businesses without existing banking relationships. That move was prompted by the intense backlash that emerged after news broke that dozens of public companies—with ample access to capital markets—had received millions of dollars in loans. The interim bill also provided another $75 billion for healthcare providers and $25 billion for coronavirus testing, $11 billion of which was reserved for states.
The Federal Reserve’s Emergency Initiatives
A slew of emergency initiatives enacted by the Federal Reserve during the crisis—including rate cuts, lending programs, and credit facilities—have the potential to inject a collective $6 trillion in cash into the financial system, CNBC estimates.
Over the past three months, the Fed has cut rates twice, down to near-zero levels. It’s slashed the reserve requirement for banks and begun buying up commercial paper (a form of short-term corporate debt). It’s buying municipal bonds for the first time and taking its first steps into certain types of riskier corporate bonds, and it’s promised to buy an unlimited amount of government debt for the duration of the crisis. It launched two credit facilities for big companies and announced a massive lending program for small and medium-sized businesses. It will also backstop loans from bank lenders participating in the Paycheck Protection Program.
The $3 trillion Heroes Act—the sweeping coronavirus rescue bill introduced by House Democrats this week—passed the House on Friday evening. The cornerstone of the bill is $875 billion in additional funding for state and local governments and $20 billion each for tribal governments and U.S. territories. The legislation also includes another $75 billion for testing, new provisions for hazard pay for essential workers, $75 billion in mortgage relief, $100 billion for rental assistance, plus another $25 billion for the Postal Service and provisions for a second round of $1,200 stimulus checks. There’s also $3.6 billion for elections, $10 billion for the Supplemental Nutrition Assistance Program and $10 billion for small businesses. If it passes the Senate in its current form (which it is unlikely to do), the bill’s astronomical price tag would make it the largest piece of stimulus legislation in American history.
Who’s Footing The Bill?
The Treasury Department announced last week that it intends to borrow $3 trillion during the current quarter to cover the massive cost of the federal government’s response to the coronavirus crisis. That number only accounts for the legislation that has been passed to date, however, and it will grow dramatically if the Heroes Act (or any other piece of major stimulus legislation) becomes law.