CARES Act becomes law
Friday, March 27, President Trump tweeted, “I just signed the CARES Act, the single biggest economic relief package in American History – twice as large as any relief bill ever enacted. At $2.2 Trillion Dollars, this bill will deliver urgently-needed relief for our nation’s families, workers, and businesses.” The stated purpose of the CARES Act—Coronavirus Aid, Relief, and Economic Security Act—is, “to provide emergency assistance and health care response for individuals, families, and businesses affected by the 2020 coronavirus pandemic.”
The bill was originally budgeted at $500 billion when Mitch McConnell introduced it to the Senate on March 19. But it quadrupled in value during congressional deliberations in the eight days before becoming law.
With this legislation, politicians primarily intend to ease the damage that COVID-19 and social separation have inflicted on the economy. About 7% of the relief fund will be spent on public health, 15% will go to state and local governments, and the rest will be used to stimulate the slowed down economy. The aid is split between three main groups: large businesses, small businesses, and individuals.
The package spends the most on individuals—an estimated $560 billion—in the form of direct payments to most American citizens. Individuals making under $75,000 per year, according to their tax returns from 2019 (or 2018 if they have not filed yet), will receive a one-time payment of $1,200. Married couples cumulatively making less than $150,000 per year will receive $2,400. Families with children collect a $500 rebate for each child under 17 claimed as a dependent on their most recent tax return filing. The payment is reduced for individual’s or couple’s with higher yearly incomes. Single people making more than $99,000 receive no payment, nor do married couples making more than $198,000.
College students generally do not qualify for the stimulus check; anyone claimed as a dependent on their parent’s tax return will not receive the $1,200 payment, and parents cannot secure the $500 rebate for any child over the age of 17. However, students are not left out entirely. The CARES Act freezes federal student loan payments and interest accrual through September 30, 2020. It does not affect any privately held loans.
The legislation designates an estimated $43 billion for education spending. Of that, $14 billion is for colleges and universities, and of that, half must be used to help students under financial distress as a result of the pandemic.
The act spends $377 billion on the small business bailout. One measure, the Paycheck Protection Program is, “an SBA loan that helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis.” According to Colorado senator Cory Gardner, the program, “provide(s) forgivable loans for small businesses to keep workers on payroll and eight weeks of financial assistance.” Businesses with less than 500 employees Denver restaurants were ordered to shut down on site operation on March 17, nearly three weeks before the loan application became available. Businesses which already made staff cuts must rehire employees to qualify; forgiveness of the loan, “is based on the employer maintaining or quickly rehiring employees and maintaining salary levels.”
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