The Treasury Department said Wednesday it wants to dedicate $500 billion to start issuing direct payments to Americans by early next month as the centerpiece of a $1 trillion plan to stabilize the economy as the coronavirus epidemic threatens a body slam to taxpayers and businesses.
In a memorandum, Treasury proposed two $250 billion cash infusions to individuals: a first set of checks issued starting April 6, with a second wave in mid-May. The amounts would depend on income and family size.
The Treasury plan, which requires approval by Congress, also recommends $50 billion to stabilize the airlines, $150 billion to issue loan guarantees to other struggling sectors, and $300 billion to for small businesses. The plan appears to anticipate that some of the loans would not be repaid.
Taken together, the administration plan promises half of the $1 trillion to families and individuals, with the other half used to prop up businesses.
The details are for the third coronavirus response bill that lawmakers hope to pass next week. Direct payments would go to U.S. citizens only, and would be “tiered based on income level and family size.” The two payments would be identical, with the second wave starting by May 18.
It comes as the Senate Wednesday passed a second coronavirus response bill, sending it to Trump. The sweeping 90-8 tally came despite significant misgivings among many Republicans over a temporary new employer mandate to provide sick leave to coronavirus victims.
The Treasury outline provides a basis for lawmakers to work from in an unprecedented government response and is likely to be broadened to include additional emergency funding for federal agencies.
The price tag for the upcoming economic package alone promises to exceed Treasury’s $1 trillion request, a rescue plan not seen since the Great Recession. Trump is urging Congress to pass the eye-popping stimulus package in a matter of days. A more realistic time frame is next week.
Economists say the country is probably already in recession and the stock market continued its free fall on Wednesday. The panic has many lawmakers shedding their ideological baggage to grapple with an enormous undertaking for a crisis that exceeds the scope of the 2008 financial crisis — a virtual weeks-long shutdown of many businesses and unemployment that could spike to 20% by some estimates.
Wednesday’s legislation would speed the delivery of testing for the virus, provide paid sick leave to workers, and boost state Medicaid budgets, but the focus in Washington has already moved to development of a far, far larger response bill that would inject hundreds of billions of dollars into the faltering economy, provide relief to shuttered businesses, and help keep airlines from going under.
At the Capitol on Wednesday, Senate Majority Leader Mitch McConnell prepared his colleagues for unprecedented steps to deal with the epidemic’s assault on the economy.
“I will not adjourn the Senate until we pass a far bolder package,” McConnell said. “We aren’t leaving until we deliver.”
But first, McConnell said, the Senate will vote on a $100 billion-plus House-passed package of sick pay, emergency food and free testing, putting it back on track for Trump’s signature — despite Republican objections over the potential impact on small businesses saddled with a new mandate to pay sick leave. The government would reimburse businesses but business advocacy groups say the plan isn’t workable for many small firms.
“We’re going to vote to pass the House bill, but its imperfections will just make our more comprehensive package more urgent,” McConnell said, referencing opposition among his members to the small business mandate.
McConnell is trying to take charge of the third coronavirus effort, putting GOP chairmen in charge and promising to consult with Senate Democrats later. Top Senate Democrat Chuck Schumer of New York retains great leverage and blasted McConnell’s approach, saying it’s “too cumbersome, too partisan and will take far too long, given the urgency and need for cooperation.”
For instance, the top Democrat on the Small Business Committee, Sen. Ben Cardin of Maryland, said bipartisan talks that had been going smoothly over the weekend had broken down.
Wednesday’s Treasury plan includes $300 billion in “small business interruption loans” that would be 100% guaranteed by the federal government to cover six weeks of payroll during the crisis. These loans would be made through private banks.
The plan would also establish a $50 billion lending program dedicated to the imperiled airline industry, which would be required to keep flying as a condition of securing the loan. Another $150 billion would underwrite loans to other business sectors.
Overnight, the White House sent lawmakers a separate $46 billion emergency funding request to boost medical care for military service members and veterans, fund production of vaccines and medicines, build 13 quarantine centers at the southern border for migrants, make federal buildings safer, and reimburse Amtrak for $500 million in anticipated revenue losses, among other purposes.
The Trump request also reverses cuts to the Centers for Disease Control and National Institutes of Health that Trump proposed in his February budget for next year and would create a $3 billion fund for unanticipated needs.
Economists doubted that the massive economic rescue package being drafted would enough to stop millions of jobs losses, even if in the short term.
The Treasury plan is on a par with $700 billion 2008 bank bailout or the nearly $800 billion 2009 recovery act. The White House proposal aims to provide a massive tax cut for wage-earners, $50 billion for the airline industry and $250 billion for small businesses. But nothing is set in concrete, and all the pressure is for the package to keep growing.
The amount that would be sent out in checks Americans is also not yet decided. The White House said it liked GOP Sen. Mitt Romney’s idea for $1,000 checks, though not necessarily at that sum and not for wealthier people.
Senate Democrats produced their own $750 billion proposal, which includes $400 billion to shore up hospitals and other emergency operations in response to the global pandemic and $350 billion to bolster the safety net with unemployment checks and other aid to Americans.
For most people, the new coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia.
The vast majority of people recover from the new virus. According to the World Health Organization, people with mild illness recover in about two weeks, while those with more severe illness may take three to six weeks to recover.
Still, health officials are urging Americans to stay home to prevent an onslaught of cases that could overwhelm hospitals as happened in Italy, among the countries hardest hit.
“We need to pay people to stay at home,” said Heidi Shierholz, a senior policy analyst at the Economic Policy Institute, a liberal think-tank. The group predicted that without a huge stimulus package, the U.S. economy could lose three million jobs by this summer.