WASHINGTON — If you want to shut down an economy to fight a pandemic without driving millions of people and businesses into bankruptcy, you need the government to cut some checks. The coronavirus response deal that congressional leaders struck early Wednesday morning will get a lot of checks in the mail, but they’ll soothe only a few months of financial pain.
If the outbreak and the disruptions continue through summer, lawmakers will need to spend even more.
The bill, a compromise between the Trump administration and Republican and Democratic leaders in Congress, includes loans and grants for corporations and small businesses, increased unemployment benefits for workers laid off or working fewer hours amid the outbreak, and direct payments to low- and middle-income individuals and families. Negotiators estimate its cost at $2 trillion.
It is more than double the size of the roughly $800 billion stimulus package that Congress passed in 2009 to ease the Great Recession. Yet it may not actually be large enough, given the enormous economic challenge the United States faces today.
The economy, which has been shuttered to control the spread of the virus, does not need a jump-start to get moving again. The government is just trying to tide people and firms over until it is safe to start back up again.
Viewed through that particular set of circumstances, the deal announced early Wednesday isn’t economic stimulus at all. It’s a series of survival payments. And those payments will only last a few months.
President Trump said Tuesday that he hoped the economy would have “reopened” by Easter, in two and a half weeks. Public health experts and a wide range of economists say that’s both unlikely and inadvisable. The country still lacks widespread testing for the virus. Confirmed infections and deaths continue to climb rapidly.
The extraordinary measures that mayors and governors have taken to restrict economic activity, which at their most extreme include shutting down all nonessential businesses and ordering people to shelter in the homes, are unlikely to show success in “bending the curve” of the virus for at least another week. If they prove effective, and the infection rate slows dramatically, activity could be back to normal — or at least something that reasonably resembles it — within a few months for many businesses and workers.
If the measures don’t prove effective, or if they are relaxed under orders from Mr. Trump or defied en masse, experts warn the crisis could stretch much longer, under the growing cloud of a recession. That’s why it’s hard to say if the congressional deal will be enough to keep families from going hungry and businesses from going under.
Still, economists hailed the emerging agreement as a good start — one that works on multiple fronts to keep money flowing through the parts of the economy that have been suddenly rendered inactive.
“The response looks to be proportionate to the extent of the problem,” said Justin Wolfers, a University of Michigan economist who has pushed for a large fiscal response to sustain the economy through the virus shutdown. But, he said, “we have no idea what the extent of the problem is.”
The bill includes $350 billion in loans for small businesses to help bridge their expenses for up to 10 weeks. Firms would not need to repay up to eight weeks of the loans if they refrain from laying off employees, or move by June to rehire employees they have already laid off. Supporters of the measure say those loans, if rapidly deployed, could help thousands of firms survive, at least temporarily.
“It is incredibly important that policymakers credibly convince business owners that these conditional loans will indeed be forgiven and that firms’ owners will be treated equitably,” said Stan Veuger, an economist at the conservative American Enterprise Institute. But, he said, “I am skeptical that the size of the package is large enough to cover the entire shutdown-slowdown period.”
The bill also includes $500 billion in aid to airlines and other large corporations that have been hurt by a cratering of consumer demand amid the crisis. Much of the money would be used to backstop loans and other assistance that the Federal Reserve said it plans to extend to companies.
Those programs are in part meant to encourage companies to keep workers on their payrolls. Even if workers are furloughed without pay, the government will essentially step in and assume paying their salaries while the workers continue to be covered by any health insurance provided by their employers.
For workers who lose their jobs, the bill supplies expanded unemployment benefits for up to four months. For many, those payments will match or even exceed the wages they were earning before the outbreak.
The bill also includes a $1,200 payment for each adult — and $500 per child — in households that earn up to $75,000 per year for individuals or $150,000 for couples. The assistance…
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