The New Stimulus Act: What’s in it for You?Submitted by Bernhardt Wealth Management on June 1st, 2020
As most Americans know by now, the CARES Act was passed by Congress and signed into law by President Trump on March 27. The largest relief act in US history, the bill contained over $2 trillion in funding aimed at providing financial relief and support for small businesses, individuals, state and local governments, and certain crucial industries.
But in the face of record unemployment and continuing uncertainty about how soon the economy can get back on its feet after the knockout blow delivered by the COVID-19 pandemic, Congress is considering another huge stimulus package in an effort to avoid a deep and prolonged recession. With White House economic advisers predicting unemployment as high as 20% by June and Fed Chair Jerome Powell signaling the need for more relief, legislators are seeking to put together a package that delivers needed support for the American economy and taxpayers.
The exact contents of the bill are uncertain at this point. While the House passed its version of the legislation, called the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES), on May 15. Now the bill must go before the Senate for review and likely revision. Here are some key provisions of the proposed law.
- A second direct payment of $1,200 per qualifying individual. As with the first check, the amount of the payment would decrease incrementally for those whose adjusted gross income (AGI) exceeds $75,000. Those with AGI of $100,000 and above would be unlikely to receive a payment. Unlike the first stimulus payment, however, children and dependents, including those over 17 years of age, would be eligible for a $1,200 payment. Payments to qualifying households would be capped at $6,000.
- Lengthened period for unemployment benefits. The HEROES Act would extend the enhanced unemployment benefits granted by the CARES Act to January 2021. Currently, the benefits are set to expire July 31, 2020.
- Support for essential workers and first responders. The bill allocates $1 trillion to state and local governments to fund pay for first responders, healthcare workers, teachers, and others whose jobs might be endangered by the pandemic. Additionally, the bill would provide hazard pay for those in occupations at high risk of infection.
- More support for small businesses. The HEROES Act would continue funding for the Paycheck Protection Program, a prominent feature of the CARES Act, intended to incentivize small business owners to keep workers on their payroll. It also contains a provision to bolster the U.S. Postal Services.
- Expanded testing and contact tracing. The bill allocates $75 billion to fund more testing and contract tracing, intended to control the spread of the coronavirus.
Proponents of the bill say it is needed to provide crucial financial support to Americans who have lost their jobs or seen decreased wages because of the shutdown brought about by the pandemic. With a current unemployment rate of 17% and expectations of even higher numbers to come, supporters believe that putting money in the hands of more Americans will provide both security for households and support for the economy.
Opponents of the bill question the wisdom of adding another $3 trillion in debt to the nation’s balance sheet. They also question the effectiveness of the current stimulus package and worry that extending enhanced unemployment benefits may dis-incentivize workers from returning to their jobs.
As mentioned previously, it remains to be seen which of these provisions, if any, will be in the final version of the bill that is passed by the full legislature and signed into law. It seems likely that some sort of measure will be enacted, however. As these matters continue their process through the halls of Congress, we will remain abreast of developments and provide you with the most current information. And in the meantime, if you have any questions or concerns about your financial matters, we are here to help.