The Senate passed its $2 trillion coronavirus aid package late last night. Here's what's in it, and how it could impact everyone from individuals to entire sectors:
1. Direct payments: $1,200 per taxpayer with income up to $75,000, with a phaseout beginning at that income level and ending at $99,000. Families will also receive $500 per child. Payments will be issued by the Treasury Department through direct deposit and physical checks.
2. A big extension of unemployment benefits: Jobless claims will be available longer and benefits will be improved for four months. Unemployment benefits will also be available to furloughed workers, freelancers, and so-called gig-economy workers like Uber drivers.
3. A $500 billion corporate relief fund: $425 billion is set aside for the Federal Reserve to leverage into loans to distressed companies, and $75 billion is available for hard-hit industries, like travel and leisure companies.
Also included is language that effectively restricts the Trump family’s business—and the businesses of his family members and other senior members of government—from receiving aid from this fund.
4. Help for companies crucial to national security: The corporate aid includes $17 billion set aside for companies that are seen as vital to the U.S.’s national security. No company is specifically named, but this could include those like Boeing.
5. Loans to small businesses: The loans, which total more than $367 billion, would carry a nominal interest rate. Any portion used to keep employees on staff or pay critical costs would be forgiven. Small businesses also get new tax incentives to keep people on payroll.
6. Aid to the health-care system: $100 billion to help hospitals, doctors, and nurses fight against the coronavirus outbreak and almost $20 billion to stockpile medical equipment.
7. Funding for state and local governments: $150 billion to help cities and states deal with both the direct costs of fighting the outbreak and the budget holes created by lost economic activity leading to lower tax revenues. Learn more: barrons.com/articles/heres…
Beyond expanded unemployment benefits and checks in the mail, there are additional points in the package that could impact individuals:
• Access to savings: Those impacted by Covid-19 — either diagnosed with the disease or experiencing adverse financial concequences as a result of it — can withdraw up to $100,000 from retirement accounts without penalty, as long as they pay back it back within three years.
• Provisions for retirees: The bill gives retirees the option to not take required minimum distributions in 2020. More information: barrons.com/articles/the-c…
Find additional details on how the package breaks down for households here: barrons.com/articles/2-tri…
If passed in its current form, the CARES Act will impact companies and sectors in different ways. Here's how:
• Airlines: The package provides $33 billion in grants for airlines to make payrolls, including $25 billion for passenger carriers, $4 billion for cargo operators such as FedEx and UPS, and $3 billion for contractors.
The bill also makes $29 billion in loans available, providing a liquidity backstop if private capital markets freeze up. And it includes waivers on fuel and excise taxes through 2020. Learn more: on.barrons.com/33L1MeY
• Health-care: The bill creates a $100 billion fund for grants to health-care providers to help with expenses or lost revenues attributable to Covid-19, and includes $27 billion for a fund meant to go toward developing and purchasing Covid-19 vaccines and countermeasures.
The package will also temporarily lift the automatic 2% Medicare payment cuts imposed by what is known as federal sequestration, and will increase pay for hospitals treating Medicare patients with Covid-19 by 20%.
Additionally, the bill includes a substantial number of provisions related to telemedicine, including various expansions of telemedicine options for Medicare recipients. Learn more: on.barrons.com/2vNEuZc
• Energy: The energy sector didn’t get much help in the stimulus package, but energy stocks were mostly higher on Thursday. That's because some of the money going to consumers is likely to be spent on products including gasoline. Learn more: on.barrons.com/2vQZTkp
• Cruise lines: It’s unclear whether cruise companies will be eligible for federal assistance amid the coronavirus crisis. Unlike the airlines, the cruise industry wasn’t mentioned in the stimulus bill. Learn more: barrons.com/articles/cruis…
Of course, some of this could change as the bill gets debated in the House. Here's what's next: barrons.com/articles/the-s…
