While the COVID-19 has been a looming and growing threat on the global stage since almost the start of the new year, for U.S. citizens, it has been more or less in seven days that have seen the world go from business more or less as usual to something quite other than that. Sports are closed, recommended gathering sizes have fallen from 250 to 50 to 10 to mandatory restaurant and bar closures for everything but takeout in some states and localities. San Francisco is sheltering in place, the mayor of New York City and the governor of New York State are currently debating whether America’s largest and most densely populated urban area should follow suit.
Workers, particularly in the hospitality segment, have been hit hard by rolling layoffs that they hope will be temporary. Still, no one is sure when the dust will clear economically or what firms will be left standing when it does. To date, 18 percent of workers report that they’ve either lost their jobs or had their hours cut due to the COVID-19 epidemic according to one recent poll. And the forecasts indicated things would get worse — a recent estimate by Moody’s Analytics indicates that almost 80 million jobs are at risk — more than 50 percent of the 153 million occupations all around.
Consumers nationwide, and particularly low-income consumers, are understandably concerned. According to a just-released PYMNTS survey of 2,128 consumers — 39.3 percent of consumers earning $50,000 a year or less reported they were very or extremely concerned about the virus, slightly following millennial consumers, 41 percent of whom reported being very or extremely concerned. The same survey indicated that those concerns are taking a bite out of consumer spending, particularly in stores. Low-income consumers shopping in stores fell by 32.5 percent after news of the outbreak spread, the biggest dip though high-income consumers have also curbed their in-store shopping, albeit by a lower 27.7 percent rate.
The numbers, particularly combined with the continuing uncertainty about COVID-19’s path and the ongoing turmoil on the public markets are adding up to a situation that increasingly looks alarming to the government, and on in need of intervention before worst-case possibilities become real-world actualities.
In advocating for an over $1 trillion stimulus package in a meeting with wary Republican senators Tuesday, Treasury Secretary Steven Mnuchin reportedly noted that failure for the government to intervene quickly could cause unemployment rates to hit the 20 percent mark. A 20 percent unemployment rate would roughly be the unemployment rate during the Great Recession and the highest in the U.S. since the Great Depression.
“It is a big number,” Mnuchin told reporters of the $1 trillion price tag. “This is a very unique situation in this economy.”
And in fact that $1 trillion play — which among provision includes a wave of checks to Americans that would cost about $250 billion, is now the second major piece of legislation that lawmakers have pushed to address the growing crisis in the last several days. And if you find yourself confused as to what has already passed, what is under discussion, and what any of the relief bills will mean for consumers or SMBs — well don’t feel bad, Congress is moving faster than it usually does.
And luckily, we have the easy primer on what is definitely happening, probably happening and still under development.
Relief Part 1 – Passed And On The Way To The President
After about a week in-process and extensive back and forth negotiations between House Democrats and Senate Republicans, the Congress has now officially passed a COVID-19 relief bill that has been signed by President Donald Trump.
The bill is focused on providing paid emergency sick leave to at last some workers, as well as boosting aid for state unemployment insurance and food assistance. In all, the bill will cost roughly $104 billion. Eligible for a promised 10 paid sick days during this outbreak include all federal government employees, W-2 workers, gig economy workers and self-employed workers, according to the Washington Post. Firms will less than 50 employees may apply for an exemption, and firms of firms with over 500 employees are also largely exempt. However, some larger companies such as Amazon and McDonald’s have independently committed to offering sick pay during these unusual circumstances.
Apart from 10 days of sick leave, the bill also requires free coronavirus tests for all citizens, whether they are privately insured, on Medicare/Medicaid or are uninsured. That includes the cost of the test itself, as well as any associated E.R. visit or doctor’s fees. The bill also creates emergency paid leave for workers caring for a child due to coronavirus-related school closings. Eligible workers would receive benefits for a month’s benefit that would amount to two-thirds of the individual’s average monthly earnings (capped at $200 per day).
Apart from direct healthcare-related benefits, the bill also directs $2 billion to state unemployment and $1 billion to expanding access to programs like SNAP, WIC and the emergency food assistance programs.
The bill passed the Senate with overwhelming approval — by a vote of 90-8. But this was the small lift. The big lift will come as Congress answers the trillion-dollar COVID-19 relief question next week, something that Senate Majority Leader Mitch McConnell said will be gotten done before anyone is allowed to go home.
The Big Relief Bill
The passage of the bill Wednesday marks what Congress is calling the closing of Phase 2 of coronavirus release. Phase 1 was an $8.3 billion bill spurring coronavirus vaccine research and development. Collectively they cost about $112 billion.
No small figure, but less than a 10 percent of the Phase 3 package that Congress will begin attempting to pass next week, which by some estimates will cost north of $1.3 trillion
“We know an additional bill of much larger proportion is necessary to meet this crisis,” Senate Majority Leader Mitch McConnell told reporters Tuesday.
As noted, roughly $250 billion of that will be dedicated to putting funds into the hands of American workers, in the form of roughly $1,000 checks that Mnuchin says the administration aims to get in the mail in the next two weeks. The relief package also includes $50 billion for the airline industry, $150 billion for “distressed sectors of the U.S. economy,” as well as providing $300 billion toward the creation of a small business interruption loan program, among other programs, meant at bolstering and stabilizing businesses during the economic uncertainty.
The bill faces challenges. This bill will originate in the Senate instead of the House (which is currently on recess) and there is reportedly still some division among Republicans (the Senate majority party) on the notion of cutting $1,000 checks to workers as a form of stimulus. Currently, three separate groups of lawmakers are working on variations of a Phase 3 plan. Senate Republicans will have to find one they can all agree one — and one that can get seven Democrats to support it — as the bill requires 60 votes to pass and Senate Republicans only control 53.
Providing that brilliant moment of bi-partisan cooperation happens, the bill will then have to go to the Democratically controlled House, which will make adjustments and vote on its version of the bill. Senators will then have to agree on a modified bill before it can go to the President for a signature.
A long way of saying there is a lot to do, particularly if the goal is to put checks in citizens’ hands in two weeks. A fact, incidentally, that McConnell recognizes but, thus far, is unphased by.
“We’re going to move here in warp speed for the Senate, which almost never does anything quickly,” McConnell said. “I think everyone on both sides of the aisle is seized with the urgency of moving yet another bill, and we intend to do that.”
What those intentions lead to, whether the Senate will vote a 13-digit relief package as it currently seems they are heading toward, and when those checks get to people’s hands (if they ever get there at all)?
Well, those questions we imagine are the subject of some very intense negotiations happening right now on Capitol Hill. We’ll keep you posted on how they unfold.