Putting the $2 Trillion CARES Act Into Context
Do you think the CARES Act will help Americans withstand the coronavirus pandemic?
by Countable | 4.11.20
At a price tag of roughly $2.2 trillion, the Coronavirus Aid, Relief, and Economic Security (CARES) Act is one of the most expensive pieces of legislation enacted in U.S. history.
As a standalone spending package, the CARES Act is the largest in history. It dwarfs the two rescue packages from the Great Recession ― the $787 billion American Recovery & Reinvestment Act (aka the “shovel-ready jobs” stimulus) and the $475 billion Troubled Asset Relief Program (TARP), which provided assistance to financial institutions & General Motors. When considering its aggregate cost the CARES Act is surpassed only by the bills to create Social Security and Medicare.
In 2019, the federal government’s spending totaled about $4.45 trillion ― of which about $1.3 trillion was “discretionary” spending, which is subject to enactment by Congress; while the roughly $3 trillion remaining goes to “mandatory” spending on Social Security, Medicare, and paying interest on the national debt. That means the CARES Act would be 45% of all federal spending in 2019, and about 170% of federal discretionary spending in 2019.
The enactment of the CARES Act and the economic lockdowns prompted by the coronavirus pandemic will result in 2020 being the largest federal deficit in American history because of the sharp increase in spending and drastic reduction in tax revenue collected. This chart from USAFacts shows federal spending, tax revenue, and the resulting annual budget deficit or surplus dating back to 1980:
What’s in the CARES Act?
The largest component is loans to larger corporations that are financially distressed because of the coronavirus pandemic, followed by aid for small businesses that comes in two forms: forgivable loans under the newly-created Paycheck Protection Program (PPP); and low-interest loans through the Small Business Administration’s (SBA) disaster relief programs. The $350 billion in funding for small business loans, which will support America’s 30 million small businesses and the 60 million workers they employ, is a more than 10-fold increase in the SBA’s lending from 2019. Congress is already working to expand funding for the PPP amid high demand, which could soon be approved as a standalone bill or included in a “phase 4” coronavirus relief bill.
Other major components of the CARES Act are the temporary expansion of unemployment benefits ($250 billion) and direct cash payments to most Americans ($350 billion), which will be up to $1,200 per adult plus $500 per child, and phase out for higher-income households. The Treasury Dept. began disbursing the economic impact payments through Direct Deposit on Friday, April 10th and will continue making the payments electronically and by check in the weeks to come.
— Eric Revell
(Photo Credit: iStock.com / NoDerog)
The DC: ✈️ ICE says foreign students must leave U.S. if colleges go online-only, and... Do you support democracy & autonomy in Hong Kong?Welcome to Friday, July 10th, fresh and ripe...Foreign college students will be largely banned from taking classes if their
by Countable | 7.10.20
ICE: Foreign Students Must Leave U.S. if Colleges Go Online-Only – Do You Support the New Rule?What's the story? Foreign college students will be largely banned from taking classes if their universities move classes
by Countable | 7.9.20
Supreme Court Rules Eastern Oklahoma is an American Indian Reservation for Purposes of Criminal ProsecutionsWhat’s the story? The Supreme Court on Thursday ruled that the state of Oklahoma can’t prosecute major crimes involving American
by Countable | 7.9.20