As the coronavirus crisis brings the U.S. economy to a standstill, millions of Americans have suddenly seen their cashflows grind to a halt. Congress took concrete steps to support the people most directly harmed by the virus with the Families First Coronavirus Response Act, which was passed by the Senate and signed by President Trump yesterday after passing the House of Representatives five days earlier. Now they must adopt a broader stimulus package that offers immediate assistance to ensure otherwise financially healthy businesses and households avoid unnecessary bankruptcies that would drag down our economy well after the pandemic has been contained.
The Trump administration’s latest proposal is to make up to $500 billion in emergency loans available to small businesses, airlines, and other distressed industries hit by the coronavirus crisis. Additionally, it proposes to send $250 billion in direct cash assistance to American households in April and then another $250 billion in May. The proposal does not detail how these payments would be structured, but does specify that they would vary in size based on family size and income.
This framework is a welcome change from the administration’s earlier proposal to repeal payroll taxes through the end of the year, which would have given the greatest benefits to those least in need of assistance, but it still has a number of problems. A complicated means test will take time to design and administer, delaying much-needed relief to cash-strapped households when time is of the essence. Moreover, amid enormous economic uncertainty, nobody even knows what their income in 2020 will be. Many households that need assistance are almost certain to fall through the cracks under the administration’s plan.
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