An alarming sign during this pandemic is people feeling drained–in their bank accounts that is. Millions are out of work, and economic activity has been dramatically reduced. Individuals wonder how their families will be fed, and business owners wonder how they will pay their employees. Does anyone care about their financial plight? The answer is a resounding “Yes!” Uncle Sam cares and has acted to come to their aid by passing the CARES Act of 2020.
Ever heard, “There ought to be a law!” Some federal legislators felt just that way in light of the economic havoc wreaked by the ongoing pandemic. And come up with a law they did–the CARES Act of 2020. The public law’s name, CARES, is an acronym for Coronavirus Aid, Relief, and Economic Security. There’s simply no end to the creativity of politicians, is there?
A striking feature of the CARES Act is that it evidences how much everyone cares. Yes, it took a global pandemic, thousands of deaths, and economic calamity to get federal legislators to put aside political divisiveness and act together for the common good. The legislation was passed with overwhelming bipartisan support. In the Senate it received unanimous approval on March 25th with a 96-0 vote. Four senators had to get notes from their doctors for missing the vote–1 had tested positive for the virus, 1 was feeling ill, and 2 were in isolation following contact with a confirmed case.
The CARES Act was passed by the House on Friday, March 27th. President Trump signed the Act into law that very same day. Voila’! Two TRILLION dollars worth of economic relief had been swiftly authorized.
I don’t know about you, but I have a hard time grasping what a trillion dollars is. Oh, I get that it is way more than I’ll make annually or even in my lifetime, but what exactly does a trillion dollars look like? In order to write the number, you’ll need a bunch of zeros–12 to be exact. That’s 1,000,000,000,000. A trillion is a thousand billions or a million millions. According to an article on methodshop.com, a stack of one trillion dollar bills would be 67,886 miles high and reach one-fourth of the way to the moon. But the CARES Act will distribute TWO TRILLION dollars. That’s a stack of $1 bills reaching halfway to the moon. Yes, to the moon, Alice!
The CARES Act is, unsurprisingly, the largest economic stimulus package in U.S. history. But desperate times call for desperate measures. Economic activity spiraled down both domestically and globally in response to the coronavirus pandemic. In ONE WEEK’s time, the week ending March 21st, approximately 3.3 million Americans filed for unemployment. This figure represents a five fold increase over the previous record of 695,000 unemployment claims sent in 1982. This is not a record about which to be excited.
Although the Act itself covers a number of areas, the two most publicized ones are the Paycheck Protection Program (“PPP”) aimed at helping small businesses and economic impact payments to eligible individuals. CARES expressly defines a small business as one with less than 500 employees. “Small” is apparently in the eyes of the beholder. The office where I work would be considered microscopic, I guess, since 500 is about 100 times bigger than we are.
The PPP offered up to $10 million in loans to “small” businesses. These loans are to be forgiven (translate don’t have to be paid back) if three conditions are met: the business’ workforce isn’t reduced after receiving the loan, workers laid off between February 15th and April 26th are quickly rehired, and at least 75% of the funds received are spent on payroll.
Yea! Small business have been saved by CARES! Or have they? Some 1.7 million loans were approved, but not every small business could be helped. Why? There wasn’t enough money to assist all of them in need. The PPP program (that’s a lot of P’s!) ran out of money on April 16, 2020, a mere 20 days after the legislation was enacted.
What about financially struggling individuals? CARES allotted $290 billion in direct payments to eligible taxpayers, an estimated 90% of Americans. Each adult making less than $75,000 a year can receive up to $1,200; in addition, they can receive $500 per child under 17. These payments can be made either by direct deposit (if the IRS has bank information) or by good old-fashioned checks.
Yea! Money in our pockets! Or not–at least in a timely fashion. Stimulus checks began going out the week of April 13th. Nevertheless, the IRS can only process 5 million checks a week, meaning it could take months (estimated up to 20 weeks) for all of the checks to be mailed. So much for the statement on the U.S. Department of Treasury website that CARES will provide “fast” assistance. Justice delayed is, as they say, justice denied. The same can be said for stimulus payments; economic help delayed is economic help denied. People who don’t have money for groceries need help now, not 16 weeks from now.
A controversy arose when it was announced the President’s name would appear in the memo line of stimulus checks possibly causing a slight delay. This is news? I mean when isn’t there a controversy about anything related to President Trump? And there’s an uproar about his name being on a check but not that it might take 5 months for needy taxpayers to receive economic assistance? I personally could care less whose name is on my check as long as I receive it in a timely fashion.
If you haven’t received your stimulus payment yet, the IRS provides a “helpful” tool on its website called “Get My Payment” allowing you to track the progress (or lack thereof) of your payment. Well, that’s the idea anyway. Numerous people utilizing the tool (including yours truly) have received a response that their eligibility cannot be determined from IRS records. This response, per the IRS, may mean the system is overwhelmed (ya think?) or that the person really isn’t eligible. Well thanks for nothing! Now people have something else to be worried about–they are struggling financially and don’t know if/when they might get a stimulus check to boot.
Let’s assume everyone, businesses and individuals alike, obtain the financial assistance offered by the CARES Act. Everything’s great, right? Um, no. Where do you think that money is coming from? The CARES Act will add to the already ginormous federal deficit. The stimulus checks alone will decrease federal revenue by around $301 BILLION in 2020 according to the Tax Foundation. The Congressional Budget Office indicates the CARES Act will raise the the federal deficit by around $1.8 TRILLION over the 2020-2030 period.
CARES seemingly indicates Uncle Sam cares about U.S. citizens, but the follow through hasn’t been that impressive. While this legislation has assisted some (but not all) in need, it has also created a problem to be addressed at some future pandemic-free point. What brilliant legislation do you think will be proposed to deal with the mind-boggling federal deficit which CARES has made even bigger? Who cares? Let’s play Scarlett O’Hara and worry about taking on the deficit tomorrow.
Have you received an economic stimulus check yet? If you haven’t, is receiving one weeks from now acceptable? If you own a small business or are employed by one, did the business apply for a Paycheck Protection Loan? Better yet, was it approved? When you heard about the financial assistance offered by the CARES Act, did you stop to think how it might impact the federal budget?