The US Senate Thursday unanimously approved a $2.2 trillion economic package to contain the damage caused to the country’s economy due to the novel coronavirus outbreak. The package, which was negotiated over several hours by the Senate Republicans, Democrats and Trump administration officials, is the largest of its kind in modern American history. It is far bigger than the $800 billion assistance provided in the aftermath of the 2008 financial crisis.
The package intends to respond to the coronavirus pandemic and provide direct payments and jobless benefits for individuals, money for states and a huge bailout fund for businesses.
What does the US’s $2 trillion package aim to do?
Quarantine orders due to the COVID-19 pandemic in many parts of the US have caused a serious downturn in the country’s economy. The deal aims at sustaining businesses and workers that have been losing income, as well as enabling the economy to recover once the quarantine orders are lifted.
Since the outbreak, this is the third occasion when US lawmakers have taken measures to address the economic fallout. On March 6, US President Donald Trump approved an $8.3 billion emergency package that provided free testing for the virus, paid leave, and support for families affected by the pandemic.
Main provisions of the $2 trillion package
The package will provide direct financial support for low and middle-income families, and payments for companies that have lost a majority or all of their customers due to the pandemic.
The support for companies is aimed towards ensuring that they keep paying wages to their employees through the crisis, despite losing business activity. The deal also provides increased support for workers who have been fired or who have had their remuneration reduced.
The package has earmarked $250 billion for individuals and families. Workers with annual incomes of up to $75,000 will receive $1,200 in direct payments, which will increase to $2,400 for couples, as well as an additional $500 per child. The benefits will phase out for those with higher salaries.
It allocates $500 billion for loans and guarantees to businesses, state and local governments. This includes up to $50 billion for passenger airlines, $8 billion for cargo carriers, $17 billion for “businesses critical to maintaining national security.”
The companies benefitting from the stimulus package will not be able to buy back outstanding stock, and have to maintain employment levels as of March 13, 2020, as far as possible.
The companies in which top administration officials, members of Congress or their families have 20 per cent stake will not be able to avail the schemes.
$350 billion has been earmarked for small businesses to pay salaries, rent and utilities. These benefits will extend to businesses having 500 or fewer employees, as well as nonprofits, self-employed persons and hotel and restaurant chains having not more than 500 workers per location.
Eight weeks of cash assistance will be provided through loans to cover salaries, rent and other expenses. These would be forgiven if the company retains workers.
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It has also provided $17 billion to help small businesses repay existing loans, and $10 billion for grants up to $10,000 for small businesses to pay operating costs.
At least $260 billion will be provided for emergency unemployment insurance, which will include an extra 13 weeks of coverage for those who have already used up existing benefits. Self-employed and gig economy workers will also be covered, and weekly benefits will be increased up to $600.
$150 billion will be provided for healthcare, including $100 billion in grants to hospitals, Medicare and Medicaid suppliers, and public and nonprofit health organisations.
Another $150 billion is allocated for state and local governments. The smallest states will get at least $1.5 billion.
A disaster relief fund of $45 billion will be created to reimburse state and local governments for purposes of providing community services, medical services among other safety measures.
The package has assigned $31 billion for education, which will include $13.5 billion for local schools and programmes, and $14 billion for assisting universities and colleges.
At least $27 billion is earmarked for research and development of coronavirus vaccines and treatments, and for stocking medical supplies.
It has provided $25 billion for public transit systems, $10 billion for commercial airports that are publicly owned, and $1 billion for Amtrak trains.
The stimulus also includes $15.5 billion for food stamps and $8.8 billion for child nutrition.
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The aid includes $10.5 billion for the Defence Department will include $1.5 billion to almost triple the current number of beds at military hospitals, $1.4 billion for deploying up to 20,000 members of the National Guard for six months, and $1 billion for stepping the production of medical apparel.
Allocations have also been made for social programmes, such as child care, aid for heating and cooling, homeless assistance, as well as money for evacuating US citizens and diplomats stuck overseas, international disaster aid, and money for organising the 2020 general election.
Student loans have been suspended, and no interest will be accrued over the next few months.
Lastly, as announced previously, coronavirus testing will be free for all citizens.
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